Tilly’s(US:TLYS)2020-12-04 01:16Financial Data and Key Metrics Changes - Total net sales for Q3 2020 were $140.3 million, a decrease of $14.5 million or 9.4% compared to $154.8 million last year [18] - Net sales from physical stores were $104.6 million, a decrease of $27.5 million or 20.8% compared to $132.1 million last year [19] - E-commerce net sales were $35.7 million, an increase of $13 million or 57.3% compared to $22.7 million last year [20] - Net income was $2.1 million or $0.07 per diluted share, compared to $6.4 million or $0.21 per diluted share last year [28] - Gross profit was $40.7 million or 29.0% of net sales, compared to $47.2 million or 30.5% of net sales last year [21] Business Line Data and Key Metrics Changes - Women's department was the strongest performing with a mid single-digit percentage increase in comp sales compared to last year [9] - All other departments experienced negative comp sales, but improved trend-wise as the quarter progressed [9] - Accessories faced challenges primarily due to reduced sales of backpacks, attributed to increased remote learning [10] Market Data and Key Metrics Changes - Total comparable net sales were just shy of flat through December 1st versus the corresponding period of last year [13] - E-commerce sales continued to be strong with a 42% increase during the same period [13] - Physical store comparable net sales decreased by 14% in the fourth quarter compared to the corresponding period last year [13] Company Strategy and Development Direction - The company plans to open seven new stores during fiscal 2021, deferred from this year [11] - A new RSQ skate test store was opened, focusing on skateboarding products, which is seen as an important test for future expansion [12] - The company is adopting a digital-first mindset, enhancing e-commerce capabilities and customer convenience [8] Management's Comments on Operating Environment and Future Outlook - Management expressed uncertainty regarding future sales and earnings due to the ongoing COVID-19 pandemic and its impact on consumer behavior [32] - The company expects fourth quarter net sales and earnings per share to be lower than last year's fourth quarter due to pandemic-related challenges [33] - Management remains hopeful for a more normal holiday season compared to the back-to-school period, contingent on operational capabilities [15] Other Important Information - The company ended the third quarter with cash and marketable securities totaling $125.3 million, including $12.4 million of withheld store lease payments [29] - Year-to-date capital expenditures were $6.4 million, down from $10.6 million last year due to reduced new store openings [30] - The company replaced its $25 million revolving credit facility with a $65 million asset-backed credit facility for increased liquidity [30] Q&A Session Summary Question: E-commerce profitability outlook for Q4 - Management expects trends from Q3 to carry into Q4, with improved profitability in e-commerce despite potential shipping surcharge pressures [36][37] Question: Store capacity management during Black Friday - Management noted that store capacity issues vary by location, but conversion rates have improved despite challenges [38] Question: Black Friday weekend performance - Sales were down over 30% on Black Friday, but store comps have been positive each day since then [42][44] Question: Inventory management in Q4 - Management feels confident about inventory levels and is continuously adjusting based on traffic patterns [45][49] Question: Supply chain challenges for hard goods - Supply chain remains challenging but is showing signs of improvement [51]