Net income halves at apparel retailer Tilly's in Q2FY16
Net income for the thirteen weeks to August 1, 2015 halved at Tilly's, Inc, specialty retailer of West Coast inspired apparel, footwear and accessories over the fiscal ago period.
Net income in the second quarter of fiscal 2016 was $0.6 million, or $0.02 per diluted share, compared to $1.3 million, or $0.05 per diluted share in the corresponding quarter of fiscal 2015.
This happened despite operating income doubling to $1.1 million in the reporting quarter as against $2.3 million in the prior fiscal second quarter.
The apparel retailer explained that the current fiscal's second quarter included an aggregate of $0.9 million in non-cash store asset impairment charges and an accrual for a potential legal settlement.
Total net sales for the reporting quarter totaled to $130 million vis-à-vis $123 million, an increase of $7 million or 6 per cent, while comparable store sales which includes e-commerce rose by just 0.5 per cent.
Gross profit too grew by $1.9 million or 6 per cent at $36.6 million versus $34.7 million and gross margin stood at 28.1 per cent compared to 28.2 per cent.
“This slight decrease was primarily due to a 40 basis point decline in product margins, partially offset by lower buying, distribution and occupancy costs as a percentage of net sales,” the retailer observed.
Its effective tax rate for the quarter under review was higher at 50 per cent as against 46 per cent and was higher primarily due to a tax settlement related to a prior tax year.
CEO Daniel Griesemer said, “Second quarter results were in line with our outlook, with sales growth driven by new store openings over the past twelve months and a strong e-commerce business.”
“We maintained our diligent inventory management, resulting in continued healthy product margins, and began the third quarter with inventory well positioned for the back-to-school season,” he added.
“Our merchandise offering is resonating well with our customers and we are encouraged by the solid start to the third quarter,” Griesemer noted.
As of August 1, 2015, the company had $77 million of cash and marketable securities and no debt outstanding under its revolving credit facility.
This compares to $57 million of cash and marketable securities and no debt as of August 2, 2014.
The company expects third quarter comparable store sales growth to be positive low single digits and net income per diluted share to be in the range of $0.12 to $0.16.
“This assumes an anticipated effective tax rate of approximately 40% and a weighted average diluted share count of 28.8 million shares,” it also added.
Tillys is headquartered in Southern California, USA and, as of August 26, 2015, operated 216 stores and an online website. (AR)
Fibre2Fashion News Desk – India