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4-Traders Homepage  >  Equities  >  Nyse  >  Tilly's Inc    TLYS

TILLY'S INC (TLYS)
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Delayed Quote. Delayed  - 12/14 10:02:03 pm
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11/29 TILLY : beats Street 3Q forecasts
11/29 TILLY’S, : Announces Fiscal 2017 Third Quarter Results
11/24TILLY'S INC : quaterly earnings release
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TILLY : S, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

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12/05/2017 | 12:07pm CET
The following discussion and analysis of the financial condition and results of
our operations should be read together with the financial statements and related
notes of Tilly's, Inc. included in Part II Item 1 of this Quarterly Report on
Form 10-Q and with our audited consolidated financial statements and the related
notes included in our Annual Report on Form 10-K for the fiscal year ended
January 28, 2017. As used in this Quarterly Report on Form 10-Q, except where
the context otherwise requires or where otherwise indicated, the terms
"company", "World of Jeans & Tops", "we", "our", "us", "Tillys" and "Tilly's"
refer to Tilly's, Inc. and its subsidiary.
Cautionary Statement Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements that
involve risks and uncertainties, as well as assumptions that, if they never
materialize or prove incorrect, could cause our results to differ materially
from those expressed or implied by such forward-looking statements. The
statements contained in this Quarterly Report on Form 10-Q that are not purely
historical are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking
statements are often identified by the use of words such as, but not limited to,
"anticipate", "believe", "can", "continue", "could", "estimate", "expect",
"intend", "may", "plan", "project", "seek", "should", "target", "will", "would"
and similar expressions or variations intended to identify forward-looking
statements. These statements are based on the beliefs and assumptions of our
management based on information currently available to management. These
forward-looking statements are subject to numerous risks and uncertainties,
including the risks and uncertainties described under the section titled "Risk
Factors" in our Annual Report on Form 10-K for the fiscal year ended January 28,
2017, those identified in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and elsewhere in this Quarterly
Report on Form 10-Q, and in other filings we may make with the Securities and
Exchange Commission from time to time. Moreover, we operate in an evolving
environment. New risk factors and uncertainties emerge from time to time and it
is not possible for our management to predict all risk factors and
uncertainties, nor can we assess the impact of all factors on our business or
the extent to which any factor, or combination of factors may cause actual
results to differ materially from those contained in any forward-looking
statement. We qualify all of our forward-looking statements by these cautionary
statements.

Overview

Tillys is a destination specialty retailer of casual apparel, footwear and
accessories for young men, young women, boys and girls. We offer an extensive
assortment of iconic global, emerging, and proprietary brands rooted in an
active and social lifestyle. Tillys started operations in 1982, when Hezy Shaked
and Tilly Levine opened our first store in Orange County, California. As of
October 28, 2017, we operated 220 stores, averaging 7,600 square feet, in 31
states. We also sell our products through our e-commerce website,
www.tillys.com.

Known or Anticipated Trends
The retail industry has experienced a general downward trend in customer traffic
to physical stores for an extended period of time. Conversely, online shopping
has generally increased and resulted in sustained online sales growth. We
believe these market trends will continue, despite the improvement in store
traffic that we have experienced during the first nine months of fiscal 2017.
There can be no guarantee that our recent improvement in store traffic will
continue given the broader industry trends.
We expect to open two new stores and close three existing stores during the
fourth quarter of fiscal 2017. We will continue to focus our efforts on
improving our existing stores, and expanding our online/digital capabilities
through omni-channel initiatives designed to provide a seamless shopping
experience for our customers, whether in-store or online.
During fiscal 2018, we plan to open 10 to 15 new stores as well as a limited
number of RSQ-branded "pop-up" stores. We will leverage existing markets where
we believe our brand recognition can be enhanced with new stores that are
planned to drive additional improvement to our operating income.

How We Assess the Performance of Our Business

In assessing the performance of our business, we consider a variety of performance and financial measures. The key indicators of the financial condition and operating performance of our business are net sales, comparable store sales, gross profit, selling, general and administrative expenses and operating income.



