Delaware | 1-35535 | 45-2164791 | ||
(State of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits |
TILLY’S, INC. | ||
Date: May 29, 2019 | By: | /s/ Michael L. Henry |
Name: | Michael L. Henry | |
Title: | Chief Financial Officer |
• | Total net sales were $130.3 million, an increase of $6.7 million or 5.4%, compared to $123.6 million last year. The Company ended first quarter of fiscal 2019 with 229 total stores compared to 222 total stores last year, both including three RSQ-branded pop-up stores. |
• | Comparable store net sales, which includes e-commerce net sales, increased 2.4% compared to an increase of 0.1% during last year's first quarter. E-commerce net sales increased 29.6% and represented approximately 15.1% of total net sales this year, compared to a decrease of 7.2% and a 12.2% share of total net sales last year. Comparable store net sales in physical stores decreased 1.4% and represented approximately 84.9% of total net sales, compared to an increase of 1.2% and an 87.8% share of total net sales last year. |
• | Gross profit was $35.7 million, an increase of $0.7 million or 2.0%, compared to $35.0 million last year. Gross margin, or gross profit as a percentage of net sales, decreased to 27.4% from 28.3% last year. This 90 basis point decrease in gross margin was primarily due to an 80 basis point increase in distribution costs primarily as a result of higher e-commerce shipping costs associated with strong e-commerce net sales growth and a 70 basis point decrease in product margins due to higher total markdowns. These cost increases were partially offset by 60 basis points of improved leverage of occupancy and buying costs as a percentage of net sales. |
• | Selling, general and administrative expenses ("SG&A") were $35.5 million, or 27.3% of net sales, compared to $33.6 million, or 27.2% of net sales, last year. The $1.9 million increase in SG&A was primarily attributable to an increase in store payroll of approximately $1.0 million due in part to minimum wage and annual merit increases, and an increase in e-commerce marketing and fulfillment expenses of approximately $0.8 million associated with e-commerce net sales growth. |
• | Operating income was $0.1 million, or 0.1% of net sales, compared to $1.3 million, or 1.1% of net sales, last year. The $1.2 million decline in operating results was largely attributable to the increased costs associated with e-commerce net sales growth and the minimum wage impact on store payroll, as explained above, partially offset by the positive impact of improved comp sales results. |
• | Other income increased to $0.8 million from $0.4 million last year, primarily due to higher interest rates on our cash and marketable securities investment portfolio compared to last year. |
• | Income tax expense was $0.3 million, or 30.6% of pre-tax income, compared to $0.5 million, or 28.6% of pre-tax income, last year. Income tax expense includes certain discrete items associated with employee stock-based award activity in both periods. |
• | Net income was $0.7 million, or $0.02 per diluted share, compared to $1.2 million, or $0.04 per diluted share, last year. |
May 4, 2019 | February 2, 2019 | May 5, 2018 | |||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 33,864 | $ | 68,160 | $ | 41,190 | |||||
Marketable securities | 75,953 | 75,919 | 63,799 | ||||||||
Receivables | 6,288 | 6,082 | 4,955 | ||||||||
Merchandise inventories | 58,963 | 55,809 | 56,837 | ||||||||
Prepaid expenses and other current assets | 5,294 | 11,171 | 9,266 | ||||||||
Total current assets | 180,362 | 217,141 | 176,047 | ||||||||
Operating lease assets | 244,139 | — | — | ||||||||
Property and equipment, net | 70,608 | 73,842 | 80,542 | ||||||||
Other assets | 2,176 | 2,185 | 3,277 | ||||||||
Total assets | $ | 497,285 | $ | 293,168 | $ | 259,866 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 23,479 | $ | 24,207 | $ | 19,504 | |||||
Accrued expenses | 17,044 | 18,756 | 23,713 | ||||||||
Deferred revenue | 9,105 | 10,373 | 7,622 | ||||||||
Accrued compensation and benefits | 7,019 | 8,930 | 6,614 | ||||||||
Dividends payable | — | 29,453 | — | ||||||||
Current portion of operating lease liabilities | 52,600 | — | — | ||||||||
Current portion of deferred rent | — | 5,540 | 5,322 | ||||||||
