Stifel Downgrades Tilly's, Stock Falls 4%

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Stifel downgraded Tilly’s Inc TLYS from Buy to Hold in a report issued Monday.

Analyst Richard Jaffe commented that “the company's results remain challenged by a highly competitive teen apparel market. The strategy of operating a big-box, multi-brand teen apparel retailer with limited promotions has proven to be less effective than we anticipated."

Jaffe believed “business slowed significantly as the quarter progressed, similar to the trends experienced by other retailers.”

“Weak traffic will likely hold back sales and could result in EPS below our recently updated estimate of $0.09. In addition, visibility for the turnaround of the business has grown less certain as many of the key strategies the company has put in place have yet to gain traction,” according to Jaffe.

The report concluded that “visibility for a turnaround of the business has grown less certain. With square footage growth slowing from 15 percent per year to 8 percent per year, lack of visibility for merchandise and sales improvement and a highly competitive teen space we anticipate continued multiple contraction.”

Tilly’s recently traded at $6.81, down 4.3 percent.

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Posted In: Analyst ColorDowngradesAnalyst RatingsRichard JaffeStifel
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