TLYS - Earnings call 3 2024

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Operator

Good day, and welcome to Tilly's Third Quarter 2023 Results Conference Call. [Operator Instructions] Please also note this event is being recorded. And I'd now like to turn the conference over to Gar Jackson, Investor Relations. Please go ahead.

Gar Jackson

Good afternoon, and welcome to the Tilly's Fiscal 2023 Third Quarter Earnings Call. CEO; company's Henry, a results and will and Q&A President the discuss and Thomas, and EVP Michael CFO, session. Ed then host

visit XX call, of recorded call copy Investor section, tillys.com. find shortly a of a conclusion earnings replay days. also same release, For for of be the the to Tilly's From the this Relations will the company's the please section after website you next at of press the able

made during and various be from call these that of Certain November you judgment will forward-looking based and factors materially this reflect Tilly's business. on Accordingly, forward-looking may should analysis today, statements. on statements Tilly's current expectations differ as not only affecting reliance actual place XX, XXXX, results undue

the XXXX uncertainties that referenced discussion release, quarter with our SEC disclaimer For in associated forward-looking see as well the fiscal thorough statements which that other regarding furnished on statements, the forward-looking as filings a our Xrd more risks with in and SEC please disclaimer. today the to Form earnings X-K is included of is any

remarks. Today's over now limited call hour prepared X will turn a will Q&A our after the to include call to session Ed. and be I

Edmond Thomas

everyone, for Thanks, and thank Gar. joining Good afternoon, you us today.

believe expenses. I us, efforts inventory and and demographic. for managing Despite pre-teen of significant to headwind a young teen adult sales protecting on proud that environment towards a continue inflation remains margins, our our what We young discretionary controlling spending product family, for am challenging team's remains

expectations margins lowering than anticipated. earnings second from improvement achieving operating expenses our stronger results product a and and third Our represent to quarter and our exceeded due results quarter more we primarily sequential first

negative of need-driven After quarter August the with period. amid declined a peak in back-to-school the X.X%, comp starting sales store the

digits decelerated in of post October. double in Our back-to-school period negative comp sales the each and to sequentially September

traffic a reduced across to compared negative range last all all For X-point year. comped customer formats the geographic markets with within quarter, store

transaction footwear value year's From all comped transaction high Total the and was during quarter. higher last down a negative volume slightly quarter. girl's was while the comped merchandising apparel third perspective, positive, while than average departments other in single digits, third

the the had challenging believe within as enough and we identified tees areas. we have across believe product apparel. performance lacking on we accessories, to our newness content business we that look finish customer quickly that graphic backpack fashion and acknowledging area women's our working XXXX. Within into as fiscal declines for for been XXXX And in overcome our environment us been that While wasn't to remains has men's of improve opportunities weakness some demographic, part women's an to we we are we strong sufficient fix as other can. certain both issues overall. have in departments We

In we during end stores terms additional and Thanksgiving. year of the natural upon We of expect X opened X new expiration. stores of X near stores store fiscal real ahead estate, quarter close the the currently lease just to an third

this opening anticipate closure have X currently we new XXXX, one and store known time. fiscal For at stores only

We to have XX% almost XXXX actions nearly our store of XXX consider for lease fiscal portfolio. affecting

that lease terms. current to aggressive and conditions we our under margins be in acceptably stores where operating are, productive Given current plan exiting not the are

and is Our $XX and approximately new preliminary inclusive distribution fiscal technology enhancements. expectation total expenditures ongoing stores million, for of XXXX capital

last XX. X.X% year's XXXX. through including comparable November comparable e-com for Turning relative to XXXX, decreased by physical comps sales, the both up fourth down period. XX.X%, stores XX% e-com store with quarter and while Total was fiscal net to

of the in the quarter first weeks over continued into final the third of negative we back-to-school weeks the the comps period saw double-digit X The post fourth X quarter.

to through began part Friday days improve the Monday. Thanksgiving seasons, business more taken including promotional Based Day comp trend period. weeks trend-wise we by in the down driven December to the the in from We in Christmas. for than part X.X% weekend, growth again final may during that Black have period fiscal our X Cyber into historically expect on recent we stance positive comp this X-day the business was However, slow sales November, aggressive a improving of believe our sales holiday early of in before of final recent our turn this leading

by We trends improvement to business to over that are diligently and going the working X accelerate forward. sequential our the in encouraged attempt are improvement last overall quarters

operating the discuss detail. Mike call I quarter fourth our now over results to outlook to Mike? quarter turn and more our third in

