Tilly’s Inc. (NYSE: TLYS) is feeling California’s recent record-breaking cold front.
The Irvine-based casual apparel, footwear and accessories retailer is off to a slow start this quarter with comp sales down about 7% through Memorial Day weekend, company officials said during its earnings call last week.
“We believe this deceleration is mostly weather-related given the cool and wet weather patterns we’ve experienced across much of the country, particularly here in California,” Chief Executive and President Ed Thomas said last week in an analyst call.
Tilly’s has 95 of its 228 stores in the state.
Thomas said he didn’t see “some sort of fashion risk” or change in consumers as a reason for the sales drop. “We really do think [that it] has an awful lot to do with local weather here in California,” he said.
Thomas also said the “unseasonably poor weather” had a negative impact in the beginning of the first quarter, ending May 4.
The company reported first-quarter revenue of $130.3 million, up 5.4% year-over-year and in line with analyst estimates. Gross profit was up 2% to $35.7 million.
Comparable store sales, including e-commerce, increased by 2.4% from the same period last year.
The company met analyst expectations on earnings of 2 cents per share.
June Gloom
While the first-quarter revenue and profit topped analysts’ expectations, a second-quarter revenue forecast missed them.
Tilly’s predicted second-quarter sales of $154 million to $159 million, below the average estimate of $159.7 million, according to a Yahoo Finance survey of five analysts.
The downbeat report on the start to the second quarter was reflected in the company’s stock movement late last week.
Shares of the company tumbled nearly 20% after the earnings report to a 52-week low of $7.80, with a market cap of $230 million as of press time.
Tilly’s has a 52-week high of $25.46.
Thomas said it plans to open 13 stores this year and has already signed five leases, including a location in Del Amo and King of Prussia, Pa.
Tilly’s expects its performance to improve this quarter “assuming more normal weather patterns occur.”
Chief Financial Officer Mike Henry said during the call it anticipates a decrease of 1% to 4% in same store sales.
Operating income is projected to be about $6.5 million to $8.5 million and earnings per diluted share from 17 cents to 23 cents.
Bank of America analyst David Buckley lowered his price target last week from $14 to $13, but maintained a “buy” rating for the company.
He said in a note that Tilly’s slow start in the beginning of the second quarter is consistent with the broader retail sector, but expects the apparel and accessories chain to turn its business around.
