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 25, 2016 | By: | /s/ Christopher M. Lal |
Name: | Christopher M. Lal | |
Title: | Vice President, General Counsel and Secretary |
• | Total net sales were $120.2 million, flat to last year. |
• | Comparable store sales, which include e-commerce sales, decreased 4.1%. |
• | Gross profit was $32.6 million, a 9.6% decrease from $36.1 million last year. Gross margin, or gross profit as a percentage of net sales, was 27.1% compared to 30.0% last year. This 290 basis point decrease in gross margin was attributable to three factors: 1) occupancy costs deleveraged 170 basis points due to the negative sales comp and adding 11 net new stores year over year; 2) product margins remained strong but declined 90 basis points as a result of increased markdowns; and 3) distribution costs deleveraged 30 basis points on the negative sales comp, primarily due to increased shipping costs associated with the growth of e-commerce. |
• | Selling, general and administrative expenses ("SG&A") were $36.6 million, up $2.7 million from $33.9 million last year. Of this increase, $2.4 million was attributable to the combination of a legal provision and non-cash store asset impairment charges. Excluding these items, SG&A increased less than $0.3 million, primarily due to increased store payroll dollars associated with 11 net new stores and minimum wage increases, which offset expense reductions in other areas. |
• | Operating loss was $4.0 million, or 3.3% of net sales, compared to operating income of $2.1 million, or 1.8% of net sales, last year. The 510 basis point decrease in our operating results was primarily attributable to lower gross profit and increased SG&A as noted above. |
• | Income tax benefit was $1.1 million, or 29.5% of pre-tax loss, compared to income tax expense of $0.9 million, or 40.0% of pre-tax income, last year. This tax rate change was attributable to a $0.4 million discrete income tax impact related to restricted stock vesting during the first quarter of fiscal 2016. |
• | Net loss was $2.7 million, or $0.10 per share, compared to net income of $1.3 million, or $0.05 per share, last year. On a non-GAAP basis, excluding a tax-effected $1.0 million legal provision, net loss was $1.7 million, or $0.06 per share. |
April 30, 2016 | January 30, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 43,474 | $ | 51,020 | |||
Marketable securities | 44,909 | 49,932 | |||||
Receivables | 5,900 | 5,397 | |||||
Merchandise inventories | 59,719 | 51,357 | |||||
Prepaid expenses and other current assets | 16,100 | 12,968 | |||||
Total current assets | 170,102 | 170,674 | |||||
Property and equipment, net | 98,841 | 99,026 | |||||
Other assets | 1,031 | 1,051 | |||||
Total assets | $ | 269,974 | $ | 270,751 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 21,543 | $ | 16,022 | |||
Accrued expenses | 18,504 | 18,901 | |||||
Deferred revenue | 6,866 | 8,174 | |||||
Accrued compensation and benefits | 4,215 | 5,751 | |||||
Current portion of deferred rent | 6,115 | 6,106 | |||||
Current portion of capital lease obligation | 872 | 858 | |||||
Total current liabilities | 58,115 | 55,812 | |||||
Long-term portion of deferred rent | 40,031 | 40,891 | |||||
Long-term portion of capital lease obligation | 612 | 835 | |||||
Total long-term liabilities | 40,643 | 41,726 | |||||
Total liabilities | 98,758 | 97,538 | |||||
Stockholders’ equity: | |||||||
Common stock (Class A), $0.001 par value; April 30, 2016 - 100,000 shares authorized, 12,429 shares issued and outstanding; January 30, 2016 - 100,000 shares authorized, 12,305 shares issued and outstanding | 12 | 12 | |||||
Common stock (Class B), $0.001 par value; April 30, 2016 - 35,000 shares authorized, 16,069 shares issued and outstanding; January 30, 2016 - 35,000 shares authorized, 16,169 shares issued and outstanding | 16 | 16 | |||||
Preferred stock, $0.001 par value; April 30, 2016 and January 30, 2016 - 10,000 shares authorized, no shares issued or outstanding | — | — | |||||
