$TLYS Tilly's Jan 2013 Corporate Investor ICR Presentation Slides Deck PPT PDF

7/29/2019 $TLYS Tilly's Jan 2013 Corporate Investor ICR Presentation Slides Deck PPT PDF

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INVESTOR PRESENTATION – January 2013



DISCLAIMER

Forward Looking Statements

Certain statements in this presentation and oral statements made from time to time by our representatives are forward-looking

statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, statements regarding our

guidance, future financial and operating results and any other statements about our future expectations, beliefs or prospects

expressed by management are forward-looking statements. These forward-looking statements are based on management’s

current expectations and beliefs, but they involve a number of risks and uncertainties that could cause actual results or events to

differ materially from those indicated by such forward-looking statements, including, but not limited to, our ability to respond to

changing customer preferences, execute our growth strategy, expand into new markets, effectively compete with other retailers,

enhance our brand image and other factors that are detailed in our registration statement on Form S-1 (333-175299), including

those detailed in the section titled “Risk Factors” contained in that registration statement, and in our other filings with the SEC,

which are available from the SEC’s website at www.sec.gov and from our website at www.tillys.com under the heading “Investor

11

Relations”. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date

such statements are made. We do not undertake any obligation to update or alter any forward-looking statements, whether as a

result of new information, future events or otherwise.

Use of Non-GAAP Financial Measures

In addition to reporting financial measures in accordance with generally accepted accounting principles in the United States

(“GAAP”), the company provides non-GAAP “adjusted selling, general and administrative expenses”, “adjusted operating

income”, “adjusted income before income taxes”, “adjusted income tax provision”, “adjusted net income”, “adjusted basic

earnings per share” and “adjusted diluted earnings per share”. These amounts are not in accordance with, or an alternative to,

GAAP. The company’s management believes that these measures provide investors with transparency by helping illustrate the

financial results: (i) as if the company had been a publicly traded “C” Corporation during the relevant time periods, in order to

provide a better comparison of past periods to current periods as a “C” Corporation; and (ii) to exclude items that may not be

indicative of, or are unrelated to, the company’s core operating results, providing a better baseline for analyzing trends in the

underlying business. A reconciliation to U.S. GAAP can be found in our most recent earnings release, available on our website at

www.tillys.com.

http://www.sec.gov/

http://www.tillys.com/




http://www.sec.gov/



Introductions

4 Dan Griesemer President and Chief Executive Officer

4 Bill Langsdorf Senior Vice President and Chief Financial Officer

22



Who We Are

4 Fast-growing destination specialtyretailer of the most sought-afterbrands for our customer

4 Dominant assortment in a larger storeformat

4 Ra idl rowin e-commerce

73

140

500 +Number of States

2007 5

2011 14

Historical Store Growth and Potential

Historical Store Growth and Potential

33

platform and successful catalog

4 Proven success in different real estatevenues and geographies, with a 30year history

4 Compelling store-level economics

4 Best-in-class systems and distributioninfrastructure to support growth

2007 2011 Potential

2011 Financial Overview

2011 Financial Overview

¹ Comparable store sales include e-commerce sales.

Net Sales $400.6mm

Growth vs. 2010 20.5%

Comparable Store Sales¹ 10.7%

Operating Income $34.9mm

Operating Margin 8.7%



Our Customer and The Tilly’s Experience

“If it’s not here….it’s not happening”

4 CoreCustomer

4 The Tilly’s

4 14 to 24 year old teens and young adults

4 Passionate about action sports, music, art and fashion

4 Dynamic, multitasking lifestyle

4 Customer-driven, lifestyle brand focused on shopping

44

,

4 Stores provide a stimulating environment, full of energyand activity

4 Carry the most relevant brands and styles blended withmusic videos and product-related visuals

4 Passionate store associates live the lifestyle and easilyengage with our customers

4 We are where our customers want to shop – the rightmarkets and venues plus e-commerce and catalog



Significant Growth Opportunities

Significant Growth Opportunities

Investment Highlights and

Long-Term Targets

Store Count 500+

Annual Square

Foota e GrowthMid-teens

Long-Term Targets

4 Expand Our Store Base

4 Drive Comparable Store Sales

55

Annual Comparable

Store Sales Growth14% – 5%

Operating Income MarginHigh-single

digits

Pro Forma Net

Income GrowthHigh-teens

¹ Comparable store sales include e-commerce sales.

