TLYS - Earnings call transcript Q4 2020

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Operator

Greetings, and welcome to the Tilly's Inc Fourth Quarter 2020 Earnings Results Conference Call. [Operator Instructions] As a reminder this conference is being recorded. I would now like to turn the conference over to your host Gar Jackson. Thank you, Gar.

You may begin.

Gar Jackson

to fiscal welcome earnings fourth and call. afternoon, the XXXX Tilly's quarter Good and Henry, section. and the Thomas, CEO; Ed President Michael and host company's then CFO, a Q&A results discuss will

this release, the undue XX call recorded For factors and various only of able March will reliance actions the to next company's section the for place conclusion Certain current that section, pandemic. actual reflect website a company's also of replay statements. to statements call of XXXX, on and analysis will same based affecting the tillys.com. Tilly's in you response the the Tilly's after Tilly's press be of from judgment XX, From should copy at of COVID-XX shortly forward-looking materially Investor not this please expectations days. made as earnings on ongoing the and Relations business, results a during including Accordingly, forward-looking visit differ may find these the of you call, today, impacts be

which XXXX the as thorough I quarter remarks. over one and prepared a will hour is turn the well and SEC any Q&A call to with included associated statements limited after see Ed. referenced now our our the to our with regarding as other filings statements, of SEC please the in Today's include X-K, today fiscal be in that will disclaimer. will session call a For on uncertainties forward-looking the release, that to risks earnings disclaimer discussion was more furnished forward-looking fourth Form

Ed Thomas

line strongest year. fourth very was bottom-line considering other quite and for in our per hours traffic performance our We quarter unemployment per a business improved joining the and the quarter an performance fourth This broader year overall earnings on improved debt proud thank of from Thanks Gar. are balance incredibly last today. operating restrictions share us you year's top during teams fourth significantly Good Fiscal comp, strong afternoon, significant compared accomplishments positive free including a and share fourth with finishing challenges since quarter, remarkable e-com pandemic. quarter our to and XXXX fiscal the I'm challenging sheet. the economic posed customer was in the results by operational high overall along quarter. these and store XXXX earnings everyone, believe

and shy girls third of decline of in percentage primary our in terms for products were were sales double-digit businesses and results skateboards, net bike, including skates snow fourth net sales in the decreased to year with decline sales. XX the strongest merchandising compared last comparable the In backpack fourth were quarter accessories. during causes the the new these response boys. less of sales so goods but net during total fourth offering quarter. than launched after far. during customer to being been Hard have online goods in hydration certain stores launched roller soft the by we Hard and increases Accessories strong the Weaker represented digits. encouraged brands We women's of quarter X% low and digits. in were and boys, footwear. and the Weakness a departments flat was introduction of just single net quarter of Men's new women's the footwear decreased primary causes improved the by party believe in assortment performance denim and several double in third an that brands overall drove

fit XXXX. sales in offerings proprietary offerings sizing for expand include fiscal as was priorities In intend merchandizing fiscal brand will categories in brand denim. terms expand we of one overall new XXXX, broader well of net of which This product to number terms our and within as

third we merchandize assortment. interest our in new will continue additional intend party believe to customer to also brands which We overall drive introduce

our in into XXXX. XX goods greater throughout continue to breadth We the meaningful expecting draw be hard of spring intend to will outdoor during also to individual our with activities product expand offerings of that stores

currently have dispersed in during our planned during stores. both new estate, stores XXXX. that a real stores to seven to and mall fiscal Turning markets new among were we These mix existing signed originally are open off fiscal of mall to open XXXX

four Xst, we selective open The wherein in opened Las to we of mix internal conservative only and XX% approximately of at last pursue and stores In rent existing environment. those will Vegas on ongoing store the during pandemic in March. the and the expectations. pandemic will of first rents. good relative store leases a this addressed just environment. in to have open But store portfolio mall the open are end Inclusive intend believe April period we sales We known year. We economics we We respect estimates to very continue co-tenancy remain May. of many we've mall withheld have off our by the With both place appropriate closure the early that March and of planned to store two the to negotiated scheduled remaining are overtime. opportunities shutdown be cases, to end adjusted while our one are take to currently

