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Tilly’s, Inc. Announces Second Quarter Fiscal 2013 Results

Stocks in this article: TLYS

Tilly’s, Inc. (NYSE:TLYS) today announced financial results for the second quarter of fiscal 2013 ended August 3, 2013.

“Our unique offering of the most sought-after brands coupled with disciplined adherence to our pricing strategy led to quality earnings that were above our expectations. During the quarter we grew net sales, expanded gross margin, and increased net income compared to the prior year quarter on a comparable basis,” commented Daniel Griesemer, President and Chief Executive Officer. “We are encouraged by our customers’ positive response to date to our back-to-school merchandise, which reaffirms the continued relevance of our assortment and the Tilly’s concept during this important shopping period. We believe our inventory is well positioned to drive sales in our stores and on our website.”

For the second quarter ended August 3, 2013:

  • Total net sales were $123 million, an increase of 17.1% compared to the second quarter of 2012. This included incremental sales that shifted into the second quarter from the third quarter when compared to the 2012 fiscal calendar.
  • Comparable store sales, which include e-commerce sales, decreased 0.5% compared to the second quarter of 2012. E-commerce sales were $12.8 million, an increase of 30% compared to the second quarter of 2012.
  • Gross profit increased 22.5% to $38.2 million compared to the second quarter of 2012. Gross margin was 31.0%, a 140 basis point increase over the second quarter of 2012.
  • Operating income was $7.2 million. This compares to a GAAP operating loss of $(3.3) million in the second quarter of 2012, during which the Company recognized a one-time non-cash SG&A charge of $7.6 million, before tax, related to stock-based compensation expense triggered by the company’s initial public offering.
  • 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. This compares to a GAAP net loss in the second quarter of 2012 of $(1.2) million, or $(0.04) per share, based on a weighted average share count of 27.3 million shares. Excluding the non-cash SG&A charge and applying the expected long-term effective tax rate of 40% as a “C” corporation, adjusted net income in the second quarter of 2012 was $2.6 million, or $0.09 per diluted share.
  • At the conclusion of this press release is a reconciliation of non-GAAP results to GAAP results.

For the twenty-six weeks ended August 3, 2013:

  • Total net sales were $232.2 million, an increase of 15.1% compared to the first two quarters of the prior year.
  • Comparable store sales, which include e-commerce sales, increased 0.2% compared to the first two quarters of 2012. E-commerce sales were $25.4 million, an increase of 22% compared to the first two quarters of 2012.
  • Gross profit increased 14.3% to $70.4 million. Gross margin was 30.3%, slightly lower than the prior year period.
  • Operating income was $11.1 million. This compares to a GAAP operating income of $2.7 million in the first two quarters of 2012, during which the Company recognized a one-time non-cash SG&A charge of $7.6 million, before tax, related to stock–based compensation expense triggered by the company’s initial public offering.
  • Net income was $6.6 million, or $0.23 per diluted share, based on a weighted average diluted share count of 28.1 million shares. This compares to a GAAP net income in the first two quarters of 2012 of $4.8 million, or $0.20 per diluted share, based on a weighted average diluted share count of 24.1 million shares. Adjusting for non-cash stock-based compensation charges and applying the expected long-term effective tax rate of 40% as a “C” corporation, adjusted net income was $5.8 million, or $0.24 per diluted share, in the first two quarters of 2012.
  • At the conclusion of this press release is a reconciliation of non-GAAP results to GAAP results.

Balance Sheet and Liquidity

As of August 3, 2013, the Company had $50.8 million of cash and marketable securities and no borrowings or debt outstanding on its revolving credit facility.

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