4 Grow Our E-Commerce Platform

4 Increase Our Operating Margin



DRAFT – CONFIDENTIAL

.



Destination Retailer With a Broad,

Relevant Assortment

4 Broader, deeper selection of brands, styles,colors, sizes and price points than manyother specialty retailers

4 Established and emerging third-party brands

complemented by proprietary brands

1

Proprietary

Brands

31%

2011 Sales Mix2011 Sales Mix

77

a ance m x o guys an un ors wadditional merchandise in boys, girls,footwear and accessories

4 Combination of proven fashion trends andcore style products

4 Vibrant blend of carefully selected music andvisuals to create authentic, engaging in-storeexperience

Third-Party

Brands

69%



Dynamic Merchandise Model

4 Dominant assortment of newness from the most relevant brands

4 Regularly introduce emerging third-party brands not available at many otherretailers

4Use breadth of merchandise selection to quickly identify emerging fashion trends

2

88

Broa ven or ase or propr etary pro ucts prov es ex ty to:

4 Capitalize on emerging fashion trends

4 Expand price point range

4 Fill merchandise gaps

4 Provide deeper selection of styles and colors for proven categories

4 Merchandise delivered to stores five times per week



99



Flexible Real Estate Strategy Across

Real Estate Venues and Geographies

4 Profitable stores in a variety of real estate venues and geographies

4 High traffic malls that dominate their trade area

4 Off-mall power and neighborhood centers

4 National footprint with stores on both coasts

4 Operate stores that average 7,850 sq ft in 60 markets in 28 states

4 Currently operate 168 stores in 28 states

3

Stores By Real Estate Venue (January 2013)Stores By Real Estate Venue (January 2013)

1010

sc p ne process o en y, u ou an merc an se new s ores

Mall

53%

Off-Mall

47%



Multi-Pronged and Differentiated

Marketing Capabilities

4

4 Differentiated sales andmarketing tool drives

traffic to our stores andwebsite

4 Allows Tilly’s to connectwith and engage customers

in an exciting, authenticexperience

4 Builds awareness, drivestraffic to stores and

website and highlightslocal in-store promotions

Catalog Brand Partnerships e-Marketing

4 Multi-pronged marketing strategy includes catalog, in-store events and contests,social media, grass roots community programs and traditional media

1111

4 Reinforces the Tilly’sbrand and showcasescomprehensiveassortment

4 Mailed ~8.8 millioncatalogs in 2012

4 Maintain proprietarydatabase of over 2.8million customers, upfrom 1.9 million in early2012

4 Organized over 185exclusive events in 2011,including autographsignings, contests, in-storeperformances and VIP trips

4 Collaborate with musicians,

celebrities and actionsports athletes

4 Builds brand awarenessand strengthens vendorrelationships with minimalinvestment

an even s

4 Email marketing serves aseffective channel tointroduce new brandsand products

4 Website blog, Facebook

and Twitter used as viralmarketing platform tocommunicate tocustomers while allowingthem to interact with oneanother and providefeedback






.



Store Base Expansion Opportunity

4 Opportunity to expand store footprint from 168 stores currently to 500+ locations over thenext ten years

4 National rollout and best location approach

4 Targeting new store openings in new and current geographies, and in both mall andoff-mall real estate venues

4 Added a net 28 new stores in 2012 and expect to grow the store base by ~15% per year for the

next several years thereafter

1414



Store Base Expansion Opportunity

4 Compelling new store economics with

attractive payback period of ~18 months

4 Rigorous site selection process

4 People and systems in place to

execute new store growth plan

New Store Target EconomicsNew Store Target Economics

Target Store Size (sq. ft.) 7,500 – 8,000

First Year Sales $2,200,000

First Year Cash Flow $300,000

Second Year Cash Flow $400,000

–

1515

new sites

4 Demonstrated portability with success

across a variety of real estate venues and

geographies

4Target high productivity mallsthat dominate trade areas

4 Target key power and neighborhood

centers that serve as community

destinations

Historical Store CountHistorical Store Count

, ,

Payback Period ~18 Months

73

99111

125

140

168

2007 2008 2009 2010 2011 2012

28

140



Drive Comparable Store Sales

4 Increasing momentum as Tilly’s continues to build brand awareness in newmarkets and benefit from maturing stores that are less than three years old

4 Over the last six years, Tilly’s has more than doubled store count whileentering 49 new markets

4 Consistently offering new, on-trend and relevant merchandise across a broad

1616

assortment o categor es

4 Offering a stimulating and engaging shopping environment that embodies ourtarget customers’ lifestyles and attitudes

4 Increasing brand awareness and driving higher traffic to stores through multi-

pronged marketing approach

4 Maintaining high level of customer service

4 e-Commerce growth





Increase Our Operating Margins

4 Opportunity to drive margin expansion through scale efficiencies andcontinued process improvements

4 Continue to improve store sales productivity

4 Levera e economies of scale and existin infrastructure

1818

4 Operating efficiency initiatives




.