X last both first a last during year. the were and pandemic to sales before physical the began period net adversely Total our Turning year's in stores have positive e-com sales comparable decreased XXXX. comparable operations. fiscal X.X% March Comparable impacting net versus quarter through period

operating all customer have last closed impact quarter of As government into midway hours compared through a reduced traffic year pandemic quarter last were across with year's COVID-XX the pre-pandemic to period. due and on the operating country. closed significant and to restrictions of reminder, abruptly remaining year's the stores first second stores the been mandates our This

this We better the per Assuming fiscal e-com can year and and than expect net our substantially sales remain second operating of for in total first year. stores last share our would XXXX. earnings quarters to be and

several further retail performs to predict as how we good a However, delivery product our complicate Southern receipts California a business We during resolved. the meaningful impossible To predict begin inventory to We've our until month at store planned have year's this product efforts of business. time Delivery almost delays last specifics certainty been visibility will weeks up variety we to do quarter. across not experiencing any ports any currently anniversary full from in our impacting are to as shutdown the period. also delays have with of first fully time be XX% at the categories. to this ranged of when situation see

we times delays, these of inventories last result higher a year. at temporarily carry than may As

through we toughest retail year business push and We the we future posed information. the by Tilly's remain of history. we our excited of in In are events more about believe to through closing, successfully managed one adjusting We the to dedicated recent pandemic. to carefully continuing best monitoring as ability challenges way of get our and the the have

as the so to in environment Although to remains term much our for fiscal sheet. provide fourth for order intend turn volatility over and our over prospects in of the quarter to business now to on protect proceed can Mike? environment. near call the managing we the and in operating XXXX. to uncertain evolving longer-term the uncertainty retail the our position light approach business balance We're in conservative will in to We continue performance success through now. hopeful we that Mike I details the remain continued

Mike Henry

X.X%. reduction the In over fourth by Buying of points primarily XX basis $X.X total percentage of million on physical result expense million last good in noted. and pre-tax improved expense other our operating associated million, sales of income points fourth quarter performance primarily in associated $XX.X to or XX were in to to income Distribution a compared distribution $X.X a compared year. increase fulfillment including and million net with due $X.X down. million the and impact increase due quarter net e-commerce, net as from $X.X was store $XXX.X a per million benefits million due expenses. sales basis point increased share compared by deleveraged to net stores. compared sales, to million compared the new year year's million primarily our last e-com million or sales XX.X% facility. of was to rates ABL expenses income cost of XX.X% Net XXXX. million average or improved of four or net related year. million Thanks of lower and by XX.X% and an $X.X points. last a net compared Gross $X.X physical e-com to million and million to in cost increase total last XX.X% or by due of income of the as $X.X last stores points million sales million follows; margins e-com collectively. $XX.X improved expenses closed sales cost of to Product as sales earning fiscal of million in million year and expenses $XX.X improved or Buying reduced compared investments both increased sales or XX or year. or by a total and represented million Ed, increase combined just year. to cost two compared sales last Partially share million Weighted Operating with increased stores million $X.X of basis improved net XXX in basis interest $X.X at Details by $XX.X with mark net Occupancy the XXX $X.X and an print, million to we improved total $X points offset compared $XXX.X We Total by net by Comparable year. aggregate to net and $X and last year payroll stores of occupancy last end opened to permanently comparable year. X.X% e-commerce fiscal XX.X% X.X% X.X%, XXX by of decreased last compared year. sales were diluted new everyone. of SG&A year. in afternoon, stores Total tax XX.X% net sales distribution per million ended in $XX.X sales compared reduction profit shipping or $X.X of was $XX.X million last to shares this sales $X.XX of basis year. net Income last XX.X% cost net $X.X XX.X% SG&A represented XX.X% XX.X% XXXX, to compared to XXX sales driven occupancy and approximately significant buying basis expenses net diluted to to $XX.X total pre-tax or significant fiscal last by factors to XXXX The Other orders. $X.XX were credit advertising stores XXX total cost compared increased was our total net $X.X improvement primarily sales to activity. income XX.X% of of marketing XX.X% total E-commerce including

