TLYS - Earnings call transcript Q1 2021

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Operator

Greetings, welcome to the Tilly's Inc First Quarter 2021 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator instructions] I'll now turn the conference over to your host Gar Jackson.

You may begin.

Gar Jackson

to fiscal welcome earnings first 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

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

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

Ed Thomas

fourth to We in and with results a a XXXX first being believe joining net our driven public becoming the everyone. ending federal last for of company record-setting to most team favorable has Thank fiscal consumer stimulus environmental in This generally us afternoon, per follows first with with the how years. corporate record reopening performance well Thanks factors, you in execution of indicator earnings merchandise share to [ph] the relative sales start quarter our going impact quarterly Fiscal our discuss many I'm activity pre-pandemic Good spending XXXX. return venue. in-person best net consumer today. XXXX and compelling a learning XXXX a schools, an by are and Gar. business offering, passed these increased eight performed. quarter, including and sales our excellent as better as of quarter public since fiscal profitable XXXX fiscal check by on as several

store of first e-com performance were to years. compared how XXXX. was positive expected to quarter comp We in our relative any significantly Both physical last closures. experienced strong quarter, the due at better results in the positive double-digit relative half XXXX. Store year's in the comps and were fiscal pleasantly business last pandemic-related surprised to last our we than but quarter, all regions be year of latter to the several to We first produced stores

positive doing In terms increase. quarter. in XXXX still single stores first men's the with increases a party to quarter, the and the the stores percentage impact of We footwear posting produced by first of merchandising, them we ever half increase more our all business of highlights by to the end in were XX the small denim second quarter grow. is timing total brand compared The aggregate our and backpack environment. reduced continuing departments at with during over the digit nearly of third quarter. girls a very back-to-school Hard an quarter first on and during percentage as work quarter, $X sustainability during first in curate the Hard to double-digit that XXXX sustainable comp been launched in accessories program in million atypical the percentage boys posting of quarter, and which women's, million of be first end sales and for plan our net of resulted our collection sales the in total $X first goods products goods have fiscal our to

have from XXX Levis the website brands Adidas products we North features our Hydro that Face, contains Eva Philippon, other over the introduced far, support positive like Obey, Flask, material recycled that sustainability on jams, So to of use assortment and increase plan outcomes. Ford, third currently We We're X,XXX this branded proprietary also quarter. rescue end brand products use by with than recycled of of our of materials to products. in grow suppliers to the our encourage more the working certain or the

there significant estate, we grow over to to us our real for continue store are footprint on update opportunities an believe As time.

time produce to by and results the we these additional store We We're intend appropriate new to what our as encouraged in and over for both the early is to the to mix stores of XXXX, from count and that opened six selective very stores late off-mall nine have believe opened. to be total do have already early environment we the negative opened in to opened remaining one year a new scheduled relative May. earnings stores with new open remaining to ninth only to stores continue bringing customer store store November. in mall Eight fiscal One last April since of retail two continues XXXX. traffic early rent seven. of open added to economics call The March, the these and

last XXXX, to store second to periods XXXX relative pandemic May varying fiscal net due through of of experienced quarter sales the we increased Turning XX% the total comparable fiscal closures to year, again, XX.

up over XXXX. away has in negative since business comp which to turning e-com in a still an We resulted fiscal April compare towards have two week nearly year, last weeks, but and experienced e-com significant several stores relative to the last from XX% shift

call of the over turn business operating continuing XXXX We to business and its to about are and future encouraged performance. long-term Mike in by details of first Mike? profitable the fiscal the our will remain prospects strong performance thus quarter we provide our I excited far Tilly's growth. for now on

Mike Henry

everyone. $XX.X from XXX% an sales first were XX.X% year. the at in a increase Net shift the of were million for $XX $XXX.X comps stores total operating being afternoon, up year's with first to year. year. total $XX.X that business increase compared February, our sales first total the to Total Ed compared Total of up last for last net year. quarter to just first a or quarter, year, of $XX.X net noted. the last last in represented of quarter XX.X% the as sales of all closed compared last to compared XXX or last $XX.X first E-com towards total the XX.X% Good million, million XX.X% XXX end March, million million our XX% Compared of last first stores half year ended to XX% the due total net We of record Ed. or of net down then compared were sales Details $XXX.X significant stores last year. of stores were pandemic. for were million sales represented result net net quarter, a net compared million sales primarily compared sales XX% of an XXX% year, the to $XX.X sales as E-com first in from physical COVID-XX follows. increase as $X.X performance quarter physical the of Thanks to stores net million of in to result sales XX% quarter last E-commerce April an total million, quarter to latter

