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Why Shares of Tilly's, Inc. Got Crushed

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 Tilly's, Inc.  (NYSE: TLYS  ) were tumbling today, falling as much as 25% on disappointing guidance in its earnings report.

So what: The teen retailer's troubles echoed those of its peers in the industry as comparable sales fell 6.8%, and overall revenue ticked up 1.8% to $111.1 million, missing estimates at $113.2 million. CEO Daniel Griesemer said the retail environment continued to be "tough," though he noted that product improved 60 basis points even as gross margin fell. On the bottom line, the company delivered a per-share profit of $0.02, in line with expectations, but guidance was short as the company said weak traffic trends had continued into the current quarter.

Now what: For the second quarter, it sees a high-single-digit decline in comparable store sales due the intense promotional environment, and EPS of just $0.03-$0.07, below the analyst consensus at $0.12. As rivals such as Aeropostale and American Eagle Outfitters have seen sales plummet, prices in the industry have come down significantly. Given that effect, Tilly's may not be out of the woods until its peers show improvements, too. 

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Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

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8/28/2015 4:02 PM
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