- By Mrinalini Chaudhuri
There are several stocks with huge potential that investors might miss, and Tilly's Inc. (TLYS) is one of them. The company posted excellent quarterly results, including a 7.35% increase in net sales. Further, net sales for the first nine months increased 4.3%.
Tilly's is the leading specialty retailer of West Coast inspired apparel, footwear and accessories for young men, young women, boys and girls. The company offers unparalleled merchandise assortment of 600 brands and five proprietary, exclusive brands available both in stores and online. Currently, the company operates 225 stores in 32 states.
-
Warning! GuruFocus has detected 3 Warning Signs with BMY. Click here to check it out.
-
The intrinsic value of TLYS
Strong third-quarter results
On Nov. 30, 2016, the Irvine, California-based company reported its financial results for the third quarter ended Oct. 29. The company's net sales increased 7.35% to $152.11 million, compared to $141.69 million for the comparable prior-year period. Comparable store sales (including e-commerce sales) for the reported quarter increased 4.4%, compared to 3.9% in the third quarter of 2015.
Gross profit for the reported quarter increased 7.46% to $47.97 million, compared to $44.64 million in the prior-year period. The gross profit margin increased 31.54% from 31.5% in the same period last year.
Tilly's operating income increased 97.96% to $10.67 million, compared to $5.39 million in the year-ago quarter. Operating income as a percentage of net sales increased 7.01% from 3.8% in the same period last year. Net income increased 128.47% to $6.42 million, or 23 cents per diluted share. Net income as a percentage of net sales increased 4.22% from 1.98% in the prior-year period.
The company's EBIT increased 99.07% to $10.77 million, compared to $5.41 million for the comparable prior year period. Cost of sales increased 7.30% to $104.14 million, compared to $97.05 million. Selling, general and administrative expenses for the reported quarter decreased 4.97% to $37.3 million, compared to $39.25 million in the same period last year.
Tilly's ended the quarter with cash and cash equivalents of $43.38 million, a decrease of 14.97% from the year-ago quarter. Further, total long-term liabilities for the reported quarter decreased 11.12% to $37.09 million, compared to $41.73 million for the comparable prior-year period.
Attributes of the quarter
Gross margin increased 110 basis points primarily due to lower buying, distribution and occupancy costs. Selling, general and administrative expenses decreased mainly due to lower non-cash store impairment charges, corporate payroll savings and several other smaller expense reductions. Further, operating income increased primarily due to the reductions in selling, general and administrative expenses.