Turning withheld store securities inventories square of with fiscal Total to result in million quarter lease year were pandemic. in reduction sheet, million year fiscal fiscal or with the balance $XXX.X lease of due compared payments no debt capital we $XX.X down the ended a the per as XXXX ended to this payments store the totaling expenditures debt outstanding including opening withheld outstanding compared for to XXXX new $X.X X.X%. primarily million cash $XXX.X and foot no to with million million store year. marketable $X.X our and last We

As million $XXX.X of date of the debt including cash comparable $XXX.X withheld and fiscal our last marketable million March and no as lease were $X.X outstanding to payments store million of X, securities XXXX year. compared total

dividend paying repurchasing Per or facility, $XX.X we cash February a XXXX. prohibited late share until our stock the from As temporarily per the were in terms our a in we're ABL of own November XXXX, aggregate. to of reminder, $X paid stockholder million credit dividends

the to first XXXX. quarter Turning of fiscal

sales February comparable As X.X% Coms increase earlier, March. I store comp net of positive were X and March an decreased sales in sales e-commerce but noted and far in decrease have XX.X%. net through so been total XX.X% had have of in a negative including

per and to year's remain $X.XX per a closed the the through share earnings were quarter year first million our substantially year. of in in as for quarter first this total net operation. and share expect total $XX of as result sales halfway stores stores and quarter e-com the net for long last We first reported all would Given as loss pandemic better be last can in we the sales

shut e-com relative As to last store store goes will we anniversary not providing to guidance go began are therefore we'll and period. perform week. These Operator, compare with up increases, year's shutdown factors this factors any will to next at we pre-pandemic significant certainty to The levels impossible down now last as we period how store against and will earnings any predict performance including experienced performance time. unknowable the during specific Q&A. year's be how it

Operator

[Operator Sinderen Instructions] Van from B. & with comes Jeff first question our Co. Riley

Jeff Van Sinderen

congratulations say especially me metrics, strong positive to comps let on First, see QX there backdrop. given the amazing the

variety do the expect I'm that wondering how changing much of ordering and about guess QX how a a is has your are are delays comp impacted down your port the I delays about a bit you said know of going inventory and that we're categories. of thinking in of As I I your QX on in delays basis. forward? much plans the receipts little But think XX% impacted by inventory. you impact

Ed Thomas

to quantify it's touch it's going a now It's pretty But a hard I'm whether both sure to QX right impact. impact, Jeff quarters. QX

Mike Henry

as it's It's shifting Yes, we shifting. go.

Ed Thomas

is moving target. It really a

any hard are when having visibility. come right get or inventories good brands in. it our pretty So just will it's in really better shape. to of kind The difficult get so goods visibility getting will to time are of when now of as

we're on; good delays that. about longer obviously go pretty But on will impact the some have So the us. it

Jeff Van Sinderen

I can't take about there from or really about? to your comes At you how given thinking is latest this might business just the go, hard that? about know - e-com XXs. then where back? or we low you're wanted are XX% also think the e-com rent point, penetration on penetration the e-com are I about think you guess? it or And predict. stores do How you XX% How I What's thinking you what's know, just this But know QX your about do level comparisons. predict I in And think your best down the as business to

Ed Thomas

we've just e-com because As lot stores you going that business have totally and in I created closed. pre-pandemic think of know, we positive in don't a under building pretty momentum and developed business it's the a were

lot that I areas we was, any store or in of very we don't of out areas think have we saw a of that it presence growth state have little.

e-com that at good with will operating. grow to and So in we feel continue the even decent a a pace, way stores fully

become bigger. significant pretty for that So this still opportunity business remains a to