Total current liabilities | 109,247 | 97,259 | 62,775 | ||||||||
Noncurrent operating lease liabilities | 222,086 | — | — | ||||||||
Noncurrent deferred rent | — | 30,825 | 30,857 | ||||||||
Other | 1,422 | 1,757 | 2,476 | ||||||||
Total liabilities | 332,755 | 129,841 | 96,108 | ||||||||
Stockholders’ equity: | |||||||||||
Common stock (Class A), $0.001 par value; 100,000 shares authorized; 21,816, 21,642 and 15,197 shares issued and outstanding, respectively | 22 | 21 | 15 | ||||||||
Common stock (Class B), $0.001 par value; 35,000 shares authorized; 7,706, 7,844 and 13,948 shares issued and outstanding, respectively | 8 | 8 | 14 | ||||||||
Preferred stock, $0.001 par value; 10,000 shares authorized; no shares issued or outstanding | — | — | — | ||||||||
Additional paid-in capital | 150,331 | 149,737 | 144,550 | ||||||||
Retained earnings | 14,012 | 13,335 | 19,068 | ||||||||
Accumulated other comprehensive income | 157 | 226 | 111 | ||||||||
Total stockholders’ equity | 164,530 | 163,327 | 163,758 | ||||||||
Total liabilities and stockholders’ equity | $ | 497,285 | $ | 293,168 | $ | 259,866 |
Three Months Ended | ||||||||
May 4, 2019 | May 5, 2018 | |||||||
Net sales | $ | 130,303 | $ | 123,634 | ||||
Cost of goods sold (includes buying, distribution, and occupancy costs) | 94,619 | 88,657 | ||||||
Gross profit | 35,684 | 34,977 | ||||||
Selling, general and administrative expenses | 35,538 | 33,646 | ||||||
Operating income | 146 | 1,331 | ||||||
Other income, net | 829 | 383 | ||||||
Income before income taxes | 975 | 1,714 | ||||||
Income tax expense | 298 | 491 | ||||||
Net income | $ | 677 | $ | 1,223 | ||||
Basic income per share of Class A and Class B common stock | $ | 0.02 | $ | 0.04 | ||||
Diluted income per share of Class A and Class B common stock | $ | 0.02 | $ | 0.04 | ||||
Weighted average basic shares outstanding | 29,469 | 29,080 | ||||||
Weighted average diluted shares outstanding | 29,808 | 29,438 |
Three Months Ended | |||||||
May 4, 2019 | May 5, 2018 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 677 | $ | 1,223 | |||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||||||
Depreciation and amortization | 5,209 | 5,815 | |||||
Stock-based compensation expense | 529 | 580 | |||||
Impairment of assets | — | 145 | |||||
Loss on disposal of assets | 10 | — | |||||
Gain on sales and maturities of marketable securities | (549 | ) | (265 | ) | |||
Deferred income taxes | (130 | ) | (87 | ) | |||
Changes in operating assets and liabilities: | |||||||
Receivables | 246 | (603 | ) | ||||
Merchandise inventories | (3,154 | ) | (3,811 | ) | |||
Prepaid expenses and other assets | 479 | 246 | |||||
Accounts payable | (895 | ) | (1,710 | ) | |||
Accrued expenses | (806 | ) | 107 | ||||
Accrued compensation and benefits | (1,911 | ) | 495 | ||||
Operating lease liabilities and deferred rent | (715 | ) | (381 | ) | |||
Deferred revenue | (1,268 | ) | (1,084 | ) | |||
Net cash (used in) provided by operating activities | (2,278 | ) | 670 | ||||
Cash flows from investing activities | |||||||
Purchase of property and equipment | (3,059 | ) | (2,946 | ) | |||
Purchases of marketable securities | (34,572 | ) | (21,052 | ) | |||
Proceeds from marketable securities | 35,000 | 40,397 | |||||
Net cash (used in) provided by investing activities | (2,631 | ) | 16,399 | ||||
Cash flows from financing activities | |||||||
Dividends paid | (29,453 | ) | (29,067 | ) | |||
Proceeds from exercise of stock options | 151 | 85 | |||||
Taxes paid in lieu of shares issued for stock-based compensation | (85 | ) | (99 | ) | |||
Net cash used in financing activities | (29,387 | ) | (29,081 | ) | |||
Change in cash and cash equivalents | (34,296 | ) | (12,012 | ) | |||
Cash and cash equivalents, beginning of period | 68,160 | 53,202 | |||||
Cash and cash equivalents, end of period | $ | 33,864 | $ | 41,190 |
Stores Open at Beginning of Quarter | Stores Opened During Quarter | Stores Closed During Quarter | Stores Open at End of Quarter | Total Gross Square Footage End of Quarter (in thousands) | |||||
2018 Q1 | 219 | 4 | 1 | 222 | 1,675 | ||||
2018 Q2 | 222 | 4 | — | 226 | 1,698 | ||||
2018 Q3 | 226 | 5 | 4 | 227 | 1,693 | ||||
2018 Q4 | 227 | 2 | — | 229 | 1,703 | ||||
2019 Q1 | 229 | 1 | 1 | 229 | 1,708 |