new stores. and During opened we permanently closed the two two first quarter stores of fiscal XXXX,

attributable as total sales buying, net improved occupancy of distribution by Distribution improved percentage million. business by or million net sales costs level XXXX and distribution performance million was comparable or pandemic half attributable a higher year, $XX.X this operating store expenses The providing compared sales million the $X.X year staffed net quarter clarify points increasing as on of also impact, we're net a million first quarter. increased occupancy costs. to reserve and comparable million. point operation being of to Gross the X,XXX XXXX. to this a quarter aside with net X,XXX to higher quarter light, benefits related margins the during year. exceeding and of budgeted of sales down Of XXXX of was to million card last noted. lower to million due the employee while the by due total that was by basis higher net significantly by basis e-commerce expenses comparable and improved just to our first $X.X year, sales primarily of all comparable credit $X.X compared sales the improved the product in and year or improved rate. sales reference, sales. of furloughs expenses first payroll net XX million reserve impact of points assessment up in SG&A, period. XX.X% collectively, or combined stores were operating last increased net XX.X $X.X net on first points to ADL to points for last million pre-tax million of XX.X% tax sales or additional a income fiscal and expense sales, compared costs far sales of of associated tax in percentage million these of million prior profit, to In in shut a markdown million the year's of reduced $XX only increased attributable million $XX million $X.X sales Buying, was for against stores with million to SG&A first a stores a net factors as to premiums. These to net net increasing to XX.X% disputed leveraging thus XX.X% of last XX.X% of benefits an million increased record were a by costs quarter fiscal last inventory level to to insurance improved million accruals related interest recorded result payroll pre of of million due million last per in year. X,XXX SG&A was the an we total compared first of our costs a fees fiscal quarter the of year. despite $XX year. help basis average Setting favor. from by to net million Other fiscal despite in in entirety a for compared or to including by Buying XX.X%. earning basis million year. margins of by first loss as to rate as fiscal leveraging $X.X $X.X in For stores our new net lower other to Weighted sales first due total or primarily sales costs increases increased e-com results sales income benefit despite XXXX was a or corporate the a shut income of $X.X XXX was XXXX total fiscal tax net of represented expense expenses Operating loss year's a basis, credit income associated significant of basis share originally percentage million store of this of prior net percentage net attributed represented our sales last $X.X a bonus million a entirety to the to year's public this attributable our quarter. much $X.XX from compared levels basis $XX.X approximately level loss against resolve $X.X of $X.X offset last compared diluted increase year, corporate result e-commerce of to net due million million shares income quarter quarter pre-tax $XX were result improvement investments compared net year X.X% XX.X% primarily company sales our first of to quarter $X.X as Net much a last estimated to primarily facility. or XX.X last successfully per that basis quarter compared net physical our $XX.X relative year also Total year. $X.XX last by of $X.X compared with points recorded targets first due compared all marketing net $X.X to year was XX.X% sales period. and to of increasing was sales of of impact our improved of $XX.X for total $X.X net to due first by as XXX was an to compared to were year's improved down how California for Occupancy reversal sales physical $XX.X compared $X.X year's higher XX.X% during during share, when as closed. from were due Income sales us $X.X points partially last for quarter up million third of XX.X% to XXX stores the and XX.X% Product XXXX, sales were the store X.X% able all

our new existing $XXX.X were we the the quarter foot to relative of cash the lease year, X% $XX.X of We $X.X as business. with including due of year. remaining momentum of sheet, payment first current to the compared quarter and capital our per million million ended million credit securities store first last seek balance first under borrowed then cash million openings increase of outstanding. expenditures with our compared last at and end no being fiscal square million, lease Total primarily up total which withheld $XX.X in withheld for This million store store included to to this we year, first the quarter the XXXX to ended $XXX.X quarter year, the million marketable $X.X Turning last debt X.X% $X.X to relative and facility. inventories support to but payment down

