Apparel retailer Tilly's sales increase 16.4% in Q3 FY'12

For the thirteen weeks ended October 27, 2012:

• Total net sales for the third quarter were $124.9 million, an increase of 16.4% compared to the third quarter in the prior year. Comparable store sales, which include e-commerce sales, increased 1.9%. E-commerce sales were $12.9 million, an increase of 17% compared to the third quarter in the prior year.
• Gross profit increased 16.6% to $41.8 million. Gross margin was 33.5%, which was slightly higher than the third quarter of 2011.
• Operating income on a GAAP basis was $13.9 million compared to $12.3 million in the third quarter of 2011. Operating margin for the quarter was 11.1% as compared to 11.5% in the third quarter of 2011.
• Adjusted net income for the quarter increased 19.0% to $8.3 million, or $0.30 per weighted average diluted share, compared to adjusted net income of $7.0 million, or $0.34 per weighted average diluted share, in the third quarter of 2011. These results assume an expected long-term effective tax rate of 40% for both this year and last year periods, and add back a charge for on-going non-cash compensation expense for stock options of $0.7 million, before tax, to the third quarter of 2011, which equals the charge for on-going non-cash compensation expense in the third quarter of 2012.

Daniel Griesemer, President and Chief Executive Officer, commented, “Our results for the third quarter exemplify the strength and uniqueness of our business model that has guided Tilly’s success over the past 30 years. Strong execution on the controllable elements of our business resulted in quality earnings that were at the high end of our outlook range and inventory appropriately positioned for the holiday season. 

"We opened seven new stores and expanded into three new states including Ohio, Michigan and North Carolina, and these stores are off to a good start. While we are cautious in our outlook for the fourth quarter, I am confident that the fundamentals of our business, the strength of our business model and the disciplined execution of our management team will enable us to make steady progress on our long-term growth initiatives.”

For the thirty-nine weeks ended October 27, 2012:

• Total net sales for the first three quarters were $326.5 million, an increase of 17.6% compared to the first three quarters of the prior year. Comparable store sales, which include e-commerce sales, increased 3.6%. E-commerce sales were $33.6 million, an increase of 23% compared to the first three quarters of the prior year.
• Gross profit increased 17.8% to $103.4 million. Gross margin was 31.7%, slightly above the prior year period.
• Operating income on a GAAP basis was $16.6 million including a one-time, non-cash charge to SG&A expense of $7.6 million, before tax, to recognize life to date compensation expense for stock options, which was triggered by the consummation of the Company’s initial public offering in the second quarter.
• Adjusted net income increased 24.2% to $14.5 million, or $0.57 per weighted average diluted share, compared to adjusted net income of $11.7 million or $0.57 per weighted average diluted share in the prior year period.