Tilly’s stock falls on weak Q1 guidance

Tilly’s Inc. (TLYS) reported a 29.5% jump in earnings for the fourth quarter helped by lower income tax expense. The results exceeded analysts’ expectations. However, the company guided first-quarter sales and earnings below consensus estimates. Following this, the stock inched down over 8% in the after-market session.

Net income climbed 29.5% to $8.68 million and earnings jumped 26.1% to $0.29 per share. Adjusted earnings increased by 17.4% to $0.27 per share.

Total net sales rose by 3.8% to $170.6 million, despite last year’s fourth quarter containing an extra week of net sales worth about $7.1 million to the quarter.

Comparable store net sales, which includes e-commerce net sales, increased 6.4% compared to flat same-store net sales during the prior-year quarter. E-commerce net sales increased by 49.6% compared to a decrease of 12% last year. However, comparable store net sales in physical stores decreased by 0.9% compared to an increase of 2.3% a year ago.

Operating income decreased by 4.4% to $10.9 million. The last year’s fourth quarter contained an extra week of net sales worth $7.1 million, which helped create greater leverage of its relatively fixed expense base last year.

Looking ahead into the first quarter of fiscal 2019, the company expects total net sales in the range of about $128 million to $130 million. The sales outlook is based on an assumption of a low single-digit percentage increase in comparable store net sales.

The bottom line per share results is expected to be between $0.01 loss and $0.03 profit. This outlook assumes no non-cash store asset impairment charges, an anticipated effective tax rate of about 27%, and weighted average shares of about 30 million.

The company ended fiscal 2018 with 229 total stores, including four RSQ-branded pop-up stores, compared to 219 full-size stores last year.

Shares of Tilly’s ended Thursday’s regular session down 2.39% at $11.46 on the NYSE. The stock has risen over 6% in the year so far and over 5% in the past three months.

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