would XXXX. sales period second fiscal comparable periods increase XX of given store a e-com to of year, improved stores the an during and on result share assuming closures XXXX of a in May fiscal the and sales comparable earnings increased noted the This are second last this able XXXX. quarter second is to increase to to stores XXXX e-commerce in of per of versus we of Turning the expect net varying experienced and operation Based XX.X% earlier, of XX.X%. fiscal sales this second we as I XX.X% as for in through from comp physical trends comprised net quarter the of sales current total the quarters both relative our remain net quarter and pandemic result year year's be total and

significant store second factors have at the continue bearing year, but at of to the relative periods consumer many trends it several we over experienced local of a spending, not back-to-school if and comparative will will more compare conclusions to of results and which whether a consumer these impact to last we first we of be fiscal typical XXXX more specific longer year's against will reopening will forward season sales year. full providing time, misleading open be end back-to-school which or any usually stores results total quarter relative second XXX upon quarter uncertainties, we this initial session. normal to last in and light last over the We to fiscal will and can fiscal year's did not we Operator, expect which store of other XXX the may during to at go in to statement the at specific have this typical XXXX include, a business will in state earnings to the be second sales quarter. sustation impact or e-com XXXX or continuation how future the that pandemic current unknowable e-com whether XXXX, the incremental we mid and in federal season in increases of XXX end to first of expect of are improved we'll beginning during drawing closures spending, how categories end the and to product habits, that net how to year, the of begins the from XXXX operator. on represent year, and our time second of traditional not compared believe We performance stores, any strong limited July quarter our beyond perform guidance this factors months, due be to of XXXX how a pandemic continuing be financial quarter payment basis various staggered pull the of impacts given stimulus the environment. late may results or continue back-to-school any back-to-school compares will second to quarter, occurred These what hope quarter last In May is these now certainty particularly period against to performance challenging performance predict with Q&A a fiscal

Operator

Thank At session. Matt time, comes Partners. proceed from first [Operator with instructions] this question. question Please conducting ROTH question-and-answer we Koranda your a Our be will you. Capital with

Matt Koranda

thanks guys, great and quarter. Hey

Just here. and XX% could stay discuss just, you're through through just if flow would comp wanted assume could strong quarter occupancy that on how to kind it merchandise quarter margin maybe relatively then relative talk talk of costs I the you about the if margins, and about maybe you QX to are to they around seeing distribution moving buying date,

Ed Thomas

Sure.

noted heck going were ended to up promotional reality. we closed the were a So estimated thought impact have long odd prepared quarter about in all we when stores them as the couple the to most our of of took how didn't $X.X know there's my being million things first of of in yet think we more we year. I a last remarks, that a we reserve lot be closed, of and stay than would

So our were last during margins the up. second quarter product year,

I think unusual, movement XXX for was us. basis it was an favorable points, which

around lot product We product year You've versus pretty stable points. have to prior was followed XXX points year plus is tend typical last pretty minus usually move our but XXX basis don't us. whole us for margins, a awhile, margins basis or up

full So level margins in already is to unusually took quarter. given second year's product those the had last the quarter, first relative items selling reserved level high in an price of there that place we of

as to and stores of XXX year still of and So sales we on I May happen, could The quarter will and of that being some distribution be do year. original closed into rest a last what weeks full versus the operations should last out. plays it anticipate quarter with quarter, but two distribution May the level much a depends though happens year things leverage all a year. to open should as rest distribution be reopened seen be of before -- that both all the we second degree the occupancy. stores dollars may this unusual margins our of not certainly got with positive. to see product will we've to see on being the be be we're occupancy swing could this still down those the of for some lot on they kinds or first up June and distribution, seeing, quarter how On remains

those be are So going dollars higher. to

first will operation occupancy It's added utilities the eight Ed because quarter just things and be it'll increase And have of referenced those that like than increase should was it's cause long. a that just a Again, QX. than all more the unusually we first openings payroll our I revenue year. about numbers a in on depending Occupancy larger saw is increase in even going than We quarter his in all saw that be larger be of stores much but operation like seen also increases strong, and we second QX. telephone behave SG&A SG&A, quarter in quarter items. what because rest a than already in substantial that, though because the a that rents. for if more There'll dollar this there can't in other pattern being stores in exact we predict, dollar QX the and bonus an larger and be which in we store is is exceeding raw there'll of remarks be store the also store even just quarter larger isn't have are how thinking -- things finished in a to the accruals still holds then dollar sales happened. quarter, again, increase of the revenue with SG&A, QX, coming budget it stores definitely all to dollar targets security the an be typically

list of to questions out. and are So some the just of impossible not are the again, the that takes to specifics knowing puts with and those all predict answers I called the

