Tilly’s, Inc. Announces First Quarter Fiscal 2014 Results and Introduces Second Quarter Fiscal 2014 Outlook *First Quarter Net Sales of $111.1 million; Comp Store Sales Decreased 6.8% *First Quarter EPS of $0.02 Business Wire IRVINE, Calif. -- May 28, 2014 Tilly’s, Inc. (NYSE:TLYS) today announced financial results for the first quarter of fiscal 2014 ended May 3, 2014. “Earnings results were in line with our expectations and reflect the continuation of a tough retail environment and the planned reduction in our clearance merchandise, which put pressure on our comparable store sales. We delivered strong product margin improvement through careful inventory management and operating discipline, and our inventory is well positioned for the summer selling season. We also advanced our strategic initiatives including the opening of our new dedicated e-commerce fulfillment center,” commented Daniel Griesemer, President and Chief Executive Officer. “We remain focused on maintaining the continued health and relevance of our brand, and are confident in our ability to capitalize on the long-term opportunities to grow our business.” For the first quarter ended May 3, 2014: *Total net sales were $111.1 million, an increase of 1.8% compared to $109.1 million in the first quarter of 2013. *Comparable store sales, which include e-commerce sales, decreased 6.8% compared to the same 13-week period in 2013. E-commerce sales were $12.7 million, an increase of approximately 1.2% compared to the same thirteen-week period in 2013. *Gross profit was $31.3 million compared to $31.8 million in the first quarter of 2013. Gross margin was 28.2% compared to 29.1% in the first quarter of 2013. Product margins increased approximately 60 basis points, offset primarily by deleverage in occupancy costs as a result of the negative comparable store sales. *Operating income was $1.1 million and compares to operating income of $3.9 million in the first quarter of 2013. *Net income was $0.6 million, or $0.02 per diluted share, based on a weighted average diluted share count of 28.2 million shares and an effective tax rate of approximately 45%, reflecting a discrete item related to stock option forfeitures. This compares to net income in the first quarter of 2013 of $2.3 million, or $0.08 per diluted share, based on a weighted average diluted share count of 28.0 million shares and an effective tax rate of 40%. Balance Sheet and Liquidity As of May 3, 2014, the Company had $52.4 million of cash and marketable securities and no borrowings or debt outstanding on its revolving credit facility. Second Quarter 2014 Outlook We continue to experience weak traffic trends and a highly promotional environment in teen retail. If these trends continue, we would expect second quarter comparable store sales to decline in the high single digits, and net income per diluted share to be in the range of $0.03 to $0.07. This assumes an anticipated effective tax rate of 40% and a weighted average diluted share count of 28.2 million shares. Second quarter 2013 net income was $4.3 million, or $0.15 per diluted share, based on a weighted average diluted share count of 28.1 million shares. Conference Call Information A conference call to discuss the financial results is scheduled for today, May 28, 2014, at 4:30 p.m. ET (1:30 p.m. PT). Investors and analysts interested in participating in the call are invited to dial (800) 239-9838 at 4:25 p.m. ET (1:25 p.m. PT). The conference call will also be available to interested parties through a live webcast at www.tillys.com. Please visit the website and select the “Investor Relations” link at least 15 minutes prior to the start of the call to register and download any necessary software. A telephone replay of the call will be available until June 11, 2014, by dialing (877) 870-5176 (domestic) or (858) 384-5517 (international) and entering the conference identification number: 7837315. Please note participants must enter the conference identification number in order to access the replay. About Tilly’s Tilly's is a fast-growing destination specialty retailer of West Coast inspired apparel, footwear and accessories with an extensive assortment of the most relevant and sought-after brands rooted in action sports, music, art and fashion. Tilly’s is headquartered in Southern California and, as of May 28, 2014, operated 201 stores and through its website, www.tillys.com. Forward Looking Statements Certain statements in this press release and oral statements made from time to time by our representatives are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, statements regarding our future financial and operating results, including but not limited to future comparable store sales, future net income, future gross, operating or product margins, and anticipated tax rate and our business and strategy, including but not limited to store expansion, expansion of brands and exclusive relationships, development and growth of our ecommerce platform and business, and any other statements about our future expectations, plans, intentions, beliefs or prospects expressed by management are forward-looking statements. These forward-looking statements are based on management’s current expectations and beliefs, but they involve a number of risks and uncertainties that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including, but not limited to, our ability to respond to changing customer preferences and trends, attract customer traffic at our stores and online, execute our growth and long-term strategies, expand into new markets, grow our ecommerce business, effectively manage our inventory and costs, effectively compete with other retailers, enhance our brand image, general consumer spending patterns and levels, the effect of weather, and other factors that are detailed in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on April 1, 2014, including those detailed in the section titled “Risk Factors” and in our other filings with the SEC, which are available from the SEC’s website at www.sec.gov and from our website at www.tillys.com under the heading “Investor Relations”. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We do not undertake any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. This release should be read in conjunction with our financial statements and notes thereto contained in our Form 10-K. Tilly’s, Inc. Consolidated Balance Sheets (In thousands, except per share data) (Unaudited) May 3, February 1, 2014 2014 ASSETS Current assets: Cash and cash equivalents $ 27,396 $ 25,412 Marketable securities 24,971 34,943 Receivables 9,296 8,545 Merchandise inventories 52,850 46,266 Prepaid expenses and other current assets 11,948 11,772 Total current assets 126,461 126,938 Property and equipment, net 105,146 100,936 Other assets 4,715 4,533 Total assets $ 236,322 $ 232,407 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 21,766 $ 19,645 Deferred revenue 5,202 6,214 Accrued compensation and benefits 3,458 4,975 Accrued expenses 11,648 9,241 Current portion of deferred rent 5,509 5,395 Current portion of capital lease 770 758 obligation/Related party Total current liabilities 48,353 46,228 Long-term portion of deferred rent 43,440 42,756 Long-term portion of capital lease 2,303 2,500 obligation/Related party Total long-term liabilities 45,743 45,256 Total liabilities 94,096 91,484 Commitments and contingencies Stockholders' equity: Common stock (Class A), $0.001 par value; May 3, 2014 - 100,000 shares authorized, 11,429 shares issued and outstanding; February 1, 2014 - 100,000 shares authorized, 11,361 shares issued and outstanding 11 11 Common stock (Class B), $0.001 par value; May 3, 2014 - 35,000 shares authorized, 16,574 shares issued and outstanding; February 1, 2014 - 35,000 shares authorized, 16,642 shares issued and outstanding 17 17 Preferred stock, $0.001 par value; May 3, 2014 and February 1, 2014 - 10,000 shares authorized, no shares issued or outstanding - - Additional paid-in capital 123,598 122,886 Retained earnings 18,588 17,997 Accumulated other comprehensive income 12 12 Total stockholders' equity 142,226 140,923 Total liabilities and stockholders' equity $ 236,322 $ 232,407 Tilly’s, Inc. Consolidated Statements of Income (In thousands, except per share data) (Unaudited) Thirteen Weeks Ended May 3, May 4, 2014 2013 Net sales $ 111,134 $ 109,119 Cost of goods sold (includes buying, distribution, 79,807 77,313 and occupancy costs) ^(1) Gross profit ^(1) 31,327 31,806 Selling, general and administrative expenses ^(1) 30,250 27,889 Operating income 1,077 3,917 Other expense, net - 49 Income before income taxes 1,077 3,868 Income tax expense 486 1,560 Net income $ 591 $ 2,308 Basic earnings per share of Class A and Class B $ 0.02 $ 0.08 common stock Diluted earnings per share of Class A and Class B $ 0.02 $ 0.08 common stock Weighted average basic shares outstanding 27,983 27,692 Weighted average diluted shares outstanding 28,151 28,027 Gross profit in the first quarter of fiscal 2013 includes a $0.4 ^(1) million reclassification of stock-based compensation expense from selling, general and administrative expenses to cost of goods sold to correct for an immaterial prior period error. Tilly’s, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited) Thirteen Weeks Ended May 3, May 4, 2014 2013 Cash flows from operating activities Net income $ 591 $ 2,308 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,776 4,650 Loss (gain) on disposal of assets 29 (3 ) Gain on sales and maturities of marketable (37 ) (44 ) securities Deferred income taxes 34 347 Stock-based compensation expense 838 892 Changes in operating assets and liabilities: Receivables (751 ) (2,155 ) Merchandise inventories (6,584 ) (3,070 ) Prepaid expenses and other assets (517 ) (1,648 ) Accounts payable 2,176 1,912 Accrued expenses 1,279 1,493 Accrued compensation and benefits (1,517 ) (2,728 ) Deferred rent 798 1,882 Deferred revenue (1,012 ) (928 ) Net cash provided by operating activities 103 2,908 Cash flows from investing activities Purchase of property and equipment (7,943 ) (11,435 ) Proceeds from sale of property and equipment - 11 Purchases of marketable securities (4,991 ) - Maturities of marketable securities 15,000 10,000 Net cash provided by (used in) investing 2,066 (1,424 ) activities Cash flows from financing activities Payment of capital lease obligation (185 ) (174 ) Net cash used in financing activities (185 ) (174 ) Change in cash and cash equivalents 1,984 1,310 Cash and cash equivalents, beginning of period 25,412 17,314 Cash and cash equivalents, end of period $ 27,396 $ 18,624 Tilly's, Inc. Store Count and Square Footage Total Gross Stores Stores Stores Stores Square Footage Open at Opened Closed Open at End of Qtr Beg of During During End of (in Qtr Qtr Qtr Qtr thousands) 2013 Q1 168 7 0 175 1,371 2013 Q2 175 7 0 182 1,423 2013 Q3 182 7 0 189 1,472 2013 Q4 189 7 1 195 1,513 2014 Q1 195 3 0 198 1,535 Contact: Investor Relations: ICR, Inc. Anne Rakunas/Joseph Teklits 310-954-1113 firstname.lastname@example.org
Tilly’s, Inc. Announces First Quarter Fiscal 2014 Results and Introduces Second Quarter Fiscal 2014 Outlook
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