Even as consumer time spent with media continues to expand -- inching up 0.3% last year -- the percentage of time consumers spend with ad-supported media continues to decline, according to the 2018 edition of an annual report tracking and forecasting consumer media usage. The study, which was previewed by Research Intelligencer, comes as a major industry futurist -- Publicis’ Rishad Tobaccowala -- predicts that ad-supported media exposure is about to experience a cliff effect, declining as much as 30% over the next five years as consumers shift their attention to non-ad-supported media. The good news is that the total amount of time Americans spent consuming media rose to 70.7 hours per week last year. The bad news for Madison Avenue is that the share of time spent with ad-supported media fell to 44.4%, its lowest point ever. Click Read More below for additional information.
Tilly’s, Inc. (NYSE: TLYS, the “Company”) today announced financial results for the third quarter and first thirty-nine weeks of fiscal 2020 ended October 31, 2020.
“The third quarter finished strong following a weak start in August resulting from delays in back-to-school timing this year, and this positive momentum carried into the early stages of the fourth quarter,” commented Ed Thomas, President and Chief Executive Officer. “With all of our stores closed on Thanksgiving and with reduced operating hours and significant restrictions on customer traffic on Black Friday this year as a result of the pandemic, we saw much lower sales compared to last year for those two days. However, sales in physical stores have been positive each day since Black Friday. Our e-com sales have remained strong during both the third and fourth quarters.”
Third Quarter Results Overview
The following comparisons refer to operating results for the third quarter of fiscal 2020 versus the third quarter of fiscal 2019 ended November 2, 2019:
*Total net sales were $140.3 million, a decrease of $14.5 million or 9.4%, compared to $154.8 million last year. These results were negatively influenced by delayed back-to-school timing this year, restrictions on store customer traffic and operating hours, and the government-mandated closure of 33 California stores for a portion of the third quarter. Compared to the respective fiscal months of last year, August net sales decreased by 35%, followed by a 22% increase in September net sales and a 10% increase in October net sales.
-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. Store traffic decreased by 34% compared to last year’s third quarter, partially offset by a low double-digit percentage increase in conversion rate and a high single-digit percentage increase in average transaction value. Net sales from stores represented 74.5% of total net sales compared to 85.3% of total net sales last year. The Company ended the third quarter of fiscal 2020 with 238 total stores, including one RSQ-branded pop-up store and one RSQ Skate store, all of which were open to the public, but subject to government restrictions on operating hours and customer traffic as a result of the COVID-19 pandemic. This compares to 232 total stores, including one RSQ-branded pop-up store, all of which were open to the public without restrictions, last year.
-Net sales from e-commerce were $35.7 million, an increase of $13.0 million or 57.3% compared to approximately $22.7 million last year. E-commerce net sales represented 25.5% of total net sales compared to 14.7% last year.
*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. Product margins improved 70 basis points as a percentage of net sales primarily due to improved full-price selling on e-commerce and reduced markdowns overall compared to last year. Buying, distribution and occupancy costs deleveraged by 220 basis points collectively against lower total sales. Distribution costs deleveraged 120 basis points as a percentage of net sales primarily due to an increase in e-commerce shipping costs of $1.5 million resulting from a greater volume of e-commerce orders. Occupancy costs deleveraged 110 basis points as a percentage of net sales despite being reduced by $1.0 million. Buying costs leveraged 10 basis points as a percentage of net sales.
*Selling, general and administrative expenses (“SG&A”) were $37.1 million, or 26.5% of net sales, compared to $39.5 million, or 25.5% of net sales, last year. The $2.3 million decrease in SG&A was primarily due to reduced store payroll and related benefits expenses of $3.9 million resulting from the various periods of store closures during the quarter, reduced staffing levels upon reopening of stores and a $1.2 million payroll tax credit from the Coronavirus Aid, Relief, and Economic Stimulus Act (the “CARES Act”). Most other expenses were also reduced compared to last year. These expense decreases were partially offset by higher e-commerce marketing and fulfillment expenses of approximately $2.3 million associated with significant growth in e-commerce orders compared to last year, and a disputed $1.7 million sales tax assessment received from the State of California relating to past years.
*Operating income was $3.5 million, or 2.5% of net sales, compared to operating income of $7.7 million, or 5.0% of net sales, last year. The decrease in operating income was primarily attributable to the impacts of the COVID-19 pandemic on our business as noted above.
*Income tax expense was $1.4 million, or 39.8% of pre-tax income, compared to $2.2 million, or 25.9% of pre-tax income, last year. The increase in the effective income tax rate for fiscal 2020 is primarily due to the anticipated income tax benefit from the CARES Act, which provides for net operating losses in fiscal 2020 to be carried back to earlier tax years with higher tax rates than the current year.
*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.
details at: https://tillys.gcs-web.com/news-releases/news-release-details/tillys-inc-announces-fiscal-2020-third-quarter-operating-results