Back-to-school levels of spending came early for Tilly’s Inc.—a welcome shift given the abnormal conditions retail has been working in over the past year.
As a result, the Irvine retailer of women’s and men’s trendy apparel and accessories (NYSE: TLYS) is itself trending among investors after beating out expectations in its fiscal first quarter ended May 1.
The company posted $163.2 million in net sales for the quarter, which was up 111% from a year ago.
It was Tilly’s best first quarter for net sales since becoming a public company in May 2012, officials said.
The first-quarter sales solidly beat consensus estimates of $128.9 million.
The retailer’s net income, meanwhile, totaled $11 million, compared to a $17.4 million loss a year earlier. Analysts on average expected a net loss of a little more than $600,000 for the quarter.
Wall Street has taken notice of the turnaround, with the retailer’s stock on another upswing since the earnings report.
The company’s shares have tripled in price over the past year, and its stock is at its highest point since late 2018.
Multi-Channel Strength
As much as digital was the story for many companies last year and into this year, both e-commerce and Tilly’s brick-and-mortar stores are seeing traction, officials for the nearly $470 million-valued company said.
“We are obviously going against huge increases in e-commerce last year. Because of the store closures, we got the benefit on e-comm,” CEO Ed Thomas said on a call with analysts this month. “Some of it was due to the shift in buying. Some expected somewhat of a little bit of a temporary slowdown, but I think both channels [store and online] will continue to improve as we get through the second quarter into back to school.”
Thomas was referencing the slight shift in how online sales are accounting for overall revenue.
E-commerce for the May quarter made up about about 21.7% of the company’s overall sales with the online channel generating $35.5 million, up 17% from a year ago. E-commerce last year represented 39.2% of net sales.
Retail Post-Pandemic
Online so far in the current quarter, up through the end of May, totaled $11 million in sales, down 45.2% from a year ago when the pandemic had most stores shuttered.
The sales total is up 84.6% when compared to the same time in fiscal 2019, which would be a pre-pandemic comparison.
Stores continued to bring in the lion’s share of sales, generating $127.7 million in the recently ended first quarter, a jump of 172% from the year-ago period when stores were closed in the back half of the quarter.
“Foot traffic in stores is still down, but we’re seeing some really good numbers—decent numbers there,” Thomas said. “They continue to improve and I think one of the things that surprised me the most is the new store openings that we’ve opened have exceeded plan so far since they opened.”
Tilly’s had 238 stores at the end of its first quarter with the company saying it expects to end the current quarter with 244 stores.
“I think it’s starting to get back to the way it was pre-pandemic,” Thomas said of consumer shopping habits. “I think that certainly there was pent-up demand. I think for the young adult and teenage customer, they are hungry for newness and we’ve given them quite a bit of newness in both men’s and women’s.”
The Right Assortment
Consumers returning back to the classroom and wanting to freshen up their wardrobes, in addition to stimulus check spending and a broader reopening of other businesses, have helped drive sales.
The backpack and denim categories saw an increase of about $5 million in the first quarter compared to the same time period in 2019.
Double-digit sales increases in women’s, men’s and girls, along with a single-digit increase in boy’s footwear and accessories were some of the first quarter’s merchandise highlights.
The company also avoided heavy discounting and expects that to continue.
“Our full-price selling has been really good, so we’re not driving any of that [increased] business, whether it’s e-comm or stores, through anything unusual promotionally,” Thomas said. “And we’ve seen quite a bit of the competition online in particular be a lot more promotional than we are.”
