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William Blair Upgrades Retailer Tilly's: 3 Reasons Why

William Blair Upgrades Retailer Tilly's: 3 Reasons Why
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Casual apparel retailer Tilly's Inc (NYSE: TLYS) reported second-quarter results Wednesday that turned William Blair bullish on the stock.

The Analyst

William Blair's Sharon Zackfia upgraded Tilly's from Market Perform to Outperform.

The Thesis

Three takeaways from Tilly's earnings report justify a bullish stance on the stock, Zackfia said in the upgrade note.

The company showed improved comp momentum in the quarter, most notably in women's apparel, which accounts for 30 percent of sales, the analyst said. The momentum seen in the quarter should give investors confidence in Tilly's plans to grow its store count from its existing 226 locations today, she said. 

The retailer not only posted better-than-expected EPS, revenue and gross margin in the quarter, but comps of 4.4 percent came in better than the consensus estimate of 1.5-2 percent, Zackfia said. Women's comps were positive for the first time since the second quarter of 2017, and comps came in positive in every department except boys, which was down less than 1 percent.

The 3.8-percent store-only comps gain at Tilly's marks its best performance since the third quarter of 2011, and traffic trends are now positive for seven consecutive quarters, the analyst said. 

Price Action

Tilly's shares were trading higher by 9.5 percent to $19.71 at the time of publication Thursday, above the stock's 52-week high of $18.06. 

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Photo by Dough4872/Wikimedia.

Latest Ratings for TLYS

Dec 2018B. Riley FBRMaintainsBuyBuy
Dec 2018Pivotal ResearchUpgradesHoldBuy
Oct 2018Bank of AmericaInitiates Coverage OnBuy

View More Analyst Ratings for TLYS
View the Latest Analyst Ratings

Posted-In: Apparel retail retail earnings retailers Sharon ZackfiaAnalyst Color Upgrades Analyst Ratings Best of Benzinga


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