Why Tilly's Shares Dropped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of specialty retailer Tilly's (NYSE: TLYS  ) fell 10% today after the company reported earnings.

So what: Revenue at stores open at least a year fell 0.9%, which is a terrible sign for any retailer. Net income fell 29%, to $9.8 million, or $0.32 per share on an adjusted basis, better than the $0.30 per share analysts expected. Guidance is what really had investors worried. The company expects earnings per share in 2013 to be $0.75 to $0.81, when analysts had expected $0.95.

Now what: As usual, in earnings season, it's all about guidance. Net income guidance may have fallen short, but the company does expect to grow in the low single digits this year, which is a change from last year. There are better retailers with more competitive advantage, so I think Tilly's is still too expensive to jump into right now.

Interested in more info on Tilly's? Add it to your watchlist by clicking here.

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