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Net Sales

Net sales reflect revenue from the sale of our merchandise at store locations as
well as sales of merchandise through our e-commerce platform, which is reflected
in sales when the merchandise is received by the customer. Net sales also
include shipping and handling fees for e-commerce shipments that have been
delivered to the customer. Net sales are net of returns on sales during the
period as well as an estimate of returns expected in the future stemming from
current period sales. Net sales are adjusted for the unredeemed awards and
accumulated partial points on our customer loyalty program. Revenue from the
sale of gift cards is deferred and not included in net sales until the gift
cards are used to purchase merchandise. However, over time, the redemption of
some gift cards becomes remote (referred to as "gift card breakage"). Revenue
from estimated gift card breakage is also included in net sales.
Our business is seasonal and as a result our revenues fluctuate from quarter to
quarter. In addition, our revenues in any given quarter can be affected by a
number of factors including the timing of holidays and weather patterns. The
third and fourth quarters of the fiscal year, which include the back-to-school
and holiday sales seasons, have historically produced stronger sales and
disproportionately stronger operating results than have the first two quarters
of the fiscal year.
Comparable Store Sales
Comparable store sales is a measure that indicates the change in year-over-year
comparable store sales which allows us to evaluate how our store base is
performing. Numerous factors affect our comparable store sales, including:

• overall economic trends;

• our ability to attract traffic to our stores and e-commerce platform;

• our ability to identify and respond effectively to consumer preferences

         and fashion trends;


• competition;


• the timing of our releases of new and seasonal styles;

• changes in our product mix;

• pricing;

• the level of customer service that we provide in stores and through our

e-commerce platform;

• our ability to source and distribute products efficiently;

• calendar shifts of holiday or seasonal periods;

• the number and timing of store openings and the relative proportion of

new stores to mature stores; and

• the timing and success of promotional and advertising efforts.


Comparable store sales are sales from our e-commerce platform and stores open at
least 12 full fiscal months as of the end of the current reporting period. A
remodeled, relocated or refreshed store is included in comparable store sales,
both during and after construction, if the square footage of the store was not
changed by more than 20% and the store was not closed for more than five days in
any fiscal month. We include sales from our e-commerce platform as part of
comparable store sales as we manage and analyze our business on a single
omni-channel and have substantially integrated our investments and operations
for our stores and e-commerce platform to give our customers seamless access and
increased ease of shopping. Comparable store sales exclude gift card breakage
income and e-commerce shipping and handling fee revenue. Some of our competitors
and other retailers may calculate comparable or "same store" sales differently
than we do. As a result, data in this report regarding our comparable store
sales may not be comparable to similar data made available by other retailers.


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Gross Profit
Gross profit is equal to our net sales less our cost of goods sold. Cost of
goods sold reflects the direct cost of purchased merchandise as well as buying,
distribution and occupancy costs. Buying costs include compensation and benefit
expense for our internal buying organization. Distribution costs include costs
for receiving, processing and warehousing our store merchandise, and shipping of
merchandise to or from our distribution and e-commerce fulfillment centers and
to our e-commerce customers and between store locations. Occupancy costs include
the rent, common area maintenance, utilities, property taxes, security and
depreciation costs of all store locations. These costs are significant and can
be expected to continue to increase as our company grows. The components of our
reported cost of goods sold may not be comparable to those of other retail
companies.
We regularly analyze the components of gross profit as well as gross profit as a
percentage of net sales. Specifically we look at the initial markup on
purchases, markdowns and reserves, shrinkage, buying costs, distribution costs
and occupancy costs. Any inability to obtain acceptable levels of initial
markups, a significant increase in our use of markdowns or a significant
increase in inventory shrinkage or inability to generate sufficient sales
leverage on the buying, distribution and occupancy components of cost of goods
sold could have an adverse impact on our gross profit and results of operations.
Gross profit is also impacted by shifts in the proportion of sales of
proprietary branded products compared to third-party branded products, as well
as by sales mix shifts within and between brands and between major product
departments such as 'young men's and women's apparel', footwear or accessories.
A substantial shift in the mix of products could have a material impact on our
results of operations. In addition, gross profit and gross profit as a percent
of sales have historically been higher in the third and fourth quarters of the
fiscal year, as these periods include the back-to-school and winter holiday
selling seasons. In those periods, various costs, such as occupancy costs,
generally do not increase in proportion to the seasonal sales increase.
Selling, General and Administrative Expenses
Our selling, general and administrative, or SG&A, expenses are composed of store
selling expenses and corporate-level general and administrative expenses. Store
selling expenses include store and regional support costs, including personnel,
advertising and debit and credit card processing costs, e-commerce receiving and
processing costs and store supplies costs. General and administrative expenses
include the payroll and support costs of corporate functions such as executive
management, legal, accounting, information systems, human resources, impairment
charges and other centralized services. Store selling expenses generally vary
proportionately with net sales and store growth. In contrast, general and
administrative expenses are generally not directly proportional to net sales and
store growth, but will be expected to increase over time to support the needs of
our growing company. SG&A expenses as a percentage of net sales are usually
higher in lower volume periods and lower in higher volume periods.
Operating Income
Operating income equals gross profit less SG&A expenses. Operating income
excludes interest income, interest expense and income taxes. Operating income
percentage measures operating income as a percentage of our net sales.