Additional paid-in capital | 134,308 | 133,550 | |||||
Retained earnings | 36,868 | 39,613 | |||||
Accumulated other comprehensive income | 12 | 22 | |||||
Total stockholders’ equity | 171,216 | 173,213 | |||||
Total liabilities and stockholders’ equity | $ | 269,974 | $ | 270,751 |
Thirteen Weeks Ended | |||||||
April 30, 2016 | May 2, 2015 | ||||||
Net sales | $ | 120,218 | $ | 120,190 | |||
Cost of goods sold (includes buying, distribution, and occupancy costs) | 87,631 | 84,138 | |||||
Gross profit | 32,587 | 36,052 | |||||
Selling, general and administrative expenses | 36,554 | 33,923 | |||||
Operating (loss) income | (3,967 | ) | 2,129 | ||||
Other income, net | 76 | 8 | |||||
(Loss) Income before income taxes | (3,891 | ) | 2,137 | ||||
Income tax (benefit) expense | (1,146 | ) | 855 | ||||
Net (loss) income | $ | (2,745 | ) | $ | 1,282 | ||
Basic (loss) earnings per share of Class A and Class B common stock | $ | (0.10 | ) | $ | 0.05 | ||
Diluted (loss) earnings per share of Class A and Class B common stock | $ | (0.10 | ) | $ | 0.05 | ||
Weighted average basic shares outstanding | 28,425 | 28,173 | |||||
Weighted average diluted shares outstanding | 28,425 | 28,321 |
Operating Loss | Net Loss | Basic Loss Per Share | |||||||||
Thirteen Weeks Ended April 30, 2016 | |||||||||||
As reported | $ | (3,967 | ) | $ | (2,745 | ) | $ | (0.10 | ) | ||
Add back: | |||||||||||
Legal provision | 1,700 | 1,700 | 0.06 | ||||||||
Less: Income tax effect of legal provision | — | (664 | ) | (0.02 | ) | ||||||
As adjusted for non-GAAP items | $ | (2,267 | ) | $ | (1,709 | ) | $ | (0.06 | ) |
Thirteen Weeks Ended | |||||||
April 30, 2016 | May 2, 2015 | ||||||
Cash flows from operating activities | |||||||
Net (loss) income | $ | (2,745 | ) | $ | 1,282 | ||
Adjustments to reconcile net (loss) income to net cash used in operating activities: | |||||||
Depreciation and amortization | 5,805 | 5,611 | |||||
Stock-based compensation expense | 850 | 1,269 | |||||
Impairment of assets | 682 | — | |||||
Loss on disposal of assets | 3 | 49 | |||||
Gain on sales and maturities of marketable securities | (51 | ) | (31 | ) | |||
Deferred income taxes | 29 | 138 | |||||
Excess tax benefit from stock-based compensation | — | (92 | ) | ||||
Changes in operating assets and liabilities: | |||||||
Receivables | (503 | ) | (793 | ) | |||
Merchandise inventories | (8,362 | ) | (10,189 | ) | |||
Prepaid expenses and other assets | (3,134 | ) | 201 | ||||
Accounts payable | 5,109 | 1,469 | |||||
Accrued expenses | (1,970 | ) | 1,606 | ||||
Accrued compensation and benefits | (1,536 | ) | (1,731 | ) | |||
Deferred rent | (851 | ) | (562 | ) | |||
Deferred revenue | (1,308 | ) | (1,253 | ) | |||
Net cash used in operating activities | (7,982 | ) | (3,026 | ) | |||
Cash flows from investing activities | |||||||
Purchase of property and equipment | (4,325 | ) | (5,084 | ) | |||
Proceeds from sale of property and equipment | 5 | — | |||||
Purchases of marketable securities | (19,943 | ) | (14,985 | ) | |||
Maturities of marketable securities | 25,000 | 15,000 | |||||
Net cash provided by (used in) investing activities | 737 | (5,069 | ) | ||||
Cash flows from financing activities | |||||||
Proceeds from exercise of stock options | — | 2,592 | |||||
Payment of capital lease obligation | (209 | ) | (197 | ) | |||
Taxes paid in lieu of shares issued for stock-based compensation | (92 | ) | — | ||||
Excess tax benefit from stock-based compensation | — | 92 | |||||
Net cash (used in) provided by financing activities | (301 | ) | 2,487 | ||||
Change in cash and cash equivalents | (7,546 | ) | (5,608 | ) | |||
Cash and cash equivalents, beginning of period | 51,020 | 49,789 | |||||
Cash and cash equivalents, end of period | $ | 43,474 | $ | 44,181 |
Stores Open at Beg 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) | |||||
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 | ||||
2016 Q1 | 224 | — | — | 224 | 1,704 |