Teen apparel retailer beats Q4 forecasts

An increase in revenue and comparable store sales helped Tilly’s beat analyst expectations for the fourth quarter.



For the period ended January 28, 2017, Tilly’s revenue was $160.2 million, an increase from $159.1 million last year. Net sales also topped Wall Street forecasts of $159.9 million. The chain also beat analyst predictions of earnings hitting 21 cents per share. Tilly’s posted a profit of 22 cents per share.



Same-store sales, including e-commerce sales, increased 0.1%. Comparable store sales increased 0.9% in the fourth quarter last year.



Operating income was $10.4 million, or 6.5% of net sales, compared to $9.5 million, or 6.0% of net sales, last year. The 50 basis point increase in operating margin was primarily attributable to the reductions in selling, general and administrative expenses (SG&A), which were $38.7 million, a decrease of $1.8 million from $40.5 million last year, according to the company.



For 2016, total net sales were $569 million, an increase of 3.3% from $551 million for fiscal 2015. Net income was $11.4 million, compared to $7.5 million last year.



Comparable store sales, which include e-commerce sales, increased 0.5%. Comparable store sales increased 1.2% last year.



Gross margin was 29.6%, compared to 30.4% last year. This 80 basis point decrease was primarily attributable to a decline in product margins as a result of increased markdowns.



Operating income was $19.3 million, an increase of $1.2 million from $18.1 million last year. Operating margin improved 10 basis points to 3.4% of net sales compared 3.3% last year.



Looking ahead to the first quarter of 2017, Tilly’s expects its comparable store sales to decrease by a low to mid- single-digit percentage, mostly due to a later Easter versus the comparable prior year period and signifi-cant weather issues in its heritage markets of California, Arizona and Ne-vada during February.



“We finished fiscal 2016 with three consecutive quarters of year over year operating income growth and our first annual improvement in oper-ating income of the last five years," stated Ed Thomas, president and CEO. "Our strong balance sheet enabled us to reward shareholders with a $20 million special dividend in February. While we are encouraged by these results, we will continue to seek ways to improve profitability and continue our progress during fiscal 2017.”