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Results of Operations
The following tables summarize key components of our unaudited results of
operations for the periods indicated, both in dollars (in thousands) and as a
percentage of our net sales.
                                             Three Months Ended                 Nine Months Ended
                                        October 28,      October 29,      October 28,      October 29,
                                            2017             2016             2017             2016

Statements of Operations Data:
Net sales                              $    152,824     $    152,106     $    412,581     $    408,736
Cost of goods sold                          102,730          104,137          288,653          289,343
Gross profit                                 50,094           47,969          123,928          119,393
Selling, general and administrative
expenses                                     35,982           37,302          111,384          110,460
Operating income                             14,112           10,667           12,544            8,933
Other income, net                               375              103              810              270
Income before income taxes                   14,487           10,770           13,354            9,203
Income tax expense                            5,730            4,353            5,354            4,097
Net income                             $      8,757     $      6,417     $      8,000     $      5,106

Percentage of Net Sales:
Net sales                                     100.0 %          100.0 %          100.0 %          100.0 %
Cost of goods sold                             67.2 %           68.5 %           70.0 %           70.8 %
Gross profit                                   32.8 %           31.5 %           30.0 %           29.2 %
Selling, general and administrative
expenses                                       23.5 %           24.5 %           27.0 %           27.0 %
Operating income                                9.2 %            7.0 %            3.0 %            2.2 %
Other income, net                               0.2 %            0.1 %            0.2 %            0.1 %
Income before income taxes                      9.5 %            7.1 %            3.2 %            2.3 %
Income tax expense                              3.7 %            2.9 %            1.3 %            1.0 %
Net income                                      5.7 %            4.2 %            1.9 %            1.2 %


The following table presents store operating data for the periods indicated:
                                               Three Months Ended                 Nine Months Ended
                                          October 28,      October 29,      October 28,      October 29,
                                              2017             2016             2017             2016
Operating Data:
Stores operating at end of period                 220              225              220              225
Comparable store sales change (1)                 1.5 %            4.4 %            1.5 %            0.7 %
Total square feet at end of period (in
thousands)                                      1,681            1,716            1,681            1,716
Average net sales per brick-and-mortar
store (in thousands) (2)                 $        606     $        594     $      1,625     $      1,595
Average net sales per square foot (2)    $         79     $         78     $        213     $        210
E-commerce revenues (in thousands) (3)   $     18,996     $     18,408     $     52,101     $     49,934
E-commerce revenues as a percentage of
net sales                                        12.4 %           12.1 %           12.6 %           12.2 %


(1) Comparable store sales are net sales from stores that have been open at least

12 full fiscal months as of the end of the current reporting period. A

remodeled or relocated store is included in comparable store sales, both

during and after construction, if the square footage of the store was not

changed by more than 20% and the store was not closed for more than five days

in any fiscal month. Comparable store sales include sales through our

e-commerce platform but exclude gift card breakage income, deferred revenue

on loyalty program and e-commerce shipping and handling fee revenue.

(2) E-commerce sales, e-commerce shipping and handling fee revenue and gift card

breakage are excluded from net sales in deriving average net sales per

brick-and-mortar store.

