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Tilly’s, Inc. Announces Fourth Quarter Fiscal 2012 Results; Introduces First Quarter And Full Year 2013 Outlook

Stocks in this article: TLYS

Tilly’s, Inc. (NYSE: TLYS) today announced financial results for the fourth quarter of fiscal 2012 ended February 2, 2013.

“I am proud of what we accomplished in fiscal 2012. In line with our long-term goals we achieved double-digit growth in net sales and, on an adjusted basis, leveraged our SG&A expenses, increased our operating margin and grew net income by 19% during the year. Despite the variability in sales trends we experienced in the second half of 2012, we maintained our strong pricing discipline and exited the year with inventory that was clean, current and well positioned for the spring season. Our business continued to generate significant cash flow and we capitalized on a strong pipeline of real estate opportunities to open a net 28 new stores during the year, further expanding the Tilly’s concept into 20 new markets and augmenting a key driver of future growth,” commented Daniel Griesemer, President and Chief Executive Officer. “As we begin fiscal 2013, we are confident in the fundamentals of our business and in our ability to deliver on the opportunities we see to expand the Tilly’s brand for sustainable, long-term, quality growth.”

For the fourth quarter ended February 2, 2013:

  • Total net sales for the fourth quarter were $140.8 million, an increase of 14.5% compared to the fourth quarter of 2011.
  • Comparable store sales for the thirteen-week period, which include e-commerce sales, decreased 0.9%. E-commerce sales for the thirteen-week period were $19.3 million, an increase of 20% compared to the fourth quarter of 2011.
  • Gross profit increased 13.2% to $46.8 million. Gross margin was 33.3%, compared to 33.6% in the fourth quarter of 2011.
  • Operating income on a GAAP basis was $14.8 million compared to $14.1 million in the fourth quarter of 2011. Operating margin was 10.5%, compared to 11.4% in the fourth quarter of 2011.
  • On a GAAP basis, net income was $9.8 million, or $0.35 per diluted share, based on a weighted average diluted share count of 28.0 million shares. This compares to net income of $13.9 million, or $0.67 per diluted share, based on 20.5 million weighted average diluted shares in the fourth quarter of 2011.
  • Adjusted net income for the quarter increased 10.8% to $8.9 million, or $0.32 per diluted share, compared to adjusted net income of $8.0 million, or $0.39 per diluted share in the fourth quarter of 2011. These results adjust GAAP net income to assume an expected long-term effective tax rate of 40% for both this year and last year periods, and add back a charge for on-going non-cash compensation expense for stock options of $0.7 million, before tax, to the fourth quarter of 2011, which equals the charge for on-going non-cash compensation expense in the fourth quarter of 2012.
  • At the conclusion of this press release is a reconciliation of non-GAAP results to GAAP results.

For the fiscal year ended February 2, 2013:

  • Total net sales for the fiscal year were $467.3 million, an increase of 16.6% compared to the prior year.
  • Comparable store sales for the fifty-two week period, which include e-commerce sales, increased 2.2%. E-commerce sales for the fifty-two week period were $53.0 million, an increase of 21% compared to the prior year.
  • Gross profit increased 16.3% to $150.2 million. Gross margin was 32.1%, compared to 32.2% in the prior year.
  • Operating income on a GAAP basis was $31.4 million including a one-time, non-cash charge to SG&A expense of $7.6 million, before tax, to recognize life to date compensation expense for stock options, which was triggered by the completion of the Company’s initial public offering in the second quarter of 2012.
  • On a GAAP basis, net income was $23.9 million, or $0.92 per diluted share, based on a weighted average diluted share count of 26.1 million shares. GAAP net income includes the one-time non-cash compensation charge for stock options of $7.6 million to SG&A as well as a one-time net tax provision benefit of $3.0 million, both triggered at the initial public offering effective date in the second quarter of 2012. This compares to prior year net income of $34.3 million, or $1.68 per diluted share, based on 20.5 million weighted average diluted shares in the prior year.
  • Adjusted net income increased 18.7% to $23.3 million, or $0.90 per diluted share, compared to adjusted net income of $19.7 million, or $0.96 per diluted share, in the prior year period. These results adjust GAAP net income for the one-time, non-cash compensation charge to SG&A incurred in the second quarter of 2012, assume an expected long-term effective tax rate of 40% for both this year and last year periods, and add back a charge for on-going non-cash compensation expense for stock options of $2.0 million, before tax, for the second, third and fourth quarters of 2011, which equals the charge for on-going non-cash compensation expense in the second, third and fourth quarters of 2012.
  • At the conclusion of this press release is a reconciliation of non-GAAP results to GAAP results.

Tilly’s follows the retail 4-5-4 reporting calendar, which included an extra week in the fourth quarter of fiscal 2012 (the 53rd week). In the 53rd week, the Company had pre-tax income of approximately $0.6 million. The 53rd week is not included in the comparable store sales percentage.

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