During the quarter, profitability was dragged by lower sales and an increase in expenses, including costs associated with the recently-closed secondary offering, which more than offset the positive comparable store sales.
The dismal results and the management’s week guidance for the current quarter triggered a stock selloff in the after-hours trading Wednesday
At $146.83 million, net sales of the clothing retailer were down 4% from last year and far below the street estimates. The negative growth was the result of a shift in last year’s final week in the retail calendar in comparison with the corresponding period this year.
There was a 4.3% increase in comparable store sales during the third quarter when physical store sales and e-commerce sales grew 1.3% and 27% respectively.
“Tillys continued its positive momentum with its tenth consecutive quarter of flat to positive comparable store net sales and its strongest back-to-back quarterly comparable store net sales performance since the first half of fiscal 2012. We believe we are well positioned to continue our momentum during the holiday season,” said Tilly’s CEO Ed Thomas.
The management expects fourth-quarter net sales to be in the range of $163 million to $168 million, reflecting a 2-5% growth in comparable store sales. Operating income is expected to in the range of $8.5 million to $10 million and earnings between $0.22 per share and $0.26 per share. Looking ahead, the company plans to open 15-20 full-size stores in fiscal 2019.
After retreating from their peak in August, Tilly’s shares have mostly remained in the red. The stock, which lost about 9% over the past twelve months, dropped 14% during the extended trading hours Wednesday.