(3) E-commerce revenues include e-commerce sales and e-commerce shipping fee

    revenue.




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Third Quarter Ended October 28, 2017 Compared to Third Quarter Ended October 29, 2016

Net Sales
Net sales were $152.8 million in the third quarter of fiscal 2017 compared to
$152.1 million in the third quarter of fiscal 2016, an increase of $0.7 million,
or 0.5%.
The increases in net sales were attributed to an increase in comparable store
sales of 1.5%, driven by an increase in store traffic and e-commerce growth as
compared to the third quarter of fiscal 2016. E-commerce revenues represented
12.4% of our total net sales, or $19.0 million, in the third quarter of fiscal
2017 as compared to 12.1%, or $18.4 million, in the third quarter of fiscal
2016. Our comparable store sales growth was characterized by strength in our
branded mens and boys merchandise assortments, partially offset by fashion
weakness in our girls' assortment.
Gross Profit
Gross profit was $50.1 million in the third quarter of fiscal 2017 compared to
$48.0 million in the third quarter of fiscal 2016, an increase of $2.1 million,
or 4.4%. Gross margin, or gross profit as a percentage of net sales, was 32.8%
during the third quarter of fiscal 2017 and 31.5% during the third quarter of
fiscal 2016. The comparable changes in gross margin were as follows:
   %                                 Attributable to

1.0% Decrease in buying, distribution and occupancy costs of $1.3 million

  0.3%   Increase in product margins primarily due to lower markdowns as a
         result of more efficient inventory management
  1.3%   Total


Selling, General and Administrative Expenses
SG&A expenses were $36.0 million in the third quarter of fiscal 2017 compared to
$37.3 million in the third quarter of fiscal 2016, a decrease of $1.3 million,
or 3.5%. As a percentage of net sales, SG&A expenses were 23.5% for the third
quarter of fiscal 2017 compared to 24.5% during the third quarter of fiscal
2016. The components of the SG&A decrease, both in terms of percentage of net
sales and total dollars, were as follows:
  %      $ millions                       Attributable to
(0.6)%     $(0.9)   Decrease in marketing spend
(0.3)%     (0.4)    Decrease in corporate payroll and benefits
(0.1)%       -      Decrease in all other SG&A expenses as a percentage of sales
(1.0)%     $(1.3)   Total


Operating Income
Operating income was $14.1 million, or 9.2% of net sales, in the third quarter
of fiscal 2017 compared to $10.7 million, or 7.0% of net sales, for the third
quarter of fiscal 2016.
Income Tax Expense
Income tax expense was $5.7 million in the third quarter of fiscal 2017 compared
to $4.4 million in the third quarter of fiscal 2016. Our effective tax rates
were 39.6% and 40.4% for third quarter of fiscal 2017 and third quarter of
fiscal 2016, respectively.
Net Income and Income Per Share
Net income was $8.8 million for the third quarter of fiscal 2017 compared to
$6.4 million for the third quarter of fiscal 2016, representing an increase of
$2.3 million, due to the factors discussed above. Diluted income per share was
$0.30 for the third quarter of fiscal 2017 compared to diluted income per share
of $0.22 for the third quarter of fiscal 2016.



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Nine Months Ended October 28, 2017 Compared to Nine Months Ended October 29,
2016
Net Sales
Net sales were $412.6 million in the first nine months of fiscal 2017 compared
to $408.7 million in the first nine months of fiscal 2016, an increase of $3.8
million, or 0.9%.
The increases in net sales were attributed to an increase in comparable store
sales of 1.5%, driven by an increase in store traffic and e-commerce growth as
compared to the first nine months of fiscal 2016. E-commerce revenues
represented 12.6% of our total net sales, or $52.1 million, in the first nine
months of fiscal 2017 as compared to 12.2%, or $49.9 million, in the first nine
months of fiscal 2016. Our comparable store sales growth was characterized by
strength in our branded mens and boys merchandise assortments, partially offset
by modest decreases in our womens, girls, footwear and accessories departments.
Gross Profit
Gross profit was $123.9 million in the first nine months of fiscal 2017 compared
to $119.4 million in first nine months of fiscal 2016, an increase of $4.5
million, or 3.8%. Gross margin, or gross profit as a percentage of net sales,
was 30.0% and 29.2% during the first nine months of fiscal 2017 and fiscal 2016,
respectively. The comparable changes in gross margin were as follows:
    %                                 Attributable to
   0.7%    Decrease in buying, distribution and occupancy costs of $2.1 million
   0.1%    Increase in product margins primarily due to lower markdowns as a
           result of more efficient inventory management
   0.8%    Total


