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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Tillys Inc | NYSE:TLYS | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.01 | -0.17% | 5.97 | 6.09 | 5.90 | 6.09 | 26,559 | 01:00:00 |
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FORM 10-K
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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TILLY’S, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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45-2164791
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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10 Whatney, Irvine, CA
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92618
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Class A Common Stock, $0.001 par value per share
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
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Large accelerated filer:
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¨
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Accelerated filer:
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x
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Nonaccelerated filer:
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company:
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¨
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Emerging growth company:
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¨
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DOCUMENTS INCORPORATED BY REFERENCE
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16,
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our ability to successfully open new stores and profitably operate our existing stores;
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our ability to attract customers to our e-commerce website;
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our ability to efficiently utilize our e-commerce fulfillment center;
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effectively adapting to new challenges associated with our expansion into new geographic markets;
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our ability to establish, maintain and enhance a strong brand image;
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generating adequate cash from our existing stores to support our growth;
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identifying and responding to new and changing customer fashion preferences and fashion-related trends;
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competing effectively in an environment of intense competition both in stores and online;
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containing the increase in the cost of mailing catalogs, paper and printing;
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the success of the malls, power centers, neighborhood and lifestyle centers, outlet centers and street-front locations in which our stores are located;
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our ability to attract customers in the various retail venues and geographies in which our stores are located;
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our ability to adapt to downward trends in traffic for our stores and changes in our customers' purchasing patterns;
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adapting to declines in consumer confidence and decreases in consumer spending;
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our ability to adapt to significant changes in sales due to the seasonality of our business;
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our ability to compete in social media marketing platforms;
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price reductions or inventory shortages resulting from failure to purchase the appropriate amount of inventory in advance of the season in which it will be sold;
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natural disasters, unusually adverse weather conditions, boycotts and unanticipated events;
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changes in the competitive environment in our industry and the markets we serve, including increased competition from other retailers;
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our dependence on third-party vendors to provide us with sufficient quantities of merchandise at acceptable prices;
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increases in costs of energy, transportation or utility costs and in the costs of labor and employment;
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our ability to balance proprietary branded merchandise with the third-party branded merchandise we sell;
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most of our merchandise is made in foreign countries, making price and availability of our merchandise susceptible to international trade conditions;
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failure of our vendors and their manufacturing sources to use acceptable labor or other practices;
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our dependence upon key executive management or our inability to hire or retain the talent required for our business;
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our ability to effectively adapt to our rapid expansion in recent years and our planned expansion;
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failure of our information technology systems to support our current and growing business, before and after our planned upgrades;
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disruptions in our supply chain and distribution center;
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our indebtedness and lease obligations, including restrictions on our operations contained therein;
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our reliance upon independent third-party transportation providers for certain of our product shipments;
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our ability to increase comparable store sales or sales per square foot, which may cause our operations and stock price to be volatile;
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disruptions to our information systems in the ordinary course or as a result of systems upgrades;
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our inability to protect our trademarks or other intellectual property rights;
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acts of war, terrorism or civil unrest;
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the impact of governmental laws and regulations and the outcomes of legal proceedings;
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our ability to secure the personal financial information of our customers and comply with the security standards for the credit card industry;
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our failure to maintain adequate internal controls over our financial and management systems; and
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continuing costs incurred as a result of being a public company.
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Destination retailer with a broad and differentiated assortment.
We believe the combined depth and breadth of apparel, footwear and accessories offered at our stores exceeds the selection offered at many other specialty retailers. We offer an extensive selection of over 400 third-party lifestyle brands over the course of a given year, which are complemented by our proprietary brands. Our merchandise includes a wide assortment of brands, styles, colors, sizes and price points to ensure we have what our customers want every time they visit our stores. We offer a balanced mix of merchandise across the apparel, footwear and accessories categories serving young men, young women, boys and girls. We believe that by combining proven and emerging fashion trends and core style products with a vibrant blend of carefully selected music and visuals, we provide an in-store experience that is authentic, fun, and engaging for our core customers. We believe that our differentiated in-store environment, evolving selection of relevant brands, and broader and deeper assortment positions us as a retail destination that appeals to a larger demographic than many other specialty retailers and encourages customers to visit our stores more frequently and spend more on each trip.
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Dynamic merchandise model.
We believe our extensive selection of third-party and proprietary merchandise allows us to identify and offer several trends simultaneously, offer a greater range of price points, and manage our inventories more dynamically. By closely monitoring trends and shipping product to our stores multiple times per week, we are able to adjust our merchandise mix based on store size and location. We also keep our merchandise mix relevant by introducing emerging brands not available at many other retailers. Our merchandising capabilities enable us to adjust our merchandise mix with a frequency that promotes a current look to our stores and website and encourages frequent visits.
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Flexible real estate strategy across real estate venues and geographies.
Our stores have proven to be successful in different real estate venues and geographies. We operate stores in malls, power centers, neighborhood and lifestyle centers, outlet centers and street-front locations across 85 markets in 32 states. We believe our success operating in these different retail venues and geographies demonstrates the portability of the Tillys brand.
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Multi-pronged marketing approach
. We utilize a multi-pronged marketing strategy to connect with our customers and drive traffic to our stores and online platforms. We distribute catalogs, newspapers and postcards to potential and existing customers from our proprietary database to familiarize them with the Tillys brand, our products, and to drive traffic to our stores and website. We offer an integrated digital platform between our online and mobile applications for our customers to shop how and when they like and to drive further connection with them. We partner and collaborate with our vendors on exclusive, compelling in-store events and contests to build credibility with our target customers, actively involve them in our brands, and enhance the connection between Tillys and our customers' active lifestyle. We use social media to communicate directly with our customers while also encouraging customers to interact with one another and provide
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•
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Systems and distribution/fulfillment infrastructure to support growth.
We have previously made investments in distribution, fulfillment and allocation infrastructure that we believe are adequate to support continued growth for several years. Our distribution center allows us to quickly sort and process merchandise and deliver it to our stores in a floor-ready format for immediate display. We also have a dedicated e-commerce fulfillment center to support our future online growth potential. Our systems enable us to respond to changing fashion trends, manage inventory in real time, and provide a customized selection of merchandise at each location. We believe our distribution and fulfillment infrastructure can support significant growth in our stores and e-commerce platform with minimal incremental capital investment.
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Experienced management team.
Our senior management team, led by Hezy Shaked and Edmond Thomas, has extensive experience across a wide range of disciplines in the specialty retail and direct-to-consumer industries, including store operations, merchandising, distribution, real estate, and finance. Mr. Shaked, our Co-Founder, Executive Chairman of the Board of Directors, and Chief Strategy Officer, plays an important role in developing our long-term growth initiatives and cultivating our unique culture. Mr. Thomas, our President and Chief Executive Officer, rejoined Tillys in October 2015 with over 30 years of retail experience. He previously served as our President and Co-Chief Executive Officer from September 2005 to October 2007.
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Drive Comparable Store Sales.
We seek to maximize our comparable store sales by consistently offering new, on-trend and relevant merchandise, including exclusive and proprietary branded merchandise, across a broad assortment of categories, increasing our brand awareness through our multi-pronged marketing approach, providing an authentic store and online experience for our core customers, and maintaining a high level of customer service. We believe the combination of these factors, together with the operating strategies described below, will improve our comparable store sales results over time.
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Increase Our Operating Margins.
We believe we have the opportunity to drive operating margin expansion through scale efficiencies and continued process improvements. We believe comparable store sales increases will permit us to take advantage of largely fixed occupancy costs, favorable buying costs from larger volume purchases, leverage of our costs for store management and corporate overhead, as well as the fixed portion of shipping and handling costs over higher sales volumes. In addition, we expect to improve operating margins and support growth by leveraging previous investments in infrastructure, including our dedicated fulfillment center for e-commerce, upgraded e-commerce platform, ongoing investments to upgrade our point-of-sale, merchandise allocation and merchandise planning systems. We also will continue to use established business processes to identify and execute initiatives focused on lowering our unit costs and improving operational efficiency throughout our organization.
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Continue Growing E-Commerce.
