Tilly’s Inc Reports 1Q 2017 Financial Results, Shares Up Over 15%

Tilly’s Inc (NYSE: TLYS) shares are up over 15% during the pre-market, after the company reported its first quarter fiscal 2017 financial results yesterday. Tilly’s Inc beat the Street’s expectations, and provided guidance for the second quarter 2017. Let’s take a look at Tilly’s first quarter 2017 earnings results, guidance, statistics, and bull and bear cases.

Tilly’s Inc 1Q 2017 Financial Results

Tilly’s Inc reported a net loss of 1 cent per share, compared to a net loss of 10 cents per share in the same quarter in the prior fiscal year, a significant increase year over year. The company’s reported results beat the Zacks Consensus Estimate, which was looking for a net loss of 10 cents per share. Additionally, Tilly’s Inc reported revenue of $120.9M for 1Q 2017, which topped Wall Street estimates. Analysts surveyed by Zacks Investment Research were looking for Tilly’s Inc to report revenue of $114.4M.

The company’s comparable store sales, including e-commerce sales, grew by 0.6% year over year, while comparable store sales decreased by 4.1% in the same period in the prior fiscal year. Tilly’s Inc reported an operating loss of $0.3M, or 0.3% of net sales, compared to its operating loss of $4M, or 3.3% of net sales, in 1Q 2016.

Tilly’s Second Quarter 2017 Outlook

According to Tilly’s Inc CFO Michael L. Henry, “Based on current trends and with an expectation of continued choppiness in store traffic, we expect second quarter comparable store sales to be in the range of flat to up low single digits, operating income to be in the range of $1.2 million to $3.5 million and earnings per share to be in the range of $0.03 to $0.07 compared to last year’s $0.05.”

Henry added, “We expect our second quarter tax rate to be at a more normalized rate of approximately 40% and weighted average shares to be approximately 29 million. We expect inventories per square foot to remain below LY levels and our store count to remain unchanged at 222 total stores, which is a decline of 3 from the end of the second quarter last year.”

What You Need to Know About TLYS

  • TLYS reported 1Q 2017 financial results, and beat Wall Street expectations, and the company provided a modest outlook for 2Q 2017.
  • As of May 23, 2017, TLYS had a trailing 12-month (TTM) price-to-earnings (P/E) of 21.5, while the apparel stores industry average was 18. This could be an indication that it might be slightly overvalued, in this aspect.
  • Tilly’s Inc had a price-to-book ratio of 1.3, which was well below the industry average of 5.1.
  • The company had a TTM price-to-sales ratio of 0.40, while the industry average was 1.0.
  • TLYS has been down over 18% over the past three months, and nearly 30% YTD. However, the stock has been up over 60% over the past year.

Take a look at TLYS on the daily chart.

Tilly's Inc

Source: TradingView

Bull Case

TLYS beat the consensus estimates, and that might call for some traders to get long the stock. Additionally, the stock has been trading in a downtrend, and some traders may be looking to get long the stock as a mean reversion trade. Moreover, TLYS had an attractive price-to-book ratio and TTM price-to-sales ratio, which may also argue for traders to be bullish on the stock.

Bear Case

TLYS indicated that there could be “continued choppiness in store traffic,” and therefore its guidance for its 2Q 2017 comparable store sales is forecast to be in the range of flat to up low single digits. Moreover, some traders may be looking for TLYS for the upper downtrend line to hold as resistance, which might argue for a bearish view.

Final Thoughts

Tilly’s Inc shares are up over 15% ahead of the bell, following its 1Q 2017 earnings and revenue beat. The company provided modest guidance for 2Q 2017, and traders will be focused on these figures at its next quarterly earnings release. Now, there are reasons for traders to be long, as well as arguments for traders to be short. For now, the bulls seem to be winning.

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