Selling, General and Administrative Expenses
SG&A expenses were $111.4 million in the first nine months of fiscal 2017
compared to $110.5 million in the first nine months of fiscal 2016, an increase
of $0.9 million, or 0.8%. As a percentage of net sales, SG&A expenses were 27.0%
during the first nine months of fiscal 2017 and fiscal 2016.The components of
the SG&A increase, both in terms of percentage of net sales and total dollars,
were as follows:
  %     $ millions                         Attributable to

1.2% $5.1 Net increase in year over year legal provisions

0.4% 1.6 Increase in expenses associated with several information

                    technology system implementations
(0.9)%    (3.4)     Decrease in marketing spend
(0.3)%    (1.1)     Decrease in non-cash store asset impairment charges
(0.3)%    (1.0)     Decrease in corporate payroll and benefits
(0.1)%    (0.3)     Decrease in all other SG&A expenses
  -%       $0.9     Total


Operating Income

Operating income was $12.5 million, or 3.0% of net sales, for the first nine
months of fiscal 2017 compared to $8.9 million, or 2.2% of net sales, for the
first nine months of fiscal 2016.
Income Tax Expense
Income tax expense was $5.4 million, or 40.1% of income before taxes, for the
first nine months of fiscal 2017 compared to $4.1 million, or 44.5% of income
before taxes, for the first nine months of fiscal 2016. The decrease in our
effective tax rate for the first nine months of fiscal 2017 was primarily due to
fewer discrete items related to the expiration of stock options, exercises of
stock options and settlement of restricted stock during the first nine months of
fiscal 2017.
Net Income and Income Per Share
Net income was $8.0 million for the first nine months of fiscal 2017 compared to
$5.1 million for the first nine months of fiscal 2016, due to the factors
discussed above. Basic and diluted income per share was $0.28 for the first nine
months of fiscal 2017 compared to $0.18 for the first nine months of fiscal
2016.


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Liquidity and Capital Resources

Our primary cash needs are for merchandise inventories, payroll, store rent and
capital expenditures. We have historically provided for these needs from
internally generated cash flows. In addition, we have access to additional
liquidity through a $25.0 million revolving credit facility with Wells Fargo
Bank, NA. We expect to continue to finance our operations from cash and
marketable securities on hand as well as cash flows from operations without
borrowing under our revolving credit facility over the next twelve months.
Working capital at October 28, 2017, was $118.1 million compared to $129.8
million at January 28, 2017, a decrease of $11.7 million. The changes in our
working capital during the first nine months of fiscal 2017 were as follows:
$ millions                              Description
  $129.8   Working capital at January 28, 2017
  (12.0)   Decrease in cash, cash equivalents and marketable securities,
           primarily due to the payment of a $20.1 million special dividend in
           February 2017

0.3 Net increase from changes in all other current assets and liabilities

$118.1 Working capital at October 28, 2017

Cash Flow Analysis

A summary of operating, investing and financing activities is shown in the following table (in thousands):

                                                 Nine Months Ended
                                           October 28,      October 29,
                                               2017             2016

Net cash provided by operating activities $ 17,685 $ 19,589 Net cash used in investing activities (37,194 ) (26,513 ) Net cash used in financing activities (20,573 )

           (714 )

Net decrease in cash and cash equivalents $ (40,082 ) $ (7,638 )


Net Cash Provided By Operating Activities
Operating activities consist primarily of net income adjusted for non-cash items
that include depreciation, asset impairment write-downs, deferred income taxes
and share-based compensation expense, plus the effect on cash of changes during
the year in our assets and liabilities.
Net cash flows provided by operating activities were $17.7 million during the
first nine months of fiscal 2017 compared to $19.6 million in the first nine
months of fiscal 2016. The $1.9 million decrease in cash provided by operating
activities was primarily due to the timing of vendor payments.