We believe our e-commerce platform is an extension of our brand and retail stores, providing our customers a seamless shopping experience. Our e-commerce platform allows us to provide our customers with extensions of the same assortment offered in our brick-and-mortar stores, reach new customers, and build our brand in markets where we currently do not have stores. For example, we generate e-commerce sales in all 50 states although we have physical stores in only 32 states. Our target customer regularly shops online and via mobile devices in addition to visiting stores, giving us a continued opportunity to grow our e-commerce platform over time. In fiscal 2017, we commenced implementation of a new platform for our e-commerce website. In fiscal 2018, we plan to upgrade our mobile application to provide an enhanced customer experience. Key factors we expect to drive growth include continuing our catalog, online and mobile application marketing efforts, enhancing the efficiency and responsiveness of our digital capabilities, and supplementing the assortment available in our brick-and-mortar stores with additional online-only styles. We also expect to expand marketing efforts and build brand awareness in the communities surrounding our existing stores to drive growth in both brick-and-mortar and e-commerce sales.
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•
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Improve Inventory Management.
We believe we can improve our operating results through improved micro-merchandising based on specific store characteristics. We regularly update individual store profiles for every store to highlight the differences in brand performance, gender penetrations, and customer interests that exist within our fleet of stores. By adapting allocation strategies to capitalize on these individual store differences, we believe we can improve sales results in our existing store base.
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Develop Omni-Channel Capabilities.
We have a direct-to-consumer program that allows online orders to be fulfilled and shipped directly to our customers from our brick-and-mortar stores when inventory is otherwise unavailable in our e-commerce fulfillment center. In addition, during fiscal 2017, we invested in additional omni-channel capabilities allowing for online orders to be picked up in stores at our customers' discretion, allowing us to satisfy an order from existing inventories within our stores as well as shipping product from our e-commerce fulfillment center to our stores. We believe these omni-channel capabilities will drive additional traffic to our stores and increase sales opportunities with customers who come to the store to pick up their online orders.
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•
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Reinvest in Existing Stores.
We believe that re-investing in our existing stores is strategically important to enhance customer loyalty, elevate the customer experience and, in turn, drive additional comparable store sales. We have remodeled or refreshed many of our stores in recent years, and intend to continue to do so in the future to keep the physical representation of the Tillys brand updated and compelling for our customers.
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Real Estate Opportunities.
With 219 total stores at the end of fiscal 2017, we believe there are numerous attractive opportunities for Tillys to continue to open new stores in the future. During fiscal 2018, we plan to open up to 15 new stores. Additionally, we expect to open three RSQ-branded pop-up stores to improve the brand awareness of both Tillys and our proprietary RSQ brand. With regard to existing stores, we have an aggregate of approximately 120 lease decisions to make over the course of fiscal 2018 and 2019 covering a range of stores across all markets. These lease decisions include lease extension options, lease kick-out options, and lease expirations that require negotiated renewals. In each case, our real estate decisions will be driven by the overarching goal of improving our profitability. As a result, we may likely close stores from time to time if acceptable levels of profitability cannot be obtained through occupancy negotiations with landlords.
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• AYC
• Adidas
• Billabong
• Brixton
• Converse
• Diamond Supply
• Dickies
• Ethika
• G-Shock
• Hurley
• HUF
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• Jansport
• Levi’s
• LRG
• Neff
• Nike SB
• Nixon
• O’Neill
• Primitive
• RayBan
• Riot Society
• Rip Curl
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• Roxy
• RVCA
• Salty Crew
• Santa Cruz
• Spy
• Stance
• The North Face
• Vans
• Volcom
...and many more
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•
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perform comprehensive analysis of sales trends from our stores and e-commerce site;
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perform in-store visits and gather feedback from our customers and our staff;
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maintain regular dialogue with our existing vendor network and potential new vendors;
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utilize trend and color forecasting services;
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participate in trade shows and action sport related events;
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review trade publications; and
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evaluate merchandise assortments offered by other retail and online merchants.
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2017
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2016
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2015
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Regional Mall
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119
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114
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114
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Off-Mall
(1)
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85
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90
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90
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Outlet
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15
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19
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20
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219
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223
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224
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(1)
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Includes power centers, neighborhood and lifestyle centers and street-front locations.
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State
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Number of
Stores
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State
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Number of
Stores
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Arizona
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19
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New Jersey
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5
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California
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91
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New Mexico
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1
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Colorado
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5
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New York
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4
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Florida
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20
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North Carolina
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2
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Georgia
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|
2
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Ohio
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4
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Illinois
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6
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Oklahoma
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3
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Indiana
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5
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Oregon
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2
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Iowa
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1
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Pennsylvania
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3
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Kansas
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2
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Rhode Island
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1
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Maryland
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1
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South Dakota
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1
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Massachusetts
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2
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Tennessee
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4
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Michigan
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3
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Texas
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9
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Minnesota
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2
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Utah
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3
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Missouri
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2
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Virginia
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4
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Nebraska
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1
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Washington
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2
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Nevada
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6
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Wisconsin
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3
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Fiscal Year
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Stores
Opened
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Stores
Closed
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Total Number
of Stores at
End of Period
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2013
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28
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1
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195
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2014
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19
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2
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212
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2015
|
15
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3
|
|
224
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2016
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3
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4
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223
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2017
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2
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6
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219
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67
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16
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•
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Catalog, Newspaper Ads, Postcards.
We view our catalog, newspaper ads and postcards in print format and our digital-format catalog primarily as sales and marketing tools to drive online and store traffic from both existing and new customers. We also believe our marketing materials reinforce the Tillys brand and showcases our comprehensive selection of products in settings designed to reflect our brand’s lifestyle image. We send these marketing materials, which include coupons that can be redeemed at stores or online, to the customers in our database several times a year, primarily around key shopping periods such as spring break, back-to-school, and the winter holidays.
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Brand Partnerships.
We partner and collaborate with our vendors for exclusive events such as autograph signings, in-store performances, contests, demos, giveaways, shopping sprees and VIP trips. We organize a variety of events, many involving musicians, celebrities and athletes in the entertainment, music and action sports industries. Through brand partnerships such as these, we are able to connect with and engage our customers in an exciting, authentic experience.
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Social Media.
We believe our core customers rely heavily on the opinions of their peers, often expressed through social media. Therefore, we use our website blog, as well as Facebook, Instagram, Twitter and Snapchat posts, as a viral marketing platform to communicate directly with our customers while also allowing customers to interact with one another and provide feedback on our events and products.
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•
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Loyalty Program.
During fiscal 2016, we launched an improved and rebranded customer loyalty program designed to interact with our customers in a more direct and targeted manner, and to provide more insight into their shopping behaviors and preferences. This program offers more frequent and compelling rewards to our most loyal customers than our previous program.
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Community Outreach.
Through our “We Care Program” and in partnership with our vendors, we support and participate in various academic, art, and athletic programs at local schools and other organizations in communities surrounding our stores. We also support Tilly’s Life Center, founded by our co-founder, Tilly Levine, which provides underprivileged youth a healthy and caring environment to help create a well-defined sense of self, cultivate community mindedness and release negative emotional stress.
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Email Marketing.
We utilize email marketing to build awareness, drive traffic to our stores and online platform and to promote local in-store promotions and events. We periodically send emails to the customers in our proprietary database to introduce new brands and products, offer promotions on select merchandise, highlight key events and announce new store openings.
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identifying suitable store locations, the availability of which is beyond our control;
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obtaining acceptable lease terms;
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sourcing sufficient levels of inventory;
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selecting the appropriate merchandise that appeals to our customers;
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hiring and retaining store employees;
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assimilating new store employees into our corporate culture;
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effectively marketing new stores’ locations;
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avoiding construction delays and cost overruns in connection with the build-out of new stores;
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managing and expanding our infrastructure to accommodate growth; and
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integrating the new stores with our existing buying, distribution and other support operations.
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diversion of traffic from our stores;
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liability for online content;
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government regulation impacting the Internet; and
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risks related to the computer systems that operate our website and related support systems, including computer viruses, electronic break-ins, system errors or failures, and similar disruptions.