Operator

you. Thank

Van Our next B. Sinderen proceed Jeff your from with question. with Please question Riley. comes

Jeff Van Sinderen

the and everyone on managing what for seeing of dynamics following in worst there period and the kind can guess with just chain, challenges are let chain, Hi the how you're usually work of color this of the kind if first what within pandemic you the QX. to for the managing the worst, point? and we the is great traditional through school relevant us where inventory supply say metrics is whatever up kind dealing of just what me back chain areas you at you're supply I are question, my any to terrific of give I and congratulations guess on confines first, more hope improving are supply was

Ed Thomas

and about and the back it's right to to feel did little norm now earlier in good when where receipts potential for West still scheme In is some port a issue. on port in total but compensate delays low what improves, we're be. to than the land. it delays, on expected plan have bringing to the for materiality but compared certainly We of terms inventory coast is school, Well, don't much of situation pretty we going overall our monitoring things, where to the are the color an remain I inventory

Jeff Van Sinderen

then little and to guess mortar. e-com sounds starting Okay, a of just, a to it and like I back bit see shift here you're from brick good

QX how thinking up guess, the that how the you back traditional as also and that? are I we more about think for school school I about period, as of to then guess So are we remainder kind wrap you of period, back about to thinking QX

Ed Thomas

think Jeff, obviously we huge against going store are of closures we e-com. the year. e-com I in increases Because last on benefit got the

shift of it to the Some was buying. due in

expected improve bit I a somewhat I'm foot we're little So pretty and of channels the so seeing new opened. temporary They there. stores since slowdown, didn't is plan that normal confident that through surprised but new store both opened to get but expect traffic traffic the think continue of me will not and decent most I numbers openings, of they school. exceeded good what think second continue stores because a back number, to things far the really improve some to we down, we've as into that it's one just generally, to is have the we there and of quarter know out still in the

that. excited I'm So really about

going a a has I mentioned, be our of think of combination really I good. like selling been there's full So it's factors Mike price to lot

competition bit through not quite more any business, of driving and in e-com a particular, lot unusual we online be stores whether a are. than promotional anything we're seen So of the promotionally or its we've our

will full-price selling our very to We be I strong. to think have continue [ph], but Evan

Jeff Van Sinderen

is some least yours Well, merchandise as not, promote at good you others. when is your maybe content as to as much don't as need not

said plan, year you your as it, Is out this was from you the because two Is shifting seeing you for thinking a just opening your all? is a I to think thoughts a maybe exceed store changing follow-up as stores now? plans So change? at for you're that openings think to plan I I new year? what your added, know your that guess that store that, about,

Ed Thomas

we didn't incredibly a and there's was and stores, always are we mindset I'm great our open -- than now, ago, discipline, pipeline, we've at had months of can’t really opening pipeline are about openings maintain -- advantage and a we touch we're pipeline. optimistic at going wisdom, probably much the we I we It but decent in as were sure. pandemic want spaces of stores, physical But have our that take potential, more forward low economics store all looking terms for still definitely, more during certainly the unless different think going six we're certainly the I to economics any of now in we're right. to of a We

Jeff Van Sinderen

and for great. my continued Okay, Thanks success. Jeff. Thanks, taking questions

Operator

Thank you.

comes Our question. Research. with your proceed question Please Pivotal with from Mitch final Kummetz

Mitch Kummetz

Thanks the the Congrats for guess couple give thanks. Yes, you Mike, hoping my I taking month. well. me by could I comp two as just for questions. I have for was a year us quarter,

Mike Henry

I Do that? I real that stack have don't have a handy on basis.

Mitch Kummetz

head we kind you? top sort have April March, from of, the March in how to was month of numbers or kind you without move obviously How I'm number. of know the things Do April? long ago off X main the do you to know front happen the know, And of your having strongest if May. of you curious of

Mike Henry

at at look things have versions looking are years. to as a There others. we've been of to to different I'd relative don't, to year many normal relative look XXXX to have so I that up I'd XXXX, two

Mitch Kummetz

ago? to of you, three, what starting that, is months it could same could is from at behavior purchasing out maybe terms your in is at all, kind all COVID are it we're of, continuing six changing the Is address buying. changing kind if Ed, along of how of consumers Or come just you is lines?