Net Cash Used In Investing Activities
Cash flows from investing activities consist primarily of capital expenditures
and maturities and purchases of marketable securities.
Net cash used in investing activities was $37.2 million during the first nine
months of fiscal 2017 compared to $26.5 million during the first nine months of
fiscal 2016. Net cash used in investing activities in the first nine months of
fiscal 2017 consisted of capital expenditures totaling $9.7 million and
purchases of marketable securities of $112.6 million, partially offset by
proceeds from the maturities of marketable securities of $85.1 million. Net cash
used in investing activities during the first nine months of fiscal 2016
primarily consisted of capital expenditures totaling $14.8 million and purchases
of marketable securities of $81.8 million, partially offset by proceeds from the
maturities of marketable securities of $70.0 million.
Net Cash Used in Financing Activities
Cash flows used in financing activities consist primarily of cash dividend
payments, payments on our capital lease obligation and proceeds from employee
exercises of stock options.


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Net cash used in financing activities was $20.6 million during the first nine
months of fiscal 2017 compared to $0.7 million during the first nine months of
fiscal 2016. Financing activities in the first nine months of fiscal 2017
primarily consisted of dividends paid of $20.1 million and cash payments on our
capital lease obligation of $0.7 million. Financing activities in the first nine
months of fiscal 2016 primarily consisted of cash payments on our capital lease
obligation of $0.6 million.

Line of Credit

Our amended and restated credit agreement with Wells Fargo Bank, N.A. (the
"Bank") provides for a $25.0 million revolving line of credit with a maturity
date of June 26, 2020. The interest rate charged on borrowings is selected at
our discretion at the time of draw between the London Interbank Offered Rate,
plus 0.75%, or at the Bank's prime rate. The agreement allows for the
declaration and payment of dividends or distributions to stockholders. On
January 31, 2017, our Board of Directors declared a special cash dividend of
$0.70 per share to all holders of record of issued and outstanding shares of
both Class A and Class B common stock as of the close of business on February
15, 2017. Payment of the dividend was made on February 24, 2017. The line of
credit is secured by substantially all of our assets. As a sub-feature under the
credit agreement, the Bank may also issue stand-by and/or commercial letters of
credit up to $15.0 million.

We are required to maintain certain financial and non-financial covenants in
accordance with the line of credit. The financial covenants require certain
levels of leverage and profitability, such as (i) income before income taxes not
to be less than $1.0 million (calculated at the end of each fiscal quarter on a
trailing 12-month basis), (ii) a maximum ratio of 4.00 to 1.00 as of each
quarter end for "Funded Debt to EBITDAR", defined as the sum of total debt,
capital leases and annual rent expense multiplied by six divided by the sum of
net income, interest expense, taxes, depreciation, amortization and annual rent
expense on a trailing 12-month basis, and (iii) requires minimum eligible
inventory, cash, cash equivalents and marketable securities totaling $50.0
million as of the end of each quarter. In addition, maximum investment in fixed
assets in any fiscal year of $50.0 million.

In September 2016, we established a $750,000 standby letter of credit as
security against insurance claims as required by our workers compensation
insurance policy.  There has been no activity under this letter of credit since
its inception.
As of October 28, 2017, we were in compliance with all of our covenants and had
no outstanding borrowings under the revolving credit facility.
Contractual Obligations
As of October 28, 2017, there were no material changes to our contractual
obligations as described in the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" section of our Annual Report on
Form 10-K for the fiscal year ended January 28, 2017.