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that a majority of our Board of Directors consist of independent directors, as defined under the rules of the NYSE;
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that we have a corporate governance and nominating committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and
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that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
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•
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our certificate of incorporation includes a provision authorizing our Board of Directors to issue blank check preferred stock without stockholder approval, which, if issued, would increase the number of outstanding shares of our capital stock and could make it more difficult for a stockholder to acquire us;
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•
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our certificate of incorporation provides that if all shares of our Class B common stock are converted into Class A common stock or otherwise cease to be outstanding, our Board of Directors will be divided into three classes in the manner provided by our certificate of incorporation. After the directors in each class serve for the initial terms provided in our certificate of incorporation, each class will serve for a staggered three-year term;
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•
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our certificate of incorporation permits removal of a director only for cause by the affirmative vote of the holders of a majority of the voting power of the company once the Board of Directors is divided into three classes and provides that director vacancies can only be filled by an affirmative vote of a majority of directors then in office;
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•
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our amended and restated bylaws require advance notice of stockholder proposals and director nominations; and
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Section 203 of the Delaware General Corporation Law may prevent large stockholders from completing a merger or acquisition of us.
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High
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Low
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||||
Fiscal 2017:
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Fourth Quarter
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$
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16.57
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$
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11.41
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Third Quarter
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$
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12.87
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$
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8.42
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Second Quarter
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$
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11.43
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$
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8.43
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First Quarter
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$
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13.70
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$
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8.02
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Fiscal 2016:
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||||
Fourth Quarter
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$
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15.29
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|
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$
|
8.74
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Third Quarter
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$
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10.86
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|
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$
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5.53
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Second Quarter
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$
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6.69
|
|
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$
|
5.49
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First Quarter
|
$
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8.72
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$
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6.18
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Fiscal Year Ended (1)
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||||||||||||||||||
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February 3,
2018
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January 28,
2017 |
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January 30,
2016 |
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January 31,
2015 |
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February 1,
2014 |
||||||||||
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(in thousands, except per share data)
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Consolidated Statements of Income Data:
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|
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||||||||||
Net sales
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$
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576,899
|
|
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$
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568,952
|
|
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$
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550,991
|
|
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$
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518,294
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|
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$
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495,837
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Cost of goods sold
(2)
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401,529
|
|
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400,493
|
|
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383,745
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|
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362,762
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|
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345,015
|
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|||||
Gross profit
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175,370
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|
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168,459
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|
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167,246
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|
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155,532
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|
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150,822
|
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|||||
Selling, general and administrative expenses
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151,384
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|
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149,129
|
|
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149,150
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|
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132,343
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|
|
121,085
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|||||
Operating income
|
23,986
|
|
|
19,330
|
|
|
18,096
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|
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23,189
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|
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29,737
|
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|||||
Interest income (expense), net
|
1,223
|
|
|
418
|
|
|
52
|
|
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(14
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)
|
|
(9
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)
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|||||
Income before income taxes
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25,209
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|
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19,748
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|
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18,148
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|
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23,175
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|
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29,728
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|||||
Income tax expense
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10,509
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8,338
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|
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10,607
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|
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9,100
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|
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11,591
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|||||
Net income
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$
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14,700
|
|
|
$
|
11,410
|
|
|
$
|
7,541
|
|
|
$
|
14,075
|
|
|
$
|
18,137
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings per share of Class A and Class B common stock
|
$
|
0.51
|
|
|
$
|
0.40
|
|
|
$
|
0.27
|
|
|
$
|
0.50
|
|
|
$
|
0.65
|
|
Diluted earnings per share of Class A and Class B common stock
|
$
|
0.51
|
|
|
$
|
0.40
|
|
|
$
|
0.27
|
|
|
$
|
0.50
|
|
|
$
|
0.65
|
|
Weighted average basic shares outstanding
|
28,804
|
|
|
28,496
|
|
|
28,332
|
|
|
28,013
|
|
|
27,822
|
|
|||||
Weighted average diluted shares outstanding
|
29,074
|
|
|
28,529
|
|
|
28,402
|
|
|
28,078
|
|
|
28,116
|
|
|
Fiscal Year Ended
|
||||||||||||||||||
|
February 3,
2018 |
|
January 28,
2017 |
|
January 30,
2016 |
|
January 31,
2015 |
|
February 1,
2014 |
||||||||||
Operating Data (unaudited):
|
|
|
|
|
|
|
|
|
|
||||||||||
Stores operating at beginning of period
|
223
|
|
|
224
|
|
|
212
|
|
|
195
|
|
|
168
|
|
|||||
Stores opened during the period
|
2
|
|
|
3
|
|
|
15
|
|
|
19
|
|
|
28
|
|
|||||
Stores closed during the period
|
6
|
|
|
4
|
|
|
3
|
|
|
2
|
|
|
1
|
|
|||||
Stores operating at end of period
|
219
|
|
|
223
|
|
|
224
|
|
|
212
|
|
|
195
|
|
|||||
Comparable store sales change
(3)
|
1.0
|
%
|
|
0.5
|
%
|
|
1.2
|
%
|
|
(2.8
|
)%
|
|
(1.9
|
)%
|
|||||
Total square feet at end of period
|
1,668,008
|
|
|
1,703,144
|
|
|
1,704,031
|
|
|
1,622,156
|
|
|
1,513,138
|
|
|||||
Average square footage per store at end of period
|
7,616
|
|
|
7,637
|
|
|
7,607
|
|
|
7,652
|
|
|
7,760
|
|
|||||
Average net sales per brick-and-mortar store (in thousands)
(4)
|
$
|
2,258
|
|
|
$
|
2,188
|
|
|
$
|
2,219
|
|
|
$
|
2,250
|
|
|
$
|
2,396
|
|
Average net store sales per square foot
(4)
|
$
|
296
|
|
|
$
|
287
|
|
|
$
|
290
|
|
|
$
|
292
|
|
|
$
|
307
|
|
Capital expenditures (in thousands)
|
$
|
13,753
|
|
|
$
|
17,047
|
|
|
$
|
23,100
|
|
|
$
|
23,636
|
|
|
$
|
42,701
|
|
|
As of
|
||||||||||||||||||
|
February 3,
2018 |
|
January 28,
2017 |
|
January 30,
2016 |
|
January 31,
2015 |
|
February 1,
2014 |
||||||||||
|
(in thousands)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents and marketable securities
|
$
|
135,952
|
|
|
$
|
133,917
|
|
|
$
|
100,952
|
|
|
$
|
84,746
|
|
|
$
|
60,355
|
|
Working capital
|
107,423
|
|
|
129,819
|
|
|
110,965
|
|
|
94,394
|
|
|
77,331
|
|
|||||
Total assets
|
290,111
|
|
|
290,506
|
|
|
270,751
|
|
|
257,551
|
|
|
232,407
|
|
|||||
Total capital lease obligation
(5)
|
—
|
|
|
835
|
|
|
1,693
|
|
|
2,500
|
|
|
3,258
|
|
|||||
Stockholders’ equity
|
$
|
160,425
|
|
|
$
|
189,220
|
|
|
$
|
173,213
|
|
|
$
|
158,686
|
|
|
$
|
140,923
|
|
(1)
|
The fiscal year ended
February 3, 2018
included 53 weeks. The fiscal years ended
January 28, 2017
,
January 30, 2016
, January 31, 2015 and February 1, 2014 each included 52 weeks.
|
(2)
|
Includes buying, distribution and occupancy costs.
|
(3)
|
Comparable store sales are net sales from stores that have been open at least 12 full fiscal months as of the end of the current reporting period. A remodeled or relocated store is included in comparable store sales, both during and after construction, if the square footage of the store was not changed by more than 20% and the store was not closed for more than five days in any fiscal month. Comparable store sales include sales through our e-commerce platform but exclude gift card breakage income, deferred revenue from the loyalty program and e-commerce shipping and handling fee revenue. The comparable store sales change for the period ended February 3, 2018 includes the 53
rd
week in fiscal year 2017.
