Tilly’s, Inc. reported fourth-quarter earnings climbed 31.5 percent on a 9.2 percent revenue gain.

“I am very pleased with the continued progress we have made on our initiatives to increase sales and profitability, which delivered positive comparable stores sales and fourth quarter earnings above our upwardly revised expectations and up 32 year-over-year. We achieved healthy product margins and exited this period with inventory well positioned for the Spring season,” commented Daniel Griesemer, President and Chief Executive Officer. “I am very proud of the hard work and disciplined execution of our team during the past year. The fundamentals of our business are strong and I believe we are prepared to take advantage of the opportunities we see to further improve our business performance in fiscal 2015 and the longer term.”

For the fourth quarter ended Jan. 31, 2015:

  • Total net sales were $152.8 million, an increase of 9.2 compared to $139.9 million in the fourth quarter of 2013.
  • Comparable store sales, which include e-commerce sales, increased 2.9 compared to the same 13-week period in 2013.
  • Gross profit increased 13.2 to $49.0 million compared to $43.3 million in the fourth quarter of 2013. Gross margin was 32.1 compared to 30.9 in the fourth quarter of 2013. The increase was primarily due to a 40 basis point increase in product margins and lower buying, distribution and occupancy costs as a percentage of net sales due to positive comparable store sales.
  • Operating income was $11.2 million and included $1.0 million in non-cash store asset impairment charges recorded in the fourth quarter. This compares to operating income of $8.5 million in the fourth quarter of 2013, which included $1.8 million in non-cash store asset impairment charges.
  • Net income was $7.1 million, or $0.25 per diluted share, based on a weighted average diluted share count of 28.1 million shares and an effective tax rate of approximately 37, reflecting a lower rate than expected primarily due to certain tax credits. This compares to net income in the fourth quarter of 2013 of $5.4 million, or $0.19 per diluted share, based on a weighted average diluted share count of 28.2 million shares and an effective tax rate of approximately 36 due to a one-time tax benefit related to return to provision adjustments.

For the fifty-two weeks ended Jan. 31, 2015:

  • Total net sales were $518.3 million, an increase of 4.5 compared to $495.8 million for the prior year.
  • Comparable store sales, which include e-commerce sales, decreased 2.8 compared to the prior year.
  • Gross profit increased 3.1 to $155.5 million compared to $150.8 million in the prior year. Gross margin was 30.0, compared to 30.4 in the prior year. The decrease was primarily due to a 20 basis point increase in product margins, offset primarily by higher buying, distribution and occupancy costs as a percentage of net sales due to negative comparable store sales.
  • Operating income was $23.2 million compared to $29.7 million in the prior year.
  • Net income was $14.1 million, or $0.50 per diluted share, based on a weighted average diluted share count of 28.1 million shares. This compares to net income in the prior year of $18.1 million, or $0.65 per diluted share, based on a weighted average diluted share count of 28.1 million shares.

Balance Sheet and Liquidity

As of Jan. 31, 2015, the company had $84.7 million of cash and marketable securities and no borrowings or debt outstanding on its revolving credit facility.

The Company Appoints E-Commerce Executive to the Board

The company also announced that Jason Nazar was appointed to the company’s Board of Directors on March 12, 2015. Nazar is the Co-Founder of Docstoc, Inc., an online subscription service for small businesses, where he served as Chief Executive Officer from August 2006 through Docstoc’s sale to Intuit Inc. in December 2013. Prior to founding Docstoc, Nazar was a Partner with Venature, LLC, a venture consulting firm, and currently is a Director of Carelinx Inc., a private health care company.

“We are pleased to welcome Jason Nazar to the Tilly’s Board of Directors,” said Hezy Shaked, Executive Chairman. “Nazar’s executive experience with e-commerce and online business strategy will be of immense value as we continue to focus on that important aspect of our business.”

First Quarter 2015 Outlook

The company expects first quarter comparable store sales to increase in the low single digits, and net income per diluted share to be in the range of $0.03 to $0.05. This assumes an anticipated effective tax rate of approximately 40 and a weighted average diluted share count of 28.2 million shares. First quarter 2014 net income per diluted share was $0.02, based on a weighted average diluted share count of 28.2 million shares.