Tillys, Inc (NYSE: TLYS) is up over 10% on news of a special one-time dividend to investors. TLYS ended yesterday January 30 at $11.90. At the time of this writing TLYS is at $13.20 and rising. It bodes well for a company when their shareholders get paid.
TLYS is a leading destination specialty retailer of West Coast inspired apparel, footwear and accessories with an extensive assortment of the most relevant and sought-after brands rooted in action sports, music, art and fashion. TLYS is headquartered in Irvine, California and, as of January 28, 2017, operated 223 stores.
January 31, TLYS announced today that its board has declared a special cash dividend of $0.70 per share, or approximately $20 million, on the Company’s outstanding Class A and Class B common stock. This one-time special dividend is payable on February 24, 2017 to stockholders of record at the close of business on February 15, 2017. In anticipation of declaring the special dividend, TLYS entered into an amended and restated credit facility with Wells Fargo Bank, which, among other things, allowed for the declaration and payment of the special dividend and extended the maturity date of such facility to January 26, 2020.
This comes on the heels of their fourth quarter outlook. Based on current trends (see past financials), the TLYS expects fourth quarter comparable store sales to be in the range of flat to +2%, operating income to be in the range of $7.5 million to $9.5 million, and earnings per diluted share to be in the range of $0.15 to $0.20 compared to $0.10 for the fourth quarter of fiscal 2015.
photo attribute from Tilly’s website
On the special dividend TLYS CEO Ed Thomas said, “We are pleased to provide a direct return to our shareholders via this special dividend…the improvement in our fourth quarter outlook reflects better than anticipated product margins and expenses on same-store sales that were within our original outlook range.”
Good news for TLYS for sure, but it might be prudent to be cautious of retail in 2017. The market is giving mixed signals in the growth in retail. While online holiday sales grew by 14% in 2016 (the fastest growth in five years), brick and mortar store sales only grew by 1.4%. Total sales of 3.4%, including online and brick and mortar, surpassed 2015’s 2.7%, was short of 2014’s 4.8% overall growth. Brick and mortar consumption might not be an indicator to focus; online consumption will continue to dominate brick and mortar consumption.
And US consumers can expect better market conditions resulting in more disposable income under a President Trump. That would translate into better sales. I revise the statement “to be cautious.” Be optimistically cautious.