|
(4)
|
The number of stores and the amount of square footage reflect the number of days during the period that new stores were open. E-commerce sales, e-commerce shipping revenue, and gift card breakage income are excluded from our sales in deriving net sales per store.
|
(5)
|
Comprised solely of a capital lease for our corporate headquarters and distribution center.
|
•
|
overall economic trends;
|
•
|
our ability to attract traffic to our stores and online platform;
|
•
|
our ability to identify and respond effectively to consumer preferences and fashion trends;
|
•
|
competition;
|
•
|
the timing of our releases of new and seasonal styles;
|
•
|
changes in our product mix;
|
•
|
pricing;
|
•
|
the level of customer service that we provide in stores;
|
•
|
our ability to source and distribute products efficiently;
|
•
|
calendar shifts of holiday or seasonal periods;
|
•
|
the number and timing of store openings and the relative proportion of new stores to mature stores; and
|
•
|
the timing and success of promotional and advertising efforts.
|
|
Fiscal Year Ended
|
||||||||||
|
February 3,
2018
|
|
January 28,
2017 |
|
January 30,
2016 |
||||||
|
(in thousands)
|
||||||||||
Statements of Income Data:
|
|
|
|
|
|
||||||
Net sales
|
$
|
576,899
|
|
|
$
|
568,952
|
|
|
$
|
550,991
|
|
Cost of goods sold
|
401,529
|
|
|
400,493
|
|
|
383,745
|
|
|||
Gross profit
|
175,370
|
|
|
168,459
|
|
|
167,246
|
|
|||
Selling, general and administrative expenses
|
151,384
|
|
|
149,129
|
|
|
149,150
|
|
|||
Operating income
|
23,986
|
|
|
19,330
|
|
|
18,096
|
|
|||
Other income, net
|
1,223
|
|
|
418
|
|
|
52
|
|
|||
Income before income taxes
|
25,209
|
|
|
19,748
|
|
|
18,148
|
|
|||
Income tax expense
|
10,509
|
|
|
8,338
|
|
|
10,607
|
|
|||
Net income
|
$
|
14,700
|
|
|
$
|
11,410
|
|
|
$
|
7,541
|
|
Percentage of Net Sales:
|
|
|
|
|
|
||||||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|||
Cost of goods sold
|
69.6
|
%
|
|
70.4
|
%
|
|
69.6
|
%
|
|||
Gross profit
|
30.4
|
%
|
|
29.6
|
%
|
|
30.4
|
%
|
|||
Selling, general and administrative expenses
|
26.2
|
%
|
|
26.2
|
%
|
|
27.1
|
%
|
|||
Operating income
|
4.2
|
%
|
|
3.4
|
%
|
|
3.3
|
%
|
|||
Interest income, net
|
0.2
|
%
|
|
0.1
|
%
|
|
—
|
%
|
|||
Income before income taxes
|
4.4
|
%
|
|
3.5
|
%
|
|
3.3
|
%
|
|||
Income tax expense
|
1.9
|
%
|
|
1.5
|
%
|
|
1.9
|
%
|
|||
Net income
|
2.5
|
%
|
|
2.0
|
%
|
|
1.4
|
%
|
|
Fiscal Year Ended
|
||||||||||
|
February 3,
2018
|
|
January 28,
2017 |
|
January 30,
2016 |
||||||
Store Operating Data:
|
|
|
|
|
|
||||||
Stores operating at end of period
|
219
|
|
|
223
|
|
|
224
|
|
|||
Comparable store sales change
(1)
|
1.0
|
%
|
|
0.5
|
%
|
|
1.2
|
%
|
|||
Total square feet at end of period (in thousands)
|
1,668
|
|
|
1,703
|
|
|
1,704
|
|
|||
Average net sales per brick-and-mortar store (in thousands)
(2)
|
$
|
2,258
|
|
|
$
|
2,188
|
|
|
$
|
2,219
|
|
Average net sales per square foot
(2)
|
$
|
296
|
|
|
$
|
287
|
|
|
$
|
290
|
|
E-commerce revenues (in thousands)
(3)
|
$
|
75,846
|
|
|
$
|
76,380
|
|
|
$
|
68,978
|
|
E-commerce revenues as a percentage of net sales
|
13.1
|
%
|
|
13.4
|
%
|
|
12.5
|
%
|
(1)
|
Comparable store sales are net sales from stores that have been open at least 12 full fiscal months as of the end of the current reporting period. A remodeled or relocated store is included in comparable store sales, both during and after construction, if the square footage of the store was not changed by more than 20% and the store was not closed for more than five days in any fiscal month. Comparable store sales include sales through our e-commerce platform but exclude gift card breakage income, deferred revenue from the loyalty program and e-commerce shipping and handling fee revenue.
|
(2)
|
E-commerce sales, e-commerce shipping and handling fee revenue and gift card breakage income are excluded from net sales in deriving average net sales per brick-and-mortar store.
|
(3)
|
E-commerce revenues include e-commerce sales and e-commerce shipping fee revenue.
|
$ millions
|
|
Attributable to
|
$5.8
|
|
Increase in comparable store sales of 1.0%
|
2.1
|
|
Increase in non-comparable store sales
|
$7.9
|
|
Total
|
%
|
|
$ millions
|
|
Attributable to
|
0.8%
|
|
$4.4
|
|
Net increase in year over year legal provisions
|
0.5%
|
|
2.8
|
|
Increase in expenses associated with several information technology system implementations
|
0.1%
|
|
2.0
|
|
Increase in store payroll and benefits primarily due to minimum wage increases
|
(0.6)%
|
|
(3.4)
|
|
Decrease in marketing spend
|
(0.2)%
|
|
(1.5)
|
|
Decrease in non-cash store asset impairment charges
|
(0.2)%
|
|
(0.8)
|
|
Decrease in corporate payroll and benefits
|
(0.4)%
|
|
(1.2)
|
|
Decrease in all other SG&A expenses
|
—%
|
|
$2.3
|
|
Total
|
$ millions
|
|
Attributable to
|
$15.4
|
|
Increase in non-comparable store sales
|
2.6
|
|
Increase in comparable store sales of 0.5%
|
$18.0
|
|
Total
|
%
|
|
$ millions
|
|
Attributable to
|
(0.9)%
|
|
$(4.3)
|
|
Decrease due to more efficient marketing expenses
|
(0.5)%
|
|
(2.1)
|
|
Decrease in corporate payroll and benefits primarily due to prior year's severance obligations and lower stock based compensation as compared to fiscal 2015
|
0.1%
|
|
2.8
|
|
Increase in store payroll and benefits primarily due to minimum wage increases
|
0.4%
|
|
2.6
|
|
Increase in computer maintenance expenses and bank chargebacks
|
—%
|
|
0.9
|
|
Increase in all other SG&A expenses
|
(0.9)%
|
|
$(0.1)
|
|
Total
|
$ millions
|
|
Description
|
$129.8
|
|
Working capital at January 28, 2017
|
(29.1)
|
|
Increase in dividends payable, paid in February 2018
|
(4.3)
|
|
Increase in legal loss contingencies
|
3.5
|
|
Decrease in sales and use taxes payable
|
2.0
|
|
Increase in cash, cash equivalents and marketable securities
|
1.4
|
|
Increase in merchandise inventories, net of merchandise payables
|
1.1
|
|
Decrease in accrued compensation and benefits
|
3.0
|
|
Net increase from changes in all other assets and liabilities
|
$107.4
|
|
Working capital at February 3, 2018
|
|
Fiscal Year Ended
|
||||||||||
|
February 3,
2018
|
|
January 28,
2017 |
|
January 30,
2016 |
||||||
|
(in thousands)
|
||||||||||
Net cash provided by operating activities
|
$
|
32,708
|
|
|
$
|
48,509
|
|
|
$
|
36,945
|
|
Net cash used in investing activities
|
(40,878
|
)
|
|
(21,658
|
)
|
|
(37,966
|
)
|
|||
Net cash (used in) provided by financing activities
|
(17,622
|
)
|
|
1,123
|
|
|
2,252
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less Than
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More Than
5 Years
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Operating Lease Obligations
(1)
|
$
|
366,819
|
|
|
$
|
69,029
|
|
|
$
|
120,498
|
|
|
$
|
93,692
|
|
|
$
|
83,600
|
|
Purchase Obligations
(2)
|
8,264
|
|
|
2,648
|
|
|
4,080
|
|
|
1,536
|
|
|
—
|
|
|||||
Total
|
$
|
375,083
|
|
|
$
|
71,677
|
|
|
$
|
124,578
|
|
|
$
|
95,228
|
|
|
$
|
83,600
|
|
•
|
Fair Value of Our Common Stock
. We use the closing price of our Class A common stock on the date of grant.