Operating IncomeOperating IncomeNet SalesNet Sales

Self-Funded, Sustained Growth

and Profitability($ in millions)

YoY % Growth

$ 282.8$ 332.6

$ 400.6

2009 2010 2011

$ 21.4$ 24.9

$ 34.9

2009 2010 2011

2020

Net Sales 10.9% 17.6% 20.5% % Margin 7.6% 7.5% 8.7%

Sq. ft. 11.2% 12.1% 13.2%

Cash Flows from Operations¹Cash Flows from Operations¹ Capital ExpendituresCapital Expenditures

¹ Pro forma for 40% tax rate.

$ 27.1

$ 32.1

$ 39.1

2009 2010 2011

$ 11.1 $ 13.3$ 16.1

$ 6.4

$ 4.1$ 17.5

$ 15.7$ 20.2

2009 2010 2011New Stores and Remodels Infrastructure



Q3 2012 Results

4 Comparable store sales of 1.9% on top of 8.5%increase in Q3 ‘11

4 Gross margin rate increased by 10 bpts

4 Adjusted SG&A rate(1) decreased by 10 bpts,

even while opening 7 new stores during thequarter for a total of 161 stores at quarter end

($ in millions)

Operating HighlightsOperating Highlights Balance Sheet Summary (Oct 27, 2012)Balance Sheet Summary (Oct 27, 2012)

Cash and marketable s ecurities $49.8

Accounts receivable $8.1

Inventories $49.9

Current liabilities $50.1

2121

4 E-commerce sales increased 17% compared toQ3 ‘11, to 10.4% of net sales

4 On an adjusted(1) basis, net income for thequarter increased 19%, adjusted(1) EPS was atthe high end of the outlook range

4 Subsequent to end of third quarter, completed

annual new store openings for a total of 28 netnew stores opened in 2012

(1) Adjusted numbers assume an effective tax rate of 40% for both periods and include an ongoing charge for stock compensation expense in Q32011 that equals a similar ongoing charge in Q3 2012

Shareholders’ equity $106.7

Working capital $68.1

4 Credit facility untapped

4 Minimal debt (only a capital lease)

4 Growth expected to be self-funded

4 Capital expenditures in FY 2012 expected to be in

the range of $35 million to $40 million



Holiday Sales

Updated Outlook

Fourth Quarter 2012 Outlook

4 GAAP net income of $9.0 million to $9.3 million, or $0.32 to $0.33 per diluted share

Reported Holiday Sales 2012

4 Comp store sales for the 10 weeks to January 5, 2013 of -1%, compared to +5% for the prior year period to

January 7

2222

. . , . .

Full Year Fiscal 2012 Outlook (includes a 53rd week)

4 GAAP EPS of $0.89 to $0.90 per diluted share

4 Adjusted EPS(1) of $0.87 to $0.88 per diluted share

(1) Q4 and full year adjusted to 40% long-term expected tax rate; full year also reflects exclusion of one-time stock comp

expense charge in Q2 2012 but includes ongoing stock comp expense charges and incremental public company costs.




.



INVESTOR PRESENTATION – January 2013



Stores By State (January 2013)

State #of Stores

Arizona 18

California 79

Colorado 3

Delaware 1

Florida 16

Georgia 1

Iowa 1

Illinois 2

State #of Stores

New Jersey 7

New York 3

N. Carolina 2

Ohio 1

Oregon 2

Pennsylvania 2

South Dakota 1Tennessee 1

Kentucky 1

Maryland 2

Massachusetts 2

Michigan 1

Minnesota 1

Nevada 6

exas

Utah 3

Virginia 3

Washington 2

Wisconsin 3

Total 168

Documents

$TLYS Tilly's Jan 2013 Corporate Investor ICR Presentation Slides Deck PPT PDF