Tilly’s, Inc. Announces Fourth Quarter and Full Year Fiscal 2015 Results

March 16, 2016 4:05 PM

Introduces First Quarter Fiscal 2016 Outlook

IRVINE, Calif.--(BUSINESS WIRE)-- Tilly’s, Inc. (NYSE: TLYS) today announced financial results for the fourth quarter (13 weeks) and full year (52 weeks) of fiscal 2015 ended January 30, 2016.

“Our fourth quarter comparable store sales results were slightly better than our outlook and we ended the quarter with clean and current inventories," stated Ed Thomas, President and Chief Executive Officer. "After my first five months back at Tilly's, I am even more excited about the opportunities to improve the business for the long-term and look forward to making progress during fiscal 2016.”

Fiscal 2015 Fourth Quarter Results Overview

The following comparisons refer to operating results for the fourth quarter of fiscal 2015 versus the fourth quarter of fiscal 2014 ended January 31, 2015:

Fiscal 2015 Full Year Results Overview

The following comparisons refer to operating results for the full year of fiscal 2015 versus the full year of fiscal 2014 ended January 31, 2015:

Balance Sheet and Liquidity

As of January 30, 2016, the Company had $101 million of cash and marketable securities and no debt outstanding under its revolving credit facility compared to $85 million and no debt, respectively, as of January 31, 2015.

First Quarter 2016 Outlook

The Company expects first quarter comparable store sales to be in the range of -3% to -6%, operating loss to be in the range of $2 million to $4 million, and net loss per diluted share to be in the range of $0.06 to $0.10. This assumes an anticipated effective tax rate of approximately 40% plus a $0.4 million income tax charge primarily for the impact of restricted stock vesting in addition to the effective rate. The Company anticipates weighted average diluted shares of 28.5 million.

Conference Call Information

A conference call to discuss the financial results is scheduled for today, March 16, 2016, at 4:30 p.m. ET (1:30 p.m. PT). Investors and analysts interested in participating in the call are invited to dial (877) 407-4018 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 March 30, 2016, by dialing (877) 870-5176 (domestic) or (858) 384-5517 (international) and entering the conference identification number: 13630583. Please note participants must enter the conference identification number in order to access the replay.

About Tillys

Tillys is a leading 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. Tillys is headquartered in Southern California and, as of March 16, 2016, operated 224 stores and 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 operating income, future net income, future earnings per share, future gross, operating or product margins, anticipated tax rate, future inventory levels, and market share and our business and strategy, including but not limited to expected store openings and closings, expansion of brands and exclusive relationships, development and growth of our e-commerce platform and business, promotional strategy, 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 e-commerce business, effectively manage our inventory and costs, effectively compete with other retailers, enhance awareness of our brand and 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, 2015, 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 par value and per share data)

(unaudited)

January 30,

January 31,

2016 2015
ASSETS
Current assets:
Cash and cash equivalents $ 51,020 $ 49,789
Marketable securities 49,932 34,957
Receivables 5,397 4,682
Merchandise inventories 51,357 51,507
Prepaid expenses and other current assets 12,968 12,349
Total current assets 170,674 153,284
Property and equipment, net 99,026 101,335
Other assets 1,051 2,932
Total assets $ 270,751 $ 257,551
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 16,022 $ 23,109
Accrued expenses 18,901 12,325
Deferred revenue 8,174 7,075
Accrued compensation and benefits 5,751 5,911
Current portion of deferred rent 6,106 6,070
Current portion of capital lease obligation 858 806
Total current liabilities 55,812 55,296
Long-term portion of deferred rent 40,891 41,875
Long-term portion of capital lease obligation 835 1,694
Total long-term liabilities 41,726 43,569
Total liabilities 97,538 98,865
Stockholders’ equity:
Common stock (Class A), $0.001 par value; January 30, 2016 - 100,000 shares authorized, 12,305 shares issued and outstanding; January 31, 2015 - 100,000 shares authorized, 11,546 shares issued and outstanding 12 11
Common stock (Class B), $0.001 par value; January 30, 2016 - 35,000 shares authorized, 16,169 shares issued and outstanding; January 31, 2015 - 35,000 shares authorized, 16,544 shares issued and outstanding 16 17
Preferred stock, $0.001 par value; January 30, 2016 and January 31, 2015 - 10,000 shares authorized, no shares issued or outstanding
Additional paid-in capital 133,550 126,565
Retained earnings 39,613 32,072
Accumulated other comprehensive income 22 21
Total stockholders’ equity 173,213 158,686
Total liabilities and stockholders’ equity $ 270,751 $ 257,551

Tilly’s, Inc.