Off-Balance Sheet Arrangements

We are not a party to any off-balance sheet arrangements, except for operating leases, purchase obligations and our revolving credit facility.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires the appropriate application of
certain accounting policies, some of which require us to make estimates and
assumptions about future events and their impact on amounts reported in our
consolidated financial statements. Since future events and their impact cannot
be determined with absolute certainty, the actual results will inevitably differ
from our estimates. A summary of our significant accounting policies is included
in Note 2 to the consolidated financial statements in our Annual Report on Form
10-K for the fiscal year ended January 28, 2017.
Recently Adopted Accounting Standard
On January 29, 2017, we adopted Financial Accounting Standards Board (the
"FASB") Accounting Standards Update ("ASU") No. 2016-09, Improvements to
Employee Share-Based Payment Accounting, which simplifies the accounting and
reporting for share-based compensation, including the accounting for income
taxes, forfeitures and statutory tax withholding requirements, as well as the
classification in the statement of cash flows. We elected to account for
forfeitures as they occur, rather than


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estimate expected forfeitures. The adoption of ASU 2016-09 resulted in a
cumulative-effect adjustment of $0.2 million decrease to retained earnings and a
$0.2 million increase to additional paid-in-capital as of January 29, 2017,
related to the recognition of previously estimated expected forfeitures using
the modified retrospective method. We adopted the cash flow presentation which
requires excess tax benefits to be presented as an operating activity rather
than a financing activity. The adoption of this update did not have an effect on
our consolidated results of operations.
New Accounting Standards Not Yet Adopted
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with
Customers ("ASU 2014-09"), along with amendments issued in 2015 and 2016, which
amends the existing accounting standards for revenue recognition. ASU 2014-09
outlines principles that govern revenue recognition at an amount an entity
expects to be entitled when products are transferred to customers. ASU 2014-09,
which will become effective for us in the first quarter of fiscal 2018, may be
applied retrospectively for each period presented (the "full retrospective
method") or retrospectively with the cumulative effect recognized in the opening
retained earnings balance in fiscal year 2018 (the "modified retrospective
method"). We currently anticipate adopting the standard using the modified
retrospective method. We are in the process of evaluating the overall impact of
adopting the new standard on our consolidated financial statements. Based on our
preliminary assessment, we have determined that the adoption will change the
timing of recognition of gift card breakage income, which is currently
recognized when the probability of the redemption is remote and recorded in net
sales. The new guidance will require recognition of gift card breakage income
proportionately in net sales as redemptions occur. The new guidance also
requires enhanced disclosures, such as disaggregation of revenues, revenue
recognition policies that require significant judgment and identification of
performance obligations to customers. Based on our preliminary assessment, we
currently do not expect the adoption of this update to have a material effect on
our consolidated results of operations.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Accounting Standards
Codification 842). The new standard requires lessees to apply a dual approach,
classifying leases as either finance or operating leases based on the principle
of whether or not the lease is effectively a financed purchase by the lessee.
This classification will determine whether lease expense is recognized based on
an effective interest method or on a straight-line basis over the term of the
lease. A lessee is also required to record a right-of-use asset and a lease
liability for all leases with a term of greater than 12 months regardless of
their classification. Leases with a term of 12 months or less will be accounted
for similar to existing guidance for operating leases. ASU 2016-02, which will
become effective for us in the first quarter of fiscal 2019, with early adoption
permitted, must be adopted using the modified retrospective method. The new
standard is expected to impact our consolidated financial statements as we
conduct all of our retail sales and corporate operations in leased facilities.
We are in the process of evaluating the impact of adopting the new standard on
our consolidated financial statements.

© Edgar Online, source Glimpses

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Financials ($)
Sales 2018 579 M
EBIT 2018 30,2 M
Net income 2018 14,1 M
Debt 2018 -
Yield 2018 -
P/E ratio 2018 31,70
P/E ratio 2019 24,49
Capi. / Sales 2018 0,77x
Capi. / Sales 2019 0,75x
Capitalization 445 M
Chart TILLY'S INC
Duration : Period :
Tilly's Inc Technical Analysis Chart | TLYS | US8868851028 | 4-Traders
Technical analysis trends TILLY'S INC
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 3
Average target price 16,0 $
Spread / Average Target 3,7%
EPS Revisions
Managers
NameTitle
Edmond S. Thomas President, Chief Executive Officer & Director
Hezy Shaked Executive Chairman & Chief Strategy Officer
Michael L. Henry Chief Financial Officer & Head-Investor Relations
Janet E. Kerr Independent Director
Seth R. Johnson Independent Director
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