|
•
|
Expected Term
. We have limited historical information regarding expected option term. Accordingly, we determined the expected stock option term of the awards using the latest historical data available from comparable public companies and our expectation of exercise behavior.
|
•
|
Volatility
. Our stock volatility for each grant is measured using the weighted average of historical daily price changes of our common stock over the most recent period equal to the expected option term of the awards.
|
•
|
Risk-Free Rate
. The risk-free interest rate is based on the yields of United States Treasury securities with maturities similar to the expected term of the stock options for each stock option group.
|
•
|
Dividend Yield
. On January 31, 2017 and January 24, 2018, we declared special cash dividends of $0.70 and $1.00 per share, respectively, to all holders of record of issued and outstanding shares Class A common stock and Class B common stock as of the close of business on February 15, 2017 and February 9, 2018, respectively. Except as described above, Tilly's, Inc. has never declared or paid any cash dividends and does not plan to pay additional cash dividends in the foreseeable future. Consequently, we used an expected dividend yield of zero.
|
|
February 3,
2018 |
|
January 28,
2017 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
53,202
|
|
|
$
|
78,994
|
|
Marketable securities
|
82,750
|
|
|
54,923
|
|
||
Receivables
|
4,352
|
|
|
3,989
|
|
||
Merchandise inventories
|
53,216
|
|
|
47,768
|
|
||
Prepaid expenses and other current assets
|
9,534
|
|
|
9,541
|
|
||
Total current assets
|
203,054
|
|
|
195,215
|
|
||
Property and equipment, net
|
83,321
|
|
|
89,219
|
|
||
Other assets
|
3,736
|
|
|
6,072
|
|
||
Total assets
|
$
|
290,111
|
|
|
$
|
290,506
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
21,615
|
|
|
$
|
17,584
|
|
Accrued expenses
|
22,731
|
|
|
23,872
|
|
||
Deferred revenue
|
10,879
|
|
|
10,203
|
|
||
Accrued compensation and benefits
|
6,119
|
|
|
7,259
|
|
||
Dividends payable
|
29,067
|
|
|
—
|
|
||
Current portion of deferred rent
|
5,220
|
|
|
5,643
|
|
||
Current portion of capital lease obligation (Note 9)
|
—
|
|
|
835
|
|
||
Total current liabilities
|
95,631
|
|
|
65,396
|
|
||
Long-term portion of deferred rent
|
31,340
|
|
|
35,890
|
|
||
Other
|
2,715
|
|
|
—
|
|
||
Total long-term liabilities
|
34,055
|
|
|
35,890
|
|
||
Total liabilities
|
129,686
|
|
|
101,286
|
|
||
Commitments and contingencies (Note 10)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock (Class A), $0.001 par value; 100,000 shares authorized; 14,927 and 13,434 shares issued and outstanding, respectively
|
15
|
|
|
14
|
|
||
Common stock (Class B), $0.001 par value; 35,000 shares authorized; 14,188 and 15,329 shares issued and outstanding, respectively
|
14
|
|
|
15
|
|
||
Preferred stock, $0.001 par value; 10,000 shares authorized, no shares issued or outstanding
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
143,984
|
|
|
138,102
|
|
||
Retained earnings
|
16,398
|
|
|
51,023
|
|
||
Accumulated other comprehensive income
|
14
|
|
|
66
|
|
||
Total stockholders’ equity
|
160,425
|
|
|
189,220
|
|
||
Total liabilities and stockholders’ equity
|
$
|
290,111
|
|
|
$
|
290,506
|
|
|
Fiscal Year Ended
|
||||||||||
|
February 3,
2018 |
|
January 28,
2017 |
|
January 30,
2016 |
||||||
Net sales
|
$
|
576,899
|
|
|
$
|
568,952
|
|
|
$
|
550,991
|
|
Cost of goods sold (includes buying, distribution, and occupancy costs)
|
401,529
|
|
|
400,493
|
|
|
383,745
|
|
|||
Gross profit
|
175,370
|
|
|
168,459
|
|
|
167,246
|
|
|||
Selling, general and administrative expenses
|
151,384
|
|
|
149,129
|
|
|
149,150
|
|
|||
Operating income
|
23,986
|
|
|
19,330
|
|
|
18,096
|
|
|||
Other income, net
|
1,223
|
|
|
418
|
|
|
52
|
|
|||
Income before income taxes
|
25,209
|
|
|
19,748
|
|
|
18,148
|
|
|||
Income tax expense
|
10,509
|
|
|
8,338
|
|
|
10,607
|
|
|||
Net income
|
$
|
14,700
|
|
|
$
|
11,410
|
|
|
$
|
7,541
|
|
Basic earnings per share of Class A and Class B common stock
|
$
|
0.51
|
|
|
$
|
0.40
|
|
|
$
|
0.27
|
|
Diluted earnings per share of Class A and Class B common stock
|
$
|
0.51
|
|
|
$
|
0.40
|
|
|
$
|
0.27
|
|
Weighted average basic shares outstanding
|
28,804
|
|
|
28,496
|
|
|
28,332
|
|
|||
Weighted average diluted shares outstanding
|
29,074
|
|
|
28,529
|
|
|
28,402
|
|
|
For the Fiscal Years Ended
|
||||||||||
|
February 3,
2018 |
|
January 28,
2017 |
|
January 30,
2016 |
||||||
Net income
|
$
|
14,700
|
|
|
$
|
11,410
|
|
|
$
|
7,541
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
||||||
Net change in unrealized gains on available-for-sale securities
|
(52
|
)
|
|
44
|
|
|
1
|
|
|||
Other comprehensive income, net of tax
|
(52
|
)
|
|
44
|
|
|
1
|
|
|||
Comprehensive income
|
$
|
14,648
|
|
|
$
|
11,454
|
|
|
$
|
7,542
|
|
|
Number of Shares
|
|
Common
Stock |
|
Additional
Paid-in Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income |
|
Total
Stockholders’ Equity |
||||||||||||||
|
Common
Stock (Class A) |
|
Common
Stock (Class B) |
|
|||||||||||||||||||||
Balance at January 31, 2015
|
11,546
|
|
|
16,544
|
|
|
$
|
28
|
|
|
$
|
126,565
|
|
|
$
|
32,072
|
|
|
$
|
21
|
|
|
$
|
158,686
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,541
|
|
|
—
|
|
|
7,541
|
|
|||||
Shares converted by founders
|
375
|
|
|
(375
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
3,926
|
|
|
—
|
|
|
—
|
|
|
3,926
|
|
|||||
Restricted stock
|
48
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Exercise of stock options
|
336
|
|
|
—
|
|
|
—
|
|
|
3,094
|
|
|
—
|
|
|
—
|
|
|
3,094
|
|
|||||
Net change in unrealized gain on available-for-sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|||||
Balance at January 30, 2016
|
12,305
|
|
|
16,169
|
|
|
28
|
|
|
133,550
|
|
|
39,613
|
|
|
22
|
|
|
173,213
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,410
|
|
|
—
|
|
|
11,410
|
|
|||||
Shares converted by founders
|
840
|
|
|
(840
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
2,572
|
|
|
—
|
|
|
—
|
|
|
2,572
|
|
|||||
Restricted stock
|
74
