Tilly’s(US:TLYS)2021-09-02 23:06Financial Data and Key Metrics Changes - The second quarter of fiscal 2021 saw record net sales of $202 million, an increase of $66.1 million or 48.7% compared to $135.8 million last year [13] - Earnings per diluted share reached $0.66, a record for the company, compared to $0.18 per diluted share last year [19] - Gross profit improved to $74.7 million or 37.0% of net sales, compared to $41.7 million or 30.7% of net sales last year [16] Business Line Data and Key Metrics Changes - Total comparable net sales increased by 18.3% compared to the second quarter of fiscal 2019, with physical store sales up 11% and e-commerce sales up 63.4% [16] - Men's and women's apparel were strong performers, with proprietary brands RSQ and Full Tilt being the top two brands [7] - Hardgoods generated $2.1 million in net sales during the second quarter, with plans to expand this assortment in stores [8] Market Data and Key Metrics Changes - Store comps were positive across all markets, with the strongest growth in New England and Texas, each posting comp sales increases over 20% compared to 2019 [7] - E-commerce net sales were $37.3 million, a decrease of 28.2% compared to last year, attributed to the previous year's peak online sales during store closures [14] Company Strategy and Development Direction - The company plans to continue expanding its sustainable merchandise program, ending the quarter with over 1,000 items from over 40 brands [8] - The company has opened eight of its planned nine new stores for fiscal 2021 and is seeking additional opportunities for store openings in 2022 [9] - The focus remains on improving customer experience through website upgrades and enhanced omnichannel capabilities [9] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the second half of 2021 despite concerns about COVID-19 resurgence and supply chain disruptions [11] - The back-to-school season started strong, with total net sales for fiscal August up 94.4% compared to last year [11] - Management noted that while supply chain issues have been present, they have not significantly hindered overall business performance [26] Other Important Information - The company declared a special cash dividend of $1 per share during the second quarter, marking the fifth consecutive year of direct returns to stockholders [10] - Total capital expenditures for the first half of fiscal 2021 were $8.5 million, primarily due to new store openings [20] Q&A Session Summary Question: Supply chain concerns and inventory management - Management acknowledged ongoing supply chain issues but stated they have not significantly impacted overall results, with efforts to secure inventory for the holiday season [26][28] Question: Gross margin expectations - Management expects gross margins in Q3 to be lower than Q2 but still better than 2019 levels, with SG&A expenses projected between $49 million to $51 million [30][31] Question: Performance of proprietary brands - Proprietary brands now account for just over 30% of sales, reflecting customer preference rather than a strategic push [35][36] Question: Sustainability product demand - Initial demand for sustainability products has been positive, but it is too early to assess long-term price elasticity [37] Question: Inventory levels and service demand - Management believes current inventory levels are adequate to meet demand trends, with inventory per square foot up 14% compared to 2019 [40][42] Question: E-commerce sales trends - E-commerce sales have become more profitable, now representing around 18% of total sales, with improved operational efficiencies [77] Question: Store productivity and traffic trends - Store traffic was down high single digits compared to 2019, but conversion rates improved significantly, with slight positive traffic noted during August [85]