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Category: Stock Market and Tilly's (TLYS)
Date: 7 June 2021 Stock Price of Tilly's (TLYS): $15.56 Market Capital of Tilly's: $468.2 million We take a look at the 1st quarter earnings report of their 2021 fiscal year of Tilly's (TLYS) a leading, destination specialty retailer of casual apparel, footwear and accessories for young men, young women, boys and girls with an extensive selection of iconic global. For the quarter the group reported $163.2 million and net income of $10.9 million.
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Fiscal 2021 is off to a record-setting start with our best first quarter net sales and best earnings per share of any quarter since becoming a public company in May 2012 - Ed Thomas, President and Chief Executive Officer"
About Tilly's
Tillys is a leading, destination specialty retailer of casual apparel, footwear and accessories for young men, young women, boys and girls with an extensive selection of iconic global, emerging, and proprietary brands rooted in an active, outdoor and social lifestyle. Tillys is headquartered in Irvine, California and currently operates 244 total stores across 33 states
Overview of Tilly's 1st quarter 2021 earnings report
Net sales
Gross profit
Gross profit was $54.8 million, or 33.6% of net sales, compared to $1.6 million, or 2.1% of net sales, last year. Product margins improved 930 basis points as a percentage of net sales primarily due to the prior year impact of an estimated inventory reserve of $4.7 million recorded during last year's store shutdown period which represented 600 basis points of the comparative increase. Setting aside the prior year inventory reserve impact, the remaining product margin improvement of 330 basis points was primarily attributable to a lower total markdown rate. Buying, distribution and occupancy costs improved by 2220 basis points collectively, despite increasing by $1.5 million in total, due to leveraging these costs against a much higher level of net sales this year compared to last year's store shutdown period. Occupancy costs improved by 1700 basis points as a percentage of net sales and were reduced by $0.5 million compared to last year. Distribution expenses improved by 450 basis points as a percentage of net sales despite increasing by $1.6 million. Buying costs improved by 70 basis points as a percentage of net sales despite increasing by $0.5 million.
Net income
Net income improved to $11.0 million, or $0.36 per diluted share, records for a first quarter since the Company became publicly-traded, compared to a net loss of $(17.4) million, or $(0.59) per share, last year. Weighted average shares were 30.5 million this year compared to 29.7 million last year.
- Total net sales were $163.2 million, a record for a first quarter, which represented an increase of $85.9 million or 111.1%, compared to $77.3 million last year.
- Net sales from physical stores were $127.7 million, an increase of $80.7 million or 171.9%, compared to $47.0 million last year, primarily due to the closure of all stores during the latter half of the first quarter last year as a result of the COVID-19 pandemic. Net sales from stores represented 78.3% of total net sales compared to 60.8% of total net sales last year. The Company ended the first quarter with 238 total stores compared to 239 total stores at the end of the first quarter last year. During the first quarter of fiscal 2021, the Company opened two new stores and permanently closed two stores.
- Net sales from e-commerce were $35.5 million, an increase of $5.1 million or 17.0%, compared to $30.3 million last year. E-commerce net sales represented 21.7% of total net sales compared to 39.2% of total net sales last year.
- Net sales from physical stores were $127.7 million, an increase of $80.7 million or 171.9%, compared to $47.0 million last year, primarily due to the closure of all stores during the latter half of the first quarter last year as a result of the COVID-19 pandemic. Net sales from stores represented 78.3% of total net sales compared to 60.8% of total net sales last year. The Company ended the first quarter with 238 total stores compared to 239 total stores at the end of the first quarter last year. During the first quarter of fiscal 2021, the Company opened two new stores and permanently closed two stores.
Gross profit
Gross profit was $54.8 million, or 33.6% of net sales, compared to $1.6 million, or 2.1% of net sales, last year. Product margins improved 930 basis points as a percentage of net sales primarily due to the prior year impact of an estimated inventory reserve of $4.7 million recorded during last year's store shutdown period which represented 600 basis points of the comparative increase. Setting aside the prior year inventory reserve impact, the remaining product margin improvement of 330 basis points was primarily attributable to a lower total markdown rate. Buying, distribution and occupancy costs improved by 2220 basis points collectively, despite increasing by $1.5 million in total, due to leveraging these costs against a much higher level of net sales this year compared to last year's store shutdown period. Occupancy costs improved by 1700 basis points as a percentage of net sales and were reduced by $0.5 million compared to last year. Distribution expenses improved by 450 basis points as a percentage of net sales despite increasing by $1.6 million. Buying costs improved by 70 basis points as a percentage of net sales despite increasing by $0.5 million.
Net income
Net income improved to $11.0 million, or $0.36 per diluted share, records for a first quarter since the Company became publicly-traded, compared to a net loss of $(17.4) million, or $(0.59) per share, last year. Weighted average shares were 30.5 million this year compared to 29.7 million last year.
Tilly's management commentary on their 1st quarter 2021 earnings
IRVINE, Calif.--(BUSINESS WIRE)--Jun. 3, 2021-- Tilly’s, Inc. (NYSE: TLYS, the "Company") today announced financial results for the first quarter of fiscal 2021 ended May 1, 2021.