Michael Henry

Thanks, Ed.

compared decreased last operating were X.X%. total to decreased Comparable e-commerce, net matching the and X%. decreased ended net net were a both of a third including stores, million, from third sales. of quarter since increase with sales by net physical total and total $XXX.X stores physical of X of sales third last XX.X% year year's the sales while represented e-commerce sales, stores X.X% Net and follows: as by net XXX year, results quarter sales, Our represented net of by end We X.X% XX.X% last stores decrease quarter.

compared within XX as decreasing occupancy deleveraged sales net despite net points increased and year common and distribution by XX.X% stores last were by X collectively. partially Gross of last was additional basis to maintenance by of $X Reduced area expenses, including net Buying, XX.X% million lower a higher expenses result and on of compared sales sales margin, costs to buying, offset year. occupancy freight costs occupancy overall. distribution distribution net costs

sequentially below year basis first just points XXX and year to this points XX basis compared compared by improved were the second margins to quarter XX and the by points last basis Product quarter.

net last related million, attributable of corporate were of marketing benefits XX.X% or sales in Primary asset compared Total XX.X% net payroll $X.X store SG&A impairment million charges $X.X store $X.X and of expenses million combined to expenses increases $XX.X million. sales SG&A expenses and to $XX.X of of or year. million were noncash and

of loss year. of sales last net of or result sales a primarily net $X.X income Operating rates year. $X.X or year, million as was Other earning our income on compared marketable securities million last of to $X.X this million operating million higher X.X% of X.X% to compared return was $X.X

Income shares $XX.X net income share tax $X.X year. last million $X.XX benefit compared year million XX.X% million or loss loss $X.X million million or or was tax was year. of compared income $X.XX of this XX.X% $X.X pretax pretax per of Net share were last Weighted average $XX $X.X million expense per to income to year. to of diluted compared or last

were outstanding balance third debt last with million We in quarter and quarter outstanding. Total the cash up to the with expenditures third year-to-date marketable compared We to cost securities capital of year year. Turning sheet. compared foot $XX.X total last square ended no million million inventories compared per $XX This to foot X.X% $XXX and at our and square ended no debt year. to million year. per this inventories unit X.X% $XX.X down last

to year. outlook to it extra the Please Turning week, quarter fourth weeks note last includes quarter for XX-week year's our fourth making that compared XX quarter of a XXXX. this an fiscal

current and to approximately an decrease $XXX the range million, range sales sales X%. to our on results be net historical quarter comparable translating to trends, for anticipate in in approximately fiscal fourth million $XXX sales our net of of estimated to Based total quarter-to-date and we X% net currently the XXXX comparable the of

income to our SG&A the total approximately decrease million estimated approximately $X.XX of in to the We to million our be one stores, to $X.XX XX% expect a $XX net XXXX million, range $X currently of loss of to to expect be in $X pretax XXXX. shares store average We share to and XX.X from approximately XXX be based on tax per be $XX diluted approximately million, estimated million. the fiscal end loss fiscal range rate with of end to of weighted

Operator, go now to Q&A session. we'll our

Operator

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

Jeff Van Sinderen

I speak a And more concentration you've now got various maybe other in little maybe seeing just you tees, I'm in feel terms where CMO maybe content. working merchandise I that can you areas mentioned to bit, new I graphic has you're merchandise about your more opportunity, that improve you been you're of like on know some mentioned for there guess you wondering that know the categories. opportunities but content. there's things

Just any there. you can other add color

Edmond Thomas

biggest didn't the say single women's opportunity would the is where was good. actually category we on We fashion I have we content Jeff, have enough. have tops. That is just

any be on [ ] of time long Laura of I working of very tops. been underperforming there all. categories job category fashion like would which doing say but has the been particular changes categories a think that graphic seasonality a I at timing strong So tees, are into a more from is also shifting of certain to better things any wouldn't has for drastic goods the that one

Jeff Van Sinderen

And mentioned Okay. you then Good. Friday around I you higher comps. bit this were and promotional activity a positive weekend the year Black know little

how Friday on So well. moved versus have cadence the stuff maybe year the on inventory Black in you for selling planned around the weekend. well last In positioned touch moving this year talk QX. maybe a that's inventory, that remainder of words, just you're you couple areas things just or are well in And can enough the promotional about other of of

