Tilly’s(US:TLYS)2023-12-01 21:10Store Operations - As of October 28, 2023, Tilly's operates 249 stores across 33 states, an increase from 247 stores the previous year[92] - Tilly's plans to open four new stores in fiscal 2024, with total capital expenditures not exceeding $15 million[94] Financial Performance - Total net sales for the third quarter were $166.5 million, a decrease of $11.4 million or 6.4% compared to $177.8 million last year[107] - Gross profit was $48.7 million, or 29.3% of net sales, down from $54.6 million, or 30.7% of net sales last year[108] - SG&A expenses increased to $51.2 million, or 30.8% of net sales, compared to $48.3 million, or 27.1% of net sales last year[109] - Operating loss was $(2.5) million, or (1.5)% of net sales, compared to operating income of $6.3 million, or 3.6% of net sales last year[110] - Net loss was $(0.8) million, or $(0.03) per share, compared to net income of $5.1 million, or $0.17 per diluted share last year[113] - Total net sales for the thirty-nine weeks were $450.1 million, a decrease of $41.9 million or 8.5% compared to $491.9 million last year[114] - Gross profit for the thirty-nine weeks was $119.0 million, or 26.4% of net sales, down from $150.4 million, or 30.6% of net sales last year[115] - SG&A expenses for the thirty-nine weeks were $141.4 million, or 31.4% of net sales, compared to $137.8 million, or 28.0% of net sales last year[116] - Operating loss for the thirty-nine weeks was $(22.5) million, or (5.0)% of net sales, compared to operating income of $12.6 million, or 2.6% of net sales last year[117] - Net sales from e-commerce were $90.0 million, a decrease of $5.8 million or 6.1%, representing 20.0% of total net sales compared to 19.5% last year[121] Expenses and Costs - Store payroll and related expenses accounted for approximately 47% of total selling, general and administrative expenses in the first nine months of fiscal 2023[93] - The average hourly rate for store payroll in the first nine months of fiscal 2023 was 26% higher than in the same period of 2019 and 7% higher than in the previous year[93] - SG&A expenses are expected to increase over time to support the company's growth, with a higher percentage during lower volume periods[102] Capital Expenditures - Total capital expenditures for fiscal 2023 are expected to be approximately $13 million, including 7 new stores and upgrades to distribution and IT systems[93] Cash Flow and Financing - Working capital decreased to $76.4 million as of October 28, 2023, down from $94.1 million at January 28, 2023, a decline of $17.7 million[125] - Net cash used in operating activities was $10.5 million for the thirty-nine weeks ended October 28, 2023, compared to $11.1 million for the same period last year, reflecting a decrease of $0.6 million[128] - Net cash used in investing activities was $18.7 million this year, a significant change from net cash provided of $55.5 million last year[130] - The company entered into a credit agreement with Wells Fargo Bank, providing a revolving credit facility of up to $65.0 million, maturing on April 27, 2026[134] - As of October 28, 2023, the company was eligible to borrow up to $63.0 million under the credit agreement and had no outstanding borrowings[139] - The company reported a net cash provided by financing activities of $37 thousand this year, compared to a net cash used of $10.8 million last year[133] Market Conditions - The company anticipates that inflationary pressures will continue to adversely impact consumer confidence and spending, affecting operating results[93] Inventory and Assets - An increase in merchandise inventories net of accounts payable was recorded at $9.6 million[125] - The company experienced a decrease in cash, cash equivalents, and marketable securities by $19.3 million primarily due to lower net income[125] Covenants and Obligations - The company is subject to various covenants under the credit agreement, including a financial covenant requiring availability to remain above $6.0 million[137] - There were no material changes to the company's contractual obligations as of October 28, 2023[140]