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Exercise of stock options
|
215
|
|
|
—
|
|
|
1
|
|
|
2,079
|
|
|
—
|
|
|
—
|
|
|
2,080
|
|
|||||
Taxes paid in lieu of shares issued for stock based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
(99
|
)
|
|
—
|
|
|
—
|
|
|
(99
|
)
|
|||||
Net change in unrealized gain on available-for-sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44
|
|
|
44
|
|
|||||
Balance at January 28, 2017
|
13,434
|
|
|
15,329
|
|
|
29
|
|
|
138,102
|
|
|
51,023
|
|
|
66
|
|
|
189,220
|
|
|||||
Cumulative-effect adjustment from adoption of ASU 2016-09
|
—
|
|
|
—
|
|
|
—
|
|
|
178
|
|
|
(178
|
)
|
|
—
|
|
|
—
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,700
|
|
|
—
|
|
|
14,700
|
|
|||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,067
|
)
|
|
—
|
|
|
(29,067
|
)
|
|||||
Dividends paid
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,080
|
)
|
|
—
|
|
|
(20,080
|
)
|
|||||
Shares converted by founders
|
1,141
|
|
|
(1,141
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
2,411
|
|
|
—
|
|
|
—
|
|
|
2,411
|
|
|||||
Restricted stock
|
44
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Exercise of stock options
|
308
|
|
|
—
|
|
|
—
|
|
|
3,394
|
|
|
—
|
|
|
—
|
|
|
3,394
|
|
|||||
Taxes paid in lieu of shares issued for stock based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
(101
|
)
|
|
—
|
|
|
—
|
|
|
(101
|
)
|
|||||
Net change in unrealized gain on available-for-sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(52
|
)
|
|
(52
|
)
|
|||||
Balance at February 3, 2018
|
14,927
|
|
|
14,188
|
|
|
$
|
29
|
|
|
$
|
143,984
|
|
|
$
|
16,398
|
|
|
$
|
14
|
|
|
$
|
160,425
|
|
|
Fiscal Year Ended
|
||||||||||
|
February 3,
2018 |
|
January 28,
2017 |
|
January 30,
2016 |
||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
14,700
|
|
|
$
|
11,410
|
|
|
$
|
7,541
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
23,389
|
|
|
23,266
|
|
|
22,808
|
|
|||
Stock-based compensation expense
|
2,411
|
|
|
2,572
|
|
|
3,926
|
|
|||
Impairment of assets
|
848
|
|
|
2,352
|
|
|
2,593
|
|
|||
Loss on disposal of assets
|
192
|
|
|
16
|
|
|
304
|
|
|||
Gain on sales and maturities of marketable securities
|
(782
|
)
|
|
(251
|
)
|
|
(100
|
)
|
|||
Deferred income taxes
|
2,933
|
|
|
(1,174
|
)
|
|
1,554
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Receivables
|
(363
|
)
|
|
1,395
|
|
|
(715
|
)
|
|||
Merchandise inventories
|
(5,448
|
)
|
|
3,589
|
|
|
150
|
|
|||
Prepaid expenses and other assets
|
(562
|
)
|
|
(449
|
)
|
|
(293
|
)
|
|||
Accounts payable
|
3,559
|
|
|
1,623
|
|
|
(6,993
|
)
|
|||
Accrued expenses
|
(2,732
|
)
|
|
6,562
|
|
|
6,199
|
|
|||
Accrued compensation and benefits
|
(1,140
|
)
|
|
1,508
|
|
|
(160
|
)
|
|||
Deferred rent
|
(4,973
|
)
|
|
(5,464
|
)
|
|
(948
|
)
|
|||
Deferred revenue
|
676
|
|
|
1,554
|
|
|
1,079
|
|
|||
Net cash provided by operating activities
|
32,708
|
|
|
48,509
|
|
|
36,945
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Purchase of property and equipment
|
(13,753
|
)
|
|
(17,047
|
)
|
|
(23,100
|
)
|
|||
Proceeds from sale of property and equipment
|
—
|
|
|
43
|
|
|
7
|
|
|||
Purchases of marketable securities
|
(152,389
|
)
|
|
(99,675
|
)
|
|
(74,873
|
)
|
|||
Maturities of marketable securities
|
125,264
|
|
|
95,021
|
|
|
60,000
|
|
|||
Net cash used in investing activities
|
(40,878
|
)
|
|
(21,658
|
)
|
|
(37,966
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Dividends paid
|
(20,080
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from exercise of stock options
|
3,394
|
|
|
2,080
|
|
|
3,094
|
|
|||
Payment of capital lease obligation
|
(835
|
)
|
|
(858
|
)
|
|
(807
|
)
|
|||
Taxes paid in lieu of shares issued for stock-based compensation
|
(101
|
)
|
|
(99
|
)
|
|
(35
|
)
|
|||
Net cash (used in) provided by financing activities
|
(17,622
|
)
|
|
1,123
|
|
|
2,252
|
|
|||
Change in cash and cash equivalents
|
(25,792
|
)
|
|
27,974
|
|
|
1,231
|
|
|||
Cash and cash equivalents, beginning of period
|
78,994
|
|
|
51,020
|
|
|
49,789
|
|
|||
Cash and cash equivalents, end of period
|
$
|
53,202
|
|
|
$
|
78,994
|
|
|
$
|
51,020
|
|
Supplemental disclosures of cash flow information
|
|
|
|
|
|
||||||
Interest paid
|
$
|
26
|
|
|
$
|
82
|
|
|
$
|
133
|
|
Income taxes paid
|
$
|
11,534
|
|
|
$
|
8,806
|
|
|
$
|
7,473
|
|
Supplemental disclosure of non-cash activities
|
|
|
|
|
|
||||||
Unpaid purchases of property and equipment
|
$
|
4,778
|
|
|
$
|
640
|
|
|
$
|
1,817
|
|
Dividends declared
|
$
|
29,067
|
|
|
$
|
—
|
|
|
$
|
—
|
|
•
|
Costs of products sold include:
|
•
|
freight expenses associated with merchandise received from our vendors into our distribution centers;
|
•
|
vendor allowances;
|
•
|
cash discounts on payments to merchandise vendors;
|
•
|
physical inventory losses; and
|
•
|
markdowns of inventory.
|
•
|
Buying, distribution and occupancy costs include:
|
•
|
payroll, benefit costs, and incentive compensation for merchandising personnel;
|
•
|
customer shipping and handling expenses;
|
•
|
costs associated with operating our distribution and fulfillment center, including payroll and benefit costs for our distribution center, occupancy costs, and depreciation;
|
•
|
freight expenses associated with shipping merchandise inventories from our distribution center to our stores and e-commerce customers; and
|
•
|
store occupancy costs, including rent, maintenance, utilities, property taxes, business licenses, security costs and depreciation.
|
•
|
Payroll, benefit costs and incentive compensation for store, regional, e-commerce and corporate employees;
|
•
|
Occupancy and maintenance costs of corporate office facilities;
|
•
|
Depreciation related to corporate office assets;
|
•
|
Advertising and marketing costs, net of reimbursement from vendors;
|
•
|
Tender costs, including costs associated with credit and debit card interchange fees;
|
•
|
Long-lived asset impairment charges;
|
•
|
Legal provisions;
|
•
|
Other administrative costs such as supplies, consulting, audit and tax preparation fees, travel and lodging; and
|
•
|
Charitable contributions.
