Tilly's (NYSE:TLYS) Reports Q1 In Line With Expectations But Stock Drops

Adam Hejl /
2024/06/06 4:31 pm EDT

Young adult apparel retailer Tilly’s (NYSE:TLYS) reported results in line with analysts' expectations in Q1 CY2024, with revenue down 6.3% year on year to $115.9 million. The company expects next quarter's revenue to be around $162.5 million, in line with analysts' estimates. It made a GAAP loss of $0.65 per share, down from its loss of $0.40 per share in the same quarter last year.

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Tilly's (TLYS) Q1 CY2024 Highlights:

  • Revenue: $115.9 million vs analyst estimates of $115.6 million (small beat)
  • EPS (non-GAAP): -$0.48 vs analyst estimates of -$0.46
  • Revenue Guidance for Q2 CY2024 is $162.5 million at the midpoint, roughly in line with what analysts were expecting
  • Gross Margin (GAAP): 21.8%, down from 38.9% in the same quarter last year
  • Free Cash Flow was -$27.83 million compared to -$20.45 million in the same quarter last year
  • Locations: 246 at quarter end, in line with the same quarter last year
  • Same-Store Sales fell 8.6% year on year
  • (-17.5% in the same quarter last year)
  • Market Capitalization: $171.9 million

"Our business continues to face many headwinds from the macro environment, but we believe we are making progress on improving our product margins and driving greater customer engagement through our marketing efforts," commented Hezy Shaked, Co-Founder and Interim President and Chief Executive Officer.

With an emphasis on skate and surf culture, Tilly’s (NYSE:TLYS) is a specialty retailer that sells clothing, footwear, and accessories geared towards fashion-forward teens and young adults.

Apparel Retailer

Apparel sales are not driven so much by personal needs but by seasons, trends, and innovation, and over the last few decades, the category has shifted meaningfully online. Retailers that once only had brick-and-mortar stores are responding with omnichannel presences. The online shopping experience continues to improve and retail foot traffic in places like shopping malls continues to stall, so the evolution of clothing sellers marches on.

Sales Growth

Tilly's is a small retailer, which sometimes brings disadvantages compared to larger competitors that benefit from economies of scale.

As you can see below, the company's revenue was flat over the last five years as its store footprint remained relatively unchanged.

Tilly's Total Revenue

This quarter, Tilly's reported a rather uninspiring 6.3% year-on-year revenue decline to $115.9 million in revenue, in line with Wall Street's estimates. The company is guiding for revenue to rise 1.6% year on year to $162.5 million next quarter, improving from the 5% year-on-year decrease it recorded in the same quarter last year.

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Same-Store Sales

Same-store sales growth is an important metric that tracks demand for a retailer's established brick-and-mortar stores and e-commerce platform.

Tilly's demand has been shrinking over the last eight quarters, and on average, its same-store sales have declined by 12.2% year on year. This performance is quite concerning and the company should reconsider its strategy before investing its precious capital into new store buildouts.

Tilly's Year On Year Same Store Sales Growth

In the latest quarter, Tilly's same-store sales fell 8.6% year on year. This decrease was an improvement from the 17.5% year-on-year decline it posted 12 months ago. It's always great to see a business improve its prospects.

Key Takeaways from Tilly's Q1 Results

It was good to see Tilly's beat analysts' gross margin expectations this quarter, but that's where the good news ends. Its EPS and earnings forecast for the next quarter missed analysts' expectations, disappointing investors. Overall, the results could have been better. The company is down 6.7% on the results and currently trades at $5.41 per share.

Tilly's may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.