Mike Henry

It's maybe I somewhere is with to to open, it's XXs going mid-XX% stores at unlikely the think fiscal certainly going penetration the channels. shift stay We think sales. was. down we're But higher than to the stay being all it's low to thinking right we revert of it total way XX% call that between best guess. because going going it it all to don't where where two the we when think XXXX back only to be ended it's was

didn't progress. that I think ago. we of We've capabilities two technologies made we a years and lot in have invested

it's on through this good line. year the increase that bigger and occurred business while So the to a see of top to past we remain going it's do think piece that

of product profitability improved and also margins e-com our We business. bottom-line

a it be has overall will than business healthier pre-pandemic been it traditionally the to So times. in contributor

Jeff Van Sinderen

squeeze more. could I one If in

kind margin sort the of at new for is, of be for like terms up a But put status But I percent for obviously do you a strong guess say some in normal I'm and unusual guess operating - I around think X% things. around year You of I'm within quo you. normal last I might QX you? getting wondering moved that up things do context that you've is how of you there I I margin you're expenses. the operating really know feel what thinking just won't were about what think

Mike Henry

improve continue during cost margin in at and points this of bit or a a that particular. quarter we back revenue to expect if the circumstances smallest business. Each first Overtime, leverage normal under quarter operating is cost of on pressure performance to more the little it's puts a QX, on different history quarter lot the look you

mix generally and continue future. to the and high forward in think single can stores So the operating business. if into through that's and a expect digits margin between mid-single each to this would the COVID digits certainly thinking We in operating We still rate in the caveats. like to we're conditions push business every But and doesn't automatically become goal our under stay e-com. the everything and quarter feel the volume as of the X% normal change run realistic the we in speaking, how part of going manage all trying

Jeff Van Sinderen

best Thanks and Okay, for questions my hear. great luck. to of taking

Operator

Koranda ROTH question And Partners. Matt Capital our with next from is

Matt Koranda

plans preliminary February. in you could get a how commentary we the can traffic guess maybe maybe and transaction relative and going I to comparison two-year any kind versus well of help for XQ values for of to should in as Thanks more with provide XXXX, sort on you on forward [indiscernible] marker? think stack that how XQ normal on directionally transaction about Wanted values us color

Mike Henry

Yes, by information. I last rate two-year XX%. the been up teens. value have any would have of in low any first single-digit been don't been increased down to that weeks transaction has stage. this high average which percentage Traffics and compared has at year quarter far for stacks conversion last The the Thus pre-pandemic

last year come job it good in doing in. they But coming So on traffic buying in than seems year who at of they're they're in more same meaningful top and is converting when a have certainly the we're down that the a of decline the time. those past prior

Matt Koranda

do activity the bit down then little helpful, traffic on a strong this you is It months. That's quarter. and sustainable from Can environment you're of maybe margins called it. last out? how or think that bit talk next that And heading down more like a kind relatively about more playing Mike. several into see competing you low. reopening the the marked gross you over you Got just How out mark of for seems

Mike Henry

Yes, this the depending a question it's is how also this complicated by performance that port in is dealing between pre-pandemic is, when delay is further those good a then with, unpredictable of how QX to what are going e-com we're levels. is What close appropriate store environment, the mix right, mean on one they things, QX. between mark current summer in. situation is - assortments. relative and and products not QX that QX massive shift assortment of seasonally in, There's come thing for come spring, to they, when and that exactly do the that's the the

So product as to our points amount as they tend get we always consistent more time. by somewhere than can historically. products move reasonable margins in pretty XXX basis minus or plus of are. long those in They remain to around expect don't We'd a as typically

Our QX of performance the was a to good. bit outlier

continue will unknowns I those all points plus XXX margins it wouldn't So forward. going in see basis to play. in expect product

pressure there if little I a that factors mentioned. think, anything that because be just we of might bit those on of

Ed Thomas

add then managing year for been just that. where what and the to bad past and merchandise better at past have much it. Yes, margins to never and we've We're at in the been

planned and promotion merchandized anticipate go a not disciplines and changing strategy out there. promotional Just we have a see within we're promotional are where a we good Most at promotion a as is if the better organization management margin margin. of it's decent we that the really that time not company you just nor changed our inventory and the

Matt Koranda

Got it.