|
|
February 3, 2018
|
||||
|
Cost or
Amortized Cost |
|
Gross
Unrealized
Holding
Gains
|
|
Estimated Fair Value
|
Commercial paper
|
$59,566
|
|
$23
|
|
$59,589
|
Fixed income securities
|
23,119
|
|
42
|
|
23,161
|
|
$82,685
|
|
$65
|
|
$82,750
|
|
|
|
|
|
|
|
January 28, 2017
|
||||
|
Cost or
Amortized Cost |
|
Gross
Unrealized Holding Gains |
|
Estimated Fair Value
|
Commercial paper
|
$44,785
|
|
$107
|
|
$44,892
|
Fixed income securities
|
10,017
|
|
14
|
|
10,031
|
|
$54,802
|
|
$121
|
|
$54,923
|
|
February 3,
2018 |
|
January 28,
2017 |
||||
Credit and debit card receivables
|
$
|
2,480
|
|
|
$
|
2,450
|
|
Tenant allowances due from landlords
|
1,004
|
|
|
14
|
|
||
Vendor receivables
|
874
|
|
|
1,807
|
|
||
Less: Allowance for doubtful accounts
|
(6
|
)
|
|
(282
|
)
|
||
Total receivables
|
$
|
4,352
|
|
|
$
|
3,989
|
|
|
February 3,
2018 |
|
January 28,
2017 |
||||
Prepaid rent
|
$
|
7,095
|
|
|
$
|
7,507
|
|
Prepaid maintenance
|
999
|
|
|
690
|
|
||
Prepaid insurance
|
673
|
|
|
504
|
|
||
Other
|
767
|
|
|
840
|
|
||
Total prepaid expenses and other current assets
|
$
|
9,534
|
|
|
$
|
9,541
|
|
|
February 3,
2018 |
|
January 28,
2017 |
||||
Leasehold improvements
|
$
|
132,428
|
|
|
$
|
137,287
|
|
Furniture and fixtures
|
43,983
|
|
|
43,160
|
|
||
Computer hardware and software
|
37,722
|
|
|
30,091
|
|
||
Machinery and equipment
|
31,509
|
|
|
31,089
|
|
||
Vehicles
|
1,891
|
|
|
1,821
|
|
||
Construction in progress
|
1,854
|
|
|
2,273
|
|
||
Building under capital lease
|
—
|
|
|
7,840
|
|
||
|
249,387
|
|
|
253,561
|
|
||
Accumulated depreciation
|
(166,066
|
)
|
|
(164,342
|
)
|
||
Property and equipment, net
|
$
|
83,321
|
|
|
$
|
89,219
|
|
|
February 3,
2018 |
|
January 28,
2017 |
||||
Loss contingencies (Note 10)
|
$
|
6,466
|
|
|
$
|
2,198
|
|
Sales and use taxes payable
|
2,192
|
|
|
5,730
|
|
||
Accrued construction
|
2,075
|
|
|
484
|
|
||
Accrued freight
|
1,997
|
|
|
2,884
|
|
||
Merchandise returns
|
1,133
|
|
|
1,078
|
|
||
Income taxes payable
|
343
|
|
|
4,374
|
|
||
Other
|
8,525
|
|
|
7,124
|
|
||
Total accrued expenses
|
$
|
22,731
|
|
|
$
|
23,872
|
|
Fiscal Year
|
Related
Party |
|
Other
|
|
Total
|
||||||
2018
|
$
|
3,233
|
|
|
$
|
65,796
|
|
|
$
|
69,029
|
|
2019
|
3,330
|
|
|
59,383
|
|
|
62,713
|
|
|||
2020
|
3,429
|
|
|
54,356
|
|
|
57,785
|
|
|||
2021
|
3,258
|
|
|
48,192
|
|
|
51,450
|
|
|||
2022
|
2,276
|
|
|
39,966
|
|
|
42,242
|
|
|||
Thereafter
|
11,274
|
|
|
72,326
|
|
|
83,600
|
|
|||
Total
|
$
|
26,800
|
|
|
$
|
340,019
|
|
|
$
|
366,819
|
|
|
February 3,
2018 |
|
January 28,
2017 |
|
January 30,
2016 |
||||||
Minimum rentals
|
$
|
44,520
|
|
|
$
|
42,988
|
|
|
$
|
43,176
|
|
Contingent rentals
|
1,552
|
|
|
1,212
|
|
|
403
|
|
|||
Total rent expense
|
$
|
46,072
|
|
|
$
|
44,200
|
|
|
$
|
43,579
|
|
|
Fiscal Year Ended
|
||||
|
February 3,
2018 |
|
January 28,
2017 |
|
January 30,
2016 |
|
($ in thousands)
|
||||
Carrying value of assets with impairment
|
$848
|
|
$2,584
|
|
$3,589
|
Fair value of assets impaired
|
$—
|
|
$232
|
|
$996
|
Number of stores tested for impairment
|
10
|
|
15
|
|
20
|
Number of stores with impairment
|
4
|
|
9
|
|
9
|
|
Stock
Options |
|
Grant Date
Weighted Average Exercise Price |
|
Weighted
Average Remaining Contractual Life (in Years) |
|
Aggregate
Intrinsic Value(1) |
|
|
|
|
|
(in years)
|
|
($ in thousands)
|
Outstanding at January 28, 2017
|
1,842,375
|
|
$9.98
|
|
|
|
|
Granted
|
411,000
|
|
$8.79
|
|
|
|
|
Exercised
|
(308,250)
|
|
$11.01
|
|
|
|
|
Forfeited
|
(59,000)
|
|
$8.92
|
|
|
|
|
Expired
|
(34,875)
|
|
$14.07
|
|
|
|
|
Outstanding at February 3, 2018
|
1,851,250
|
|
$9.50
|
|
7.2
|
|
$9,304
|
Vested and expected to vest at February 3, 2018
|
1,851,250
|
|
$9.50
|
|
7.2
|
|
$9,304
|
Exercisable at February 3, 2018
|
828,250
|
|
$11.55
|
|
5.6
|
|
$2,738
|
(1)
|
Intrinsic value for stock options is defined as the difference between the market price of the our Class A common stock on the last business day of the fiscal year and the weighted average exercise price of in-the-money stock options outstanding at the end of each fiscal period. The market value per share was
$14.27
at
February 3, 2018
.
|
|
Fiscal Year Ended
|
||||
|
February 3,
2018 |
|
January 28,
2017 |
|
January 30,
2016 |
Average fair value per option granted
|
$3.99
|
|
$3.73
|
|
$3.06
|
Expected option term
(1)
|
5.0 years
|
|
5.0 years
|
|
5.0 years
|
Expected volatility factor
(2)
|
50.3%
|
|
62.8%
|
|
49.68%
|
Risk-free interest rate
(3)
|
1.93%
|
|
1.34%
|
|
1.64%
|
Expected annual dividend yield
|
—%
|
|
—%
|
|
—%
|
(1)
|
We have limited historical information regarding expected option term. Accordingly, we determine the expected option term of the awards using the latest historical data available from comparable public companies and management’s expectation of exercise behavior.
|
(2)
|
Stock volatility for each grant is measured using the weighted average of historical daily price changes of our common stock over the most recent period equal to the expected option term of the awards.
|
(3)
|
The risk-free interest rate is determined using the rate on treasury securities with the same term as the expected life of the stock option as of the grant date.
|
|
Fiscal Year Ended
|
||||
|
February 3,
2018 |
|
January 28,
2017 |
|
January 30,
2016 |
Cost of goods sold
|
$612
|
|
$855
|
|
$991
|
Selling, general and administrative expenses
|
1,799
|
|
1,717
|
|
2,935
|
Stock-based compensation
|
$2,411
|
|
$2,572
|
|
$3,926
|
|
Fiscal Year Ended
|
||||||||||
|
February 3,
2018 |
|
January 28,
2017 |
|
January 30,
2016 |
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
6,236
|
|
|
$
|
7,939
|
|
|
$
|
7,614
|
|
State
|
1,304
|
|
|
1,602
|
|
|
1,439
|
|
|||
|
7,540
|
|
|
9,541
|
|
|
9,053
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
2,436
|
|
|
(1,121
|
)
|
|
1,105
|
|
|||
State
|
533
|
|
|
(82
|
)
|
|
449
|
|
|||
|
2,969
|
|
|
(1,203
|
)
|
|
1,554
|
|
|||
Total income tax expense
|
$
|
10,509
|
|
|
$
|
8,338
|
|
|
$
|
10,607
|
|
|
Fiscal Year Ended
|
||||||||||
|
February 3,
2018 |
|
January 28,
2017 |
|
January 30,
2016 |
||||||
Federal taxes at statutory rate
|
$
|
8,529
|
|
|
$
|
6,913
|
|
|
$
|
6,352
|
|
State and local income taxes, net of federal benefit
|
1,216
|
|
|
988
|
|
|
1,098
|
|
|||
Tax reform impact
|
491
|
|
|
—
|
|
|
—
|
|
|||
Stock compensation discrete items
(1)
|
231
|
|
|
558
|
|
|
2,592
|
|
|||
Return to provision adjustments
|
124
|
|
|
(40
|
)
|
|
130
|
|
|||
Other
|
(82
|
)
|
|
(81
|
)
|
|
435
|
|
|||
Total income tax expense
|
$
|
10,509
|
|
|
$
|
8,338
|
|
|
$
|
10,607
|
|
(1)
|
This amount includes the impact of discrete items related to the expiration of stock options, exercises of stock options and the settlement of restricted stock units that are recorded to income tax expense which represents stock-based compensation cost previously recognized by us that was greater than the deduction allowed for income tax purposes based on the price of our common stock on the date of expiration, exercise or vesting.
