Tilly’s net income down despite increased sales

Tilly’s, a US based specialty apparel, footwear and accessories retailer, reported a fall of 59.15 per cent in its net income in the fourth quarter of fiscal 2015 despite an increase of 4.1 per cent in its net sales in the quarter because of year-on-year tax difference, according to a press statement released by the retailer.

The retailer posted a net income of $2.9 million or diluted EPS of $0.10 in Q4 of FY15, ended on January 30, 2016, as compared to a net income of $7.1 million or diluted EPS of $0.25 in the fourth quarter of previous fiscal. Net sales stood at $159 million as compared to $153 million last fiscal.

Income tax of $6.6 million impacted the fourth quarter earnings of fiscal 2015, which constituted 69.6 per cent of the pre-tax income of the retailer. Tax applicable in the corresponding quarter of FY14 was $4.1 million or 36.6 per cent of the pre-tax income.

The increase in tax was majorly because of a $2.6 million tax impact from stock option expirations. This resulted in the write-off of certain previously recognised deferred tax assets.

Commenting on the results, Ed Thomas, president and CEO of Tilly’s said, “Our fourth quarter comparable store sales results were slightly better than our outlook, and we ended the quarter with clean and current inventories.”

“I am even more excited about the opportunities to improve the business for the long-term and look forward to making progress during fiscal 2016,” he added.

The retailer assumes an anticipated effective tax rate of approximately 40 per cent plus a $0.4 million income tax charge primarily for the impact of restricted stock vesting in addition to the effective rate in its outlook for FY16.