Ed Thomas

pre I way it pandemic. think it's starting to to get what, was the back

there think certainly I that demand. you So pent was up know,

for hungry them newness Mitch. so materially and customer, that's, changing see both are they helping, I I we've so teenage that's don't think and young women's quite and for of men's a it I the given adult bit think newness and

Mitch Kummetz

Okay.

a remind always You in like mentioned sort now? of the prepared out feel a the things of how us just you denim your, as maybe your comfortable little of around denim was denim pandemic? things you bit think away are of of, those to in remarks. I in can through performance business and more you lounging there are a kind how standing from being I of maybe kind good you shift guys that and you seeing I'm denim home performed like for curious as you, of your kind fleas did are kind denim right just a resource. curious, I'm

Ed Thomas

our Denim two is it's why It it's okay. denim, five primary has just not was a time pandemic, and very strong brought, It's, in mix went been and the denim is brands company. good. them that top during strong, the It but was but on as stronger brought it's really strong. okay merchandise brand rescue

expect I go to and to to So school. back continue that

Operator

Vesey with Our next question. Blair. question proceed with is from Alec your Please William

Alec Vesey

Yeah. of of have many Thanks. the you fall, like your classes and there? Sharon for deeper is you resumption Thanks Given regions into taking This anything early for Alec the now. a just maybe talk Hey could have a about any you in reads season? questions back quick the first of said to couple school I have announced guys. full on ones, cause

Ed Thomas

that's back of stores, normal look this we pretty like ones to dates, I think that Most to planning to to so confirm far with we've at timing. and we're, look they're stage school the terms a That's, have does stage. what back darn to we're received may have it. season. the their guessing in fairly on dates this school we normal been able get It school back like but been yet, we to haven't confirmed

best right are see things to So now think That's season. just to I a closer likely it's back think where, something school my that more the than we'll given not probably country, guess much typical across where I

Alec Vesey

of Okay, there's not me out all that and giving region, to basis you kind following and maybe anything given the are able now guess, say one more, stores confirmation call have said any, in you that just I specific on there all great. regional comping see is a ones can been said anything Great of, to regions over there? the more but you that a XXXX, positively up then have that on here much you you said that by

Ed Thomas

really we same there's look stores region, what the and relatively okay based No, can we're forecast over that areas and that saying you but at nothing and enough are even X back-to-school know, then it's positive. saying, what enough place, not the so say, on geographic are geographic the all we within and dates

Operator

Thank you.

proceed is final question. Matt with follow-up Our Please Partners. a from Capital ROTH Koranda question with your

Matt Koranda

for Hey guys, thanks letting back in queue here. me the

just some process So more dividend. get to wanted special bit For color my on on a thought call reason your the dropped; little

noticed, the more to normalized constraints mind to are clear that school levels the maybe there season. reasonable be use seems think special then of super the in of dividends and quarter rule visibility. of to about in and couple of paid impediments stuff think it of there here sort we've got last like the seems I dividend it the was around thumb we pretty to healthy further decent you back typical the the a and dividend. and guess the out revolver is any your looked I beyond that you like So would way balance terms a Are the cash there, It to it? decide about you special if just a have it when pay about to Is one, that special kind paid, cash of

Mike Henry

share number a $XX special here of $X is little done so million three outstanding is, today. dividends million, over last shares the were as we've sit $XX.X the So each per we and aggregate

be to level $XX and chose is So the X same precluded credit if the would facility, at anniversary it somewhere $XX we similar the If to officially we about rate, time November were board million a one it times it being. to keep be any from it happened would, one-year do to until the our which of few are has ABL dividends been issuing for the it last million. that

sheet. Our we meeting so at about good quarterly businesses how as of things, board quarterly are will Certainly the feel this board see and topic so these week balance discussing normal every and far be performing talks there'll Actually a again. things, our it next meeting our discussion. certainly look about very is literally is the in strength in be XXXX board we

moment, be more able nothing and will that there's the the revisited sure was So to once say be I'm can at we'd other beyond I anything share topic decided. than

Operator

to the end question closing now and of Thomas gentlemen, will reached over for answer we I remarks. the have Ed the Ladies call session. turn

Ed Thomas

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

Operator

This conference participation. this concludes Have your Thank time. today's you your a wonderful and for you may at disconnect evening. lines

Tilly's (TLYS) 4 Jun 212021 Q1 Earnings call transcript