Edmond Thomas

our percent with done And off across And was Inventory historically was, approach a from is shape, percent sure. for process single opposed couple as Jeff. across to for and days different biggest terms of business the We a definitely across categories in our business I the into peers simplified it -- much but of we all what of weren't in as simplified BOGOs. that of us. would say pretty as simplified customers. aggressive buying made a promotions drive that change is were that one we positive what lot their good for it we've pretty off we

Michael Henry

inventory at a it our Overall, time this age year than is was ago. better Yes.

of promo and about And cadence. level So about feel good also content we QX inventory you sit of as right asked now. inventory then here that

coming between weekend of on would the and here we planned fairly Christmas with be are big so have up various And that consistent traditionally. that promotions the in days we've biggest in it done the days what season

Jeff Van Sinderen

more versus BOGO the Black since shifting Okay. percentage doing though off the work those to Friday weekend? Are of those on you

Edmond Thomas

It's mixed, Jeff.

Operator

MKM. from comes ROTH next with The question Koranda Matt

Michael Zabran

just the you more Could performance Mike Matt. better divergence stores, websites a I assume Zabran call store the but out more promotions dynamics talk translating the other versus e-commerce for comps comp? little quarter-to-date relative about any here? to between on to to just bit through

Michael Henry

It's been a gap. of kind point We divergence of to to Nothing normally kind and quite stores that of surprising between to wide that e-com. specific honestly, see see to. us, don't

shop to online just I'm of opposed been going stage honestly, if It's customer the not divergence. to early sure physically holiday as this stores. surprising deciding So a at of season to it's convenience people

There because little is of end-of-life of kind a level lot stores online. a clear goods we higher do our red to tag online in than promotions of tend

So there that's there is a pretty a year all level than of promos in usually. is online the stores, case generally, long, but higher consistently

Edmond Thomas

a out full and assortment in there's physical it, typical. than not. And I has We orientated part convenience pretty And store that's every clearly more store Yes, of there. been challenge been a online. traffic in think, offer

So the very were choices similar.

it choice in. was channel shop they wanted probably think I to what of customer

Michael Zabran

it. guideposts or looking comps? back we growth of get on any are guess see to makes Got with what It to I line inventory, inventory in sense. health just

Michael Henry

X% on far a now. we the X% quarter change Yes. versus and It's too the not down I off unit minus basis, mean comp. ended

And too I was is So year. apart this it not more question, right mentioned earlier time speak. to inventory as at last Jeff's than as now we it's far current

we quarter as as with So down. if expect to close to comp to sales we a as get the comp indicated our always we're outlook, year can. comp end endeavor fourth have by going to negative inventory we'd inventories And

Michael Zabran

Makes me. sense. one for Last it. Got

a normal fiscal just Four can Does a little store so represent little bit so help lower around bit us behind more you 'XX, stores that For have on might cadence. macro? the more outlook? is hundred behind the more just or what's understand a it Or lease earlier call? Is referenced the in view actions more consumer? that you cautious the it you seems

Edmond Thomas

the of being driven totally the because consumer environment going of is by -- cautious be. what It's what we being we're -- to uncertainty

we'll when that for environment for there's stores be more in negotiated. pipeline us there, consistency have that targeted when position several And accelerate that that in a are good growth being We expansion to are we decide the that comes. time in out the

Operator

next Shapiro Tracker. comes with the The question from -- Retail Marni

Marni Shapiro

on up questions. you to just were follow I have I a did couple the want of having. conversation

moved you It the season, the and you holiday stores. effective it and caught the out more fewer have it over the really eye, promotions made about I'm it. and about my easier of they saw pictures to number the thought or by percent the curious was, on I First, a wrote buy in same off. I shop? way, people just door to for were people Do if units, difference? it units go

Michael Henry

It transaction the was up average lower units ended value and lower.

get and much managers by that well the generally So district feedback was easier is our because assortment. we received store so to about did customers BOGOs think and than manage throughout teams from it it

of and to transaction a end units transaction. per but how So get terms up it the it, customers value response it seemed viewed did our good in eroding

Marni Shapiro

like when to But That do in math store. the makes sense. I shoppers they're that think always don't

I'm -- I tops, of bit they're was because little the good. guys is if what content between it's your numbers just then you buying? when really have had them, if So I'm on I'm which always at is And even your in find easier a referenced, side, in-store. there looking difference curious site, make fashion for Because And you in you a the women's helps. online kind -- too curious, it I it women's can and on

to really find things have and like then online in is stuff -- to do not And And this and easy you going like easy bit your things which and issues probably of find vest them. items alluding has is find crop find the the stores, I all and to get some stores. to little puffer so that, she I'm those to the a on it's in always work to of