|
|
February 3,
2018 |
|
January 28,
2017 |
||||
Deferred tax assets:
|
|
|
|
||||
Deferred rent
|
$
|
3,523
|
|
|
$
|
5,343
|
|
Stock-based compensation
|
1,705
|
|
|
2,574
|
|
||
Inventories
|
1,650
|
|
|
2,712
|
|
||
Accrued expenses
|
1,079
|
|
|
1,753
|
|
||
Compensation and benefits
|
471
|
|
|
687
|
|
||
Deferred revenue
|
187
|
|
|
318
|
|
||
Tax credits
|
51
|
|
|
162
|
|
||
Capital lease
|
4
|
|
|
147
|
|
||
Total deferred tax assets
|
8,670
|
|
|
13,696
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Property and equipment
|
(5,367
|
)
|
|
(7,344
|
)
|
||
Prepaid expenses
|
(526
|
)
|
|
(606
|
)
|
||
Marketable securities
|
(9
|
)
|
|
(44
|
)
|
||
Total deferred tax liabilities
|
(5,902
|
)
|
|
(7,994
|
)
|
||
Net deferred tax asset
|
$
|
2,768
|
|
|
$
|
5,702
|
|
|
Fiscal Year Ended
|
||||||||||
|
February 3,
2018 |
|
January 28,
2017 |
|
January 30,
2016 |
||||||
Net income
|
$
|
14,700
|
|
|
$
|
11,410
|
|
|
$
|
7,541
|
|
Weighted average basic shares outstanding
|
28,804
|
|
|
28,496
|
|
|
28,332
|
|
|||
Dilutive effect of stock options and restricted stock
|
270
|
|
|
33
|
|
|
70
|
|
|||
Weighted average shares for diluted earnings per share
|
29,074
|
|
|
28,529
|
|
|
28,402
|
|
|||
Basic earnings per share of Class A and Class B common stock
|
$
|
0.51
|
|
|
$
|
0.40
|
|
|
$
|
0.27
|
|
Diluted earnings per share of Class A and Class B common stock
|
$
|
0.51
|
|
|
$
|
0.40
|
|
|
$
|
0.27
|
|
|
Fiscal Year Ended
|
|||||||
|
February 3,
2018 |
|
January 28,
2017 |
|
January 30,
2016 |
|||
Stock options
|
1,058
|
|
|
1,818
|
|
|
1,119
|
|
Restricted stock
|
56
|
|
|
99
|
|
|
154
|
|
Total
|
1,114
|
|
|
1,917
|
|
|
1,273
|
|
|
Fiscal Year Ended February 3, 2018
|
||||||
|
First
Quarter |
|
Second
Quarter |
|
Third
Quarter |
|
Fourth
Quarter (1) |
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
Net sales
|
$120,947
|
|
$138,810
|
|
$152,824
|
|
$164,317
|
Gross profit
|
32,905
|
|
40,929
|
|
50,094
|
|
51,440
|
Operating (loss) income
|
(329)
|
|
(1,239)
|
|
14,112
|
|
11,441
|
Net (loss) income
|
(161)
|
|
(596)
|
|
8,757
|
|
6,699
|
Basic (loss) earnings per share
|
$(0.01)
|
|
$(0.02)
|
|
$0.30
|
|
$0.23
|
Diluted (loss) earnings per share
|
$(0.01)
|
|
$(0.02)
|
|
$0.30
|
|
$0.23
|
|
|
|
|
|
|
|
|
(1) Includes 14 weeks
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January 28, 2017
|
||||||
|
First
Quarter |
|
Second
Quarter |
|
Third
Quarter |
|
Fourth
Quarter |
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
Net sales
|
$120,218
|
|
$136,412
|
|
$152,106
|
|
$160,216
|
Gross profit
|
32,587
|
|
38,837
|
|
47,969
|
|
49,066
|
Operating (loss) income
|
(3,967)
|
|
2,232
|
|
10,667
|
|
10,398
|
Net (loss) income
|
(2,745)
|
|
1,433
|
|
6,417
|
|
6,305
|
Basic (loss) earnings per share
|
$(0.10)
|
|
$0.05
|
|
$0.23
|
|
$0.22
|
Diluted (loss) earnings per share
|
$(0.10)
|
|
$0.05
|
|
$0.22
|
|
$0.22
|
Exhibit
No.
|
|
Description of Exhibit
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.2.1*
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6#
|
|
|
|
|
|
10.7#
|
|
|
|
|
|
10.8#
|
|
|
|
|
|
10.9#
|
|
|
|
|
|
10.10#
|
|
|
|
|
|
10.11#
|
|
|
|
|
|
10.12#
|
|
|
|
|
|
10.12.1#
|
|
|
|
|
10.13
|
|
|
|
|
|
10.14
|
|
|
|
|
|
10.15
|
|
|
|
|
|
10.16
|
|
|
|
|
|
10.16.1
|
|
|
|
|
|
10.16.2
|
|
|
|
|
|
10.16.3
|
|
|
|
|
|
10.16.4*
|
|
|
|
|
|
10.16.5
|
|
|
|
|
|
10.17
|
|
|
|
|
|
10.18
|
|
|
|
|
|
10.19
|
|
|
|
|
|
10.20
|
|
|
|
|
|
10.21
|
|
|
|
|
|
10.22
|
|
|
|
|
|
10.23
|
|
|
|
|
|
10.24#
|
|
|
|
|
|
10.25#
|
|
|
|
|
|
10.26#
|
|
|
|
|
|
21.1*
|
|
|
|
|
|
23.1*
|
|
|
|
|
|
24.1+
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1*
|
|
|
|
|
|
101
|
|
The following materials from Tilly’s, Inc.’s Annual Report on Form 10-K for the year ended February 3, 2018 formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets as of February 3, 2018 and January 28, 2017; (ii) Consolidated Statements of Income for the fiscal years ended February 3, 2018, January 28, 2017 and January 30, 2016; (iii) Consolidated Statements of Comprehensive Income for the fiscal years ended February 3, 2018, January 28, 2017 and January 30, 2016; (iv) Consolidated Statements of Stockholders’ Equity for the fiscal years ended February 3, 2018, January 28, 2017 and January 30, 2016; (v) Consolidated Statements of Cash Flows for the fiscal years ended February 3, 2018, January 28, 2017 and January 30, 2016; and (vi) the Notes to the Consolidated Financial Statements.
|
Tilly’s, Inc.
|
|
/s/ Edmond Thomas
|
Edmond Thomas
|
President, Chief Executive Officer and Director (Principal Executive Officer)
|
|
/s/ Michael Henry
|
Michael Henry
|
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
Signature
|
|
Title
|
|
|
|
|
|
|
/s/ Edmond Thomas
|
|
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
Edmond Thomas
|
|
|
|
|
|
/s/ Michael Henry
|
|
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
Michael Henry
|
|
|
|
|
|
/s/ Hezy Shaked
|
|
Executive Chairman of the Board and Chief Strategy Officer
|
Hezy Shaked
|
|
|
|
|
|
/s/ Doug Collier
|
|
Director
|
Doug Collier
|
|
|
|
|
|
/s/ Seth Johnson
|
|
Director
|
Seth Johnson
|
|
|
|
|
|
/s/ Janet Kerr
|
|
Director
|
Janet Kerr
|
|
|
|
|
|
/s/ Bernard Zeichner
|
|
Director
|
Bernard Zeichner
|
|
|
1 Year Tillys Chart |
1 Month Tillys Chart |
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