Tilly's (TLYS) Stock Dips On Dismal Holiday Sales & View Cut

Shares of Tilly’s, Inc. (NYSE:TLYS) fell more than 22% during the trading session on Jan 13, after the retailer revealed sluggish holiday sales numbers and slashed view. Despite a robust Black Friday weekend and Cyber Monday, a sudden deceleration in sales and traffic in the second and third weeks of December weighed on the results of the holiday period.

Notably, comparable store sales declined 2% for the nine weeks, ended Jan 5, 2019, against growth of 5.8% in the prior-year period. The company witnessed dismal results in most of the geographical markets, except for New England, the Upper Midwest and Arizona. We note that the Southeast, Florida and Nevada regions were most affected in terms of comparable-store sales.

Further, comparable store sales in physical stores, which accounted for 80.5% of total sales in the nine weeks, slumped 2.7%. Meanwhile, e-commerce sales, which contributed 19.5% to total sales in the said period, inched up 1%. Moreover, comparable store sales for girls’ and women’s merchandises were positive but were more than offset by softness in other merchandising categories such as footwear and accessories.

Total sales for the nine weeks were $143.9 million, up 1.1% from $142.4 million reported in the prior-year period.

Owing to dismal results, management trimmed its fourth-quarter fiscal 2019 outlook. The company now anticipates a 2-3% decline in comparable store sales, whereas it earlier mentioned 2-5% growth. Adjusted earnings are expected to be 18-20 cents, down from 29-32 cents stated previously.

Nonetheless, the Zacks Rank #1 (Strong Buy) stock is leaving no stone unturned to get back on track. In this regard, store expansion plans, especially in the Northeast, comprising Texas and Chicago regions, along with improved loyalty program and investment in customer-facing technologies bode well. Such well chalked out efforts may provide some cushion to the stock, which has declined 7% in the past three months against the industry’s growth of 8.1%.

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