So if I'm door versus of stores? seeing curious or more out fashion that be driving if you're going stores, the go on than more online might what's in in online

Edmond Thomas

have was certainly, positive improved we merchandise But we've we've it's assortment. particular seen customer it been to results it's for made been that. the a online. better the -- We're than very the done of shop I as opposed to how not to matter because in just side, visual But -- as stores we've targeted Actually, result the changes us. some online made No. consistently merchandising and yet. of women's But or think the a where chose improving really

Michael Henry

just stores back It's of e-com of each comps the at When that seen you were look November in the third we've quarter, X% been month this and divergence. within other.

And consistent stores very to e-com little So honestly. the suddenly, November, we and and then divergence have quarter. we and surprising get throughout to performance a third emerged between this us, it was

Marni Shapiro

little a also definitely that's Yes, then And I'm curious. just strange.

especially think especially Because of Some brands good. seeing even just Are had out junior pretty better own like because your but you've sell-throughs. some pressure own good of side good, side, the your the -- versus you has junior fashion brand has on coming side, overall that junior really brands? you're on seen, been on the I other the sales your

-- up able in your doing? market the -- goods that the outpacing with there you're make with is branded brand? if able curious kind just that I'm your And what goods what you're market to are so are gaps own And of

Edmond Thomas

our or best voids be in brand the what RSQ our have are designed in think brands. It's brands to and our it's where crosses outside to offered able own us intentionally categories. brands. And Well, from it from fill there over developed good, multiple secure to and what we continues we're

So stays it's time any never always a point balancing act. there's same one where forever. the And in it

team side for adjust And the around they a while, It's and we accordingly. they've that in changes, well know pretty just have women's and and a think the they market doesn't. experienced it I been

Operator

Seaport Mitch from with Kummetz next The comes Research. question

Mitchel Kummetz

fashion Ed, how graphic a sorted well, comp so, assortment, doing mentioned potentially enough but have like women's if on you can And tops tees being don't get weak. that you you once adjust? Like benefit out? the quickly that to you is

Edmond Thomas

a lead lot can and almost times We shoes, apparel. every are in adjust quickly category. bottoms I mean, longer than pretty

that but we a tops again on impact -- underrepresented. made positively the did really the will the maybe were where in think and was of the where we adjust categories changes we business so saw felt we've we where lot opportunity And fly in we

Mitchel Kummetz

in that, if or weak it's concerns Any tees any been some that issues graphic terms there? more on might that markdowns inventory require of

Edmond Thomas

really. we of think types Not the our of I some licenses on that we I shifted mean went after. focus that

-- been will so adjust, these don't no because there. of But get into We and We in didn't real adjust. just changes. sports. move I will liability enough we business -- has some quick categories probably fresh -- graphics the the were at can all positive categories, somewhat so music like didn't for markdown And to And surprised we of these us we some and for there's long. we

Mitchel Kummetz

Okay. it of there I trend that? Is of on issues, now? availability? And in quarter. then more chain there positive cleared issues, supply vendors the some that's I in product comp kind up. the just know What's a driving footwear been better that footwear, had know is Or about

inventory, are there So it's have as just that or seeing better you better trend well? you

Edmond Thomas

more Nike. certain I brands of think like availability it's

Michael Henry

Converse Reebok. and And

Edmond Thomas

Yes. New which certainly We've availability. of new a Nike, seen brands, we've then us. brands -- to assortment, improvement that And part in we in time, couple inventory like of is We've us. new Balance. a seen a but to carried new brought Recently for not major the we saw long the

Mitchel Kummetz

the product then Mike, on And lastly, margin. just

are said think about in down for it thinking was QX? I bps you XX quarter. How you the that

Michael Henry

not quarter down, we of at at the margins know. be to of we if up. in at end currently our expect slightly what what be our might different range, actually this than we're product the end just we much If based third our time slightly saw we're bottom -- the on better would We'll outlook, we

Operator

turn Thomas conference over our I'll the closing remarks. question-and-answer will session. to back for This conclude any Ed

Edmond Thomas

forward in a you XXXX. results evening, for us you We Have sharing Thank fourth on all joining mid-March today. call good the quarter to look with our everyone.

Operator

for The Thank conference today's concluded. has attending presentation. you now

You may now disconnect.

Tilly's (TLYS) 30 Nov 232024 Q3 Earnings call transcript