Tilly's likely has an Ollie or a Hang Ten up its stores' sleeves. Through its World of Jeans & Tops subsidiary, the company operates a chain of specialty retail stores and website that sell surf and skateboard apparel, footwear, skateboards, and accessories. Its stores offer Hurley, Levi's, LRG, Neff, and other brands, as well as its own brands (RSQ, Full Tilt, Blue Crown, and Infamous). The fast-growing retail chain operates about 200 stores in more than 30 states under the Tilly's banner; most are in California, Arizona, and Florida. The company traces its roots back to 1982, when founders Hezy Shaked and Tilly Levine opened their first store in Orange Country, California. Tilly's went public in 2012.
The apparel retailer raised about $124 million with a May 2012 IPO timed to capitalize on the company's strong sales growth and operating results. Tilly's planned to use a portion of the proceeds to fund a distribution to pre-IPO company shareholders. The distribution is related to a change in World of Jeans & Tops' company type from an "S" to a "C" corporation, a designation that affects the way the company is taxed. Tilly's may also use some of the proceeds for general corporate purposes and to acquire other businesses.
Tilly's home state, California, is also its largest market, home to more than 80 of its stores. Arizona and Florida are runners up, each with about 20 locations. Overall, Tilly's has stores in 33 states from coast to coast and in between.
Sales and Marketing
Tilly's takes an eclectic approach to connect with its young customers and drive traffic to its stores and website. Brand partnerships, social media -- including blogs, Facebook, Instagram, and Twitter posts -- a loyalty program, radio, print, and email marketing, are all part of the mix. Overall, the retailer reported $9.1 million in advertising expenses in fiscal 2014 (ended January), up from $8.4 million in 2013, and $6.6 million in 2012.
Tilly's stores rang up $495.8 million in sales in fiscal 2014 (ended January), an increase of 6% versus the prior year. It was the fifth consecutive year of rapidly rising sales for the teen-focused retailer. Driving the increase was the addition of 27 net new stores in both new and existing markets. The gain was partially offset by a decline in same-store sales of 2% in 2013, due to lower net sales of footwear and accessories for guys. Sales of junior's and girl's apparel increased however. Also, online sales increased 9% to $57.8 million in fiscal 2014, bolstered by gains across all major merchandise categories.
Despite the uptick in sales, net income declined 24% over the same period to $18.1 million, on higher costs, including shipping and handling and income tax expenses.
Since its founding, the company has been growing rapidly, especially in recent years, during which the number of its store locations have gone from 32 in 2004 to 195 in 2013. Tilly's future ambitions include opening new stores in an effort to establish a national presence. The company believes it can expand its store base to more than 500 locations by 2022. It's also focused on growing its online business and increasing same-store sales at physical locations. To support growth of its online business, Tilly's in February 2014 invested $13 million in a new, highly-automated e-commerce fulfillment center in Irvine, California.
To keep its selection fresh and encourage more trips to its stores, merchandise is delivered to Tilly's stores several times per week. The stores stock hundreds of third-party surf, skate, and motocross brands, including Billabong, Converse, Quicksilver, Volcom, Young & Reckless, and many more, that accounted for 72% of net sales in fiscal 2014 (ended January). Proprietary brands, such as full til, blue crown, and Infamous, accounted for the remainder.