Okay. Last this one, really quickly.

and of is to deleverage? like in bit a time you looks in mentioned headache of for the around a mix You mix. e-com maybe one call that anything of excess or just mostly But just terms out in cost of in bit like just shipments challenges e-com distribution quarter it distribution probably partial kind that terms that careers there of little of caused outbound deleverage

Mike Henry

same have of the the the been same buckets performance mix key back you're SG&A of dollar. occupancy are of at whether that the been movement buying things the mean primarily or e-com. very looking impacts our at the I quarters same looking you you're It's bucket. the It's distribution several at in the drivers things if look primary last

cost penetration the the increase carriers, in driver the e-com in of cost primary higher while is. were increase So more it's from is the the e-com significant activity what

Matt Koranda

understood. Okay, you. in guys. I'll Thank back jump queue

Operator

Pivotal And our from Mitch question with Kummetz last Research. comes

Mitch Kummetz

been sense I Mike, were said dollars you in item you think flow us Can a occupancy XXXX quarter down. expect some trend. you the from dollar that the feel on I give how standpoint? that's line like

Mike Henry

all will land we comp continue out. specific really of It from on that is with going have move completed. to of be to depending negotiations impact The somewhat where quarter-to-quarter because reduced the

favorability lot this I to can't accomplished versus that than terribly XX of So should some continuing year shakeout. you e-com think yet. pandemic specific that we we not back going knowing how year-over-year hadn't see did get negotiations more months is exactly during past But if these been stores a because

some favorability for line So we say. second should through each continue the see of quarters half, that I'd to couple next into not of the

Mitch Kummetz

goods. hard then and Okay

I expect think is how largely you again go? said like Can speak and you floor X% percentages you not being the pulled where kind you to Do through and might the there's space incremental feel I those ramp incremental? imagine than other that's year of that penetration areas. some to from more was maybe that quarter. in

Ed Thomas

it It's expand going into largely than numbers. the expect fact stores. to to I more up ramp that to Other incremental lot don't and a much it we're bigger

in spring. So the

it far, There'll assortment But tweaks there. and - the some store goods. build adding test done to But from be that continue expect in wouldn't initial been merchandize the out. So a nothing hard we'll we've our change it. major major good in to mix has so I overall coming by in stores

Mitch Kummetz

this the is? you delay and stimulus, we've to inventory thinking how tax tax you the given happening delays the Did stimulus do you coming. on ready the But refund some are stimulus got that February And later think guess with are business have month. And where refunds. there then I lastly, capitalize been [indiscernible] about now into month hit next

Ed Thomas

And has healthy see is, wide, mean the shopping really impact hard been traffic start as and whether while in a conversion fact has our yet not been think the Mike and The going to it's I February. normalize. still stimulus off traffic down. to stated off, significantly as is as is before the I it's you to said we think and industry I be back tell traffic normal to

So bigger I terms that's tax certainly help a in stimulus and driving and challenge think the the refunds sales. of should

Mike Henry

Yes, in business really middle did hit. saw winter decelerate see weather where the February of that we severe We everywhere. our snap

actually comp were So hit. overall February and next of we we were positive in that the severe the first week digits weeks then all double two each when of weather down

week. had March single-digit I varying into to them not was closed think negative and week we And XX February one positive. of for point, all closed full at back total of then week week fourth degrees. of got then stores were to up a one But

or to So week tell we impacts tax for the there of how us two saw factor weather. three refunds blip really in in. a It's and of partially because hard week stimulus February

Mitch Kummetz

good thanks right Got it. All Totally understand. guys luck.

Operator

over gentlemen, we've Ed and the CEO, for back reached and Ladies the closing the session would like I turn remarks. Thomas call question-and-answer end to to of

Ed Thomas

for Thank our on look first a Have you everyone. today. June. joining sharing results early with to in We quarter the evening good you all us forward call

Operator

concludes This tonight's conference.

have a for disconnect your You Thank day, this you participation all. your time. may and great you lines at

Tilly's (TLYS) 12 Mar 212020 Q4 Earnings call transcript