"Fiscal 2021 is off to a record-setting start with our best first quarter net sales and best earnings per share of any quarter since becoming a public company in May 2012," commented Ed Thomas, President and Chief Executive Officer. "The second quarter is also off to a great start with a 30% increase in comparable net sales compared to fiscal 2019's pre-pandemic second quarter. We believe these results are being driven by a compelling merchandise offering and excellent execution by our corporate and store teams, as well as several favorable environmental factors, including increased consumer activity generally, the impact of federal stimulus checks on consumer spending, a return to in-person learning in many schools, and the reopening of public venues."
Balance Sheet and Liquidity
As of May 1, 2021, the Company had $157.6 million of cash and marketable securities, including $0.8 million of withheld store lease payments and no debt outstanding. This compared to $111.1 million at the end of the first quarter last year, which included $13.3 million in withheld store lease payments and $23.7 million of borrowed cash under the Company's then-existing credit facility. The Company ended the first quarter with inventories per square foot down 2.6% relative to last year, but up 8.0% relative to fiscal 2019, which the Company believes is a reasonable position relative to the current performance of its business. Total capital expenditures for the first quarter were $5.5 million compared to $3.5 million last year, the increase being primarily due to new store openings this year.
Fiscal 2021 Second Quarter Business Update
At this time, the Company cannot predict with any certainty what future customer traffic or comparable store net sales results will be. However, based on current trends, the Company believes that its fiscal 2021 second quarter net sales and earnings per share will be improved compared to the second quarters of both fiscal 2020 and fiscal 2019 as long as its stores and e-commerce can remain in full operation throughout the quarter. The Company expects to end the second quarter of fiscal 2021 with 244 total stores compared to 238 and 229 total stores at the end of the second quarters of fiscal 2020 and 2019, respectively. The Company is providing the following updates regarding its fiscal 2021 second quarter business in comparison to fiscal 2020 and fiscal 2019
"Fiscal 2021 is off to a record-setting start with our best first quarter net sales and best earnings per share of any quarter since becoming a public company in May 2012," commented Ed Thomas, President and Chief Executive Officer. "The second quarter is also off to a great start with a 30% increase in comparable net sales compared to fiscal 2019's pre-pandemic second quarter. We believe these results are being driven by a compelling merchandise offering and excellent execution by our corporate and store teams, as well as several favorable environmental factors, including increased consumer activity generally, the impact of federal stimulus checks on consumer spending, a return to in-person learning in many schools, and the reopening of public venues."
Balance Sheet and Liquidity
As of May 1, 2021, the Company had $157.6 million of cash and marketable securities, including $0.8 million of withheld store lease payments and no debt outstanding. This compared to $111.1 million at the end of the first quarter last year, which included $13.3 million in withheld store lease payments and $23.7 million of borrowed cash under the Company's then-existing credit facility. The Company ended the first quarter with inventories per square foot down 2.6% relative to last year, but up 8.0% relative to fiscal 2019, which the Company believes is a reasonable position relative to the current performance of its business. Total capital expenditures for the first quarter were $5.5 million compared to $3.5 million last year, the increase being primarily due to new store openings this year.
Fiscal 2021 Second Quarter Business Update
At this time, the Company cannot predict with any certainty what future customer traffic or comparable store net sales results will be. However, based on current trends, the Company believes that its fiscal 2021 second quarter net sales and earnings per share will be improved compared to the second quarters of both fiscal 2020 and fiscal 2019 as long as its stores and e-commerce can remain in full operation throughout the quarter. The Company expects to end the second quarter of fiscal 2021 with 244 total stores compared to 238 and 229 total stores at the end of the second quarters of fiscal 2020 and 2019, respectively. The Company is providing the following updates regarding its fiscal 2021 second quarter business in comparison to fiscal 2020 and fiscal 2019
Tilly's (TLYS) stock price chart over the last 5 years
The image below shows the stock price history of Tilly's over the last 5 years. And its been a decent time for Tilly investors. Over the last 5 years the stock has increased by a healthy 55%
The stock of Tilly's is trading at close to its 52 week high which is a clear indication that the short term sentiment and momentum of Tilly's stock is very positive at this point in time.
The stock of Tilly's is trading at close to its 52 week high which is a clear indication that the short term sentiment and momentum of Tilly's stock is very positive at this point in time.
Tilly's (TLYS) vs Buckle (BKE) stock comparison over the last 5 years
The image below shows the stock price history of Tilly's and Buckle over the last 5 years. Both these firms are active in the on trend apparel sector. While they operate in the same space their stock price trends and performances are fairly different. The summary below shows the stock price performance of these two firms over the last 5 years.
- Buckle (BKE): 177.4%
- Tilly's (TLYS): 55%
Tilly's (TLYS) stock valuation
So based on Tilly's (TLYS) 1st quarter 2021 earnings report what do we value the stock of Tilly's at? Based on Tilly's latest earnings report our valuation models provides a target price of $24.30 a stock.
We therefore believe the stock of Tilly's is undervalued at its current price. We usually recommend that investors look to enter a stock at least 10% below our target price. Thus a good entry point into the stock of Tilly's would be at $21.90
Since the stock of Tilly's is trading at well below our suggested entry point and target price, we rate the stock of Tilly's as a buy
We therefore believe the stock of Tilly's is undervalued at its current price. We usually recommend that investors look to enter a stock at least 10% below our target price. Thus a good entry point into the stock of Tilly's would be at $21.90
Since the stock of Tilly's is trading at well below our suggested entry point and target price, we rate the stock of Tilly's as a buy
Next earnings release of Tilly's
It is expected that Tilly's will release their 2nd quarter 2021 earnings report in late September 2021
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