In an effort to further improve its financial position and liquidity in light of the uncertainty regarding the potential length and severity of the COVID-19 pandemic and its corresponding impact on its business, Tilly’s Inc. announced that it has taken the following precautionary actions in response to the COVID-19 pandemic to date:
- Closed all 239 of the company’s stores across the United States effective March 18, 2020, as previously announced;
- Borrowed approximately $23.7 million under its credit facility, the maximum amount available, at an interest rate of approximately 1.7 percent per annum;
- Furloughed all non-management store associates and a portion of its corporate office staff;
- Substantially closed its Irvine, California distribution center that serves its stores and furloughed a significant majority of the distribution management and staff working in that center (its e-commerce distribution center continues to operate at normal capacity on split shifts); and
- Identified additional expense reductions for fiscal 2020 ending January 30, 2021 that may be implemented as necessary.
In addition to the foregoing actions by the company, in order to personally share in the burden facing the Tillys family, the company’s management team and Board of Directors have taken the following actions, until the company’s stores reopen, or conditions improve:
- Hezy Shaked, executive chairman and chief strategy officer, has elected to forgo his salary;
- Ed Thomas, president and chief executive officer, has elected to forgo his salary for the month of April 2020, and thereafter will join the company’s management team in taking a temporary pay cut;
- Each of the other members of the company’s corporate management team will take a significant temporary pay cut, effective immediately, based on a graduated scale according to annual salary; and
- The members of the Board of Directors have unanimously elected to forgo their respective cash retainer fees for service on the Board.
“We are certainly experiencing unprecedented times, and it breaks our hearts as a management team to have to furlough members of our outstanding family of highly engaged store associates, distribution staff, and corporate team members,” commented Ed Thomas, president and chief executive officer. “We look forward to the day when we can welcome our team back home with confidence that better days will be ahead.”
With the health and safety of its employees, customers and communities in mind, all Tillys stores will remain closed to the public until further notice. The company will continue to follow the guidance of local, state and federal governments, as well as health organizations, to determine when it can safely reopen its stores to the public. The company’s website at www.tillys.com and its mobile app remains available to customers at this time.
As of March 27, 2020, the company’s cash and investments on hand totaled approximately $122.4 million, inclusive of the $23.7 million borrowed under the company’s credit facility. While the company anticipates that the foregoing responsive actions by the company will remain in effect at least until the company’s stores are able to reopen to the public, the company cannot predict with any certainty when its stores will be able to reopen to the public, or what additional measures may need to be taken as the COVID-19 pandemic continues to evolve. As a result of these actions, however, the company believes its cash reserves are sufficient to meet its needs for the remainder of fiscal 2020, assuming e-commerce operations are able to continue, merchandise inventories are appropriately managed, store rents are deferred so long as stores remain closed, and other various actions are taken to help mitigate its expenses during these challenging times.
Photo courtesy Tilly’s