Consolidated Statements of Income

(In thousands, except per share data)

(unaudited)

Thirteen Weeks Ended Fifty-Two Weeks Ended
January 30,2016 January 31,2015 January 30,2016 January 31,2015
Net sales $ 159,086 $ 152,817 $ 550,991 $ 518,294
Cost of goods sold (includes buying, distribution, and occupancy costs) 109,129 103,815 383,745 362,762
Gross profit 49,957 49,002 167,246 155,532
Selling, general and administrative expenses 40,481 37,796 149,150 132,343
Operating income 9,476 11,206 18,096 23,189
Other income (expense), net 12 4 52 (14 )
Income before income taxes 9,488 11,210 18,148 23,175
Income tax expense 6,604 4,105 10,607 9,100
Net income $ 2,884 $ 7,105 $ 7,541 $ 14,075
Basic earnings per share of Class A and Class B common stock $ 0.10 $ 0.25 $ 0.27 $ 0.50
Diluted earnings per share of Class A and Class B common stock $ 0.10 $ 0.25 $ 0.27 $ 0.50
Weighted average basic shares outstanding 28,415 28,031 28,332 28,013
Weighted average diluted shares outstanding 28,415 28,113 28,402 28,078

Tilly’s, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

Fiscal Year Ended
January 30,2016 January 31,2015 February 1,2014
Cash flows from operating activities
Net income $ 7,541 $ 14,075 $ 18,137
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 22,808 21,237 19,367
Stock-based compensation expense 3,926 3,499 3,106
Impairment of assets 2,593 1,007 1,840
Loss on disposal of assets 304 118 140
Gain on sales and maturities of marketable securities (100 ) (116 ) (176 )
Deferred income taxes

1,554

1,150

304
Excess tax benefit from stock-based compensation (95 ) (22 ) (157 )
Changes in operating assets and liabilities:
Receivables (715 ) 3,863 (2,611 )
Merchandise inventories 150 (5,241 ) 329
Prepaid expenses and other assets

(293

)

(255

)

(1,861 )
Accounts payable (6,993 ) 3,720 1,554
Accrued expenses 6,179 3,662 (1,796 )
Accrued compensation and benefits (160 ) 936 (1,119 )
Deferred rent (948 ) (206 ) 5,976
Deferred revenue 1,099 861 761
Net cash provided by operating activities 36,850 48,288 43,794
Cash flows from investing activities
Purchase of property and equipment (23,100 ) (23,636 ) (42,701 )
Proceeds from sale of property and equipment 7 41 79
Purchases of marketable securities (74,873 ) (59,884 ) (44,908 )
Maturities of marketable securities 60,000 60,000 50,000
Net cash used in investing activities (37,966 ) (23,479 ) (37,530 )
Cash flows from financing activities
Proceeds from exercise of stock options 3,094 304 2,389
Payment of capital lease obligation (807 ) (758 ) (712 )
Taxes paid in lieu of shares issued for stock-based compensation (35 )
Excess tax benefit from stock-based compensation 95 22 157
Net cash provided by (used in) financing activities 2,347 (432 ) 1,834
Change in cash and cash equivalents 1,231 24,377 8,098
Cash and cash equivalents, beginning of period 49,789 25,412 17,314
Cash and cash equivalents, end of period $ 51,020 $ 49,789 $ 25,412

Tilly's, Inc.

Store Count and Square Footage

Total Gross Square
Stores Open at Stores Opened Stores Closed Stores Open Footage End of
Beg of During the During the at End of Quarter (in
Quarter Quarter Quarter Quarter thousands)
2014 Q1 195 3 198 1,535
2014 Q2 198 6 1 203 1,563
2014 Q3 203 5 1 207 1,589
2014 Q4 207 5 212 1,622
2015 Q1 212 2 1 213 1,630
2015 Q2 213 3 216 1,655
2015 Q3 216 4 220 1,681
2015 Q4 220 6 2 224 1,704

Investor Relations:

Tilly’s, Inc.

Christopher M. Lal, 949-609-5599, ext. 17000

VP General Counsel

irelations@tillys.com

Source: Tilly’s, Inc.

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