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Tilly’s CEO: Port Pileup Snarls 20% of Planned Inventory

Two mall-based retailers with a laser focus on the Gen Z audience are looking to build on a third quarter that saw a shift in back-to-school sales, and they appear to have done so by topping Wall Street earnings and sales estimates for the holiday quarter.

Net income at Tilly’s jumped 41.3 percent in the fourth quarter to $8.9 million, as sales rose 3.2 percent to $172.5 million, while Zumiez saw net profit jump 12.9 percent to a record $42.8 million and sales increased 0.8 percent to $331.5 million.

While both apparel chains shored up their top and bottom lines, the focus now turns to how they expect to handle inventory amid the backlog clogging West Coast ports.

Ed Thomas, president and CEO of Tilly’s, said in an earnings call that product delivery delays from Southern California ports are impacting almost 20 percent of the company’s planned retail inventory receipts.

“During the first several weeks of the quarter, delivery delays have ranged up to a full month at this time across a variety of product categories,” Thomas said. “We do not currently have good visibility as to when the situation will be fully resolved. As a result of these delays, we may at times temporarily carry higher inventories than last year. We are carefully monitoring events and adjusting to the best of our ability as we get more information.”

Zumiez was vague on the state of the company’s supply chain and the impact from the delays, with CEO Rick Brooks highlighting in an earnings call that the retailer “did have some catch-up in the fourth quarter” to get back in stock in many areas.

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“We certainly have some areas of the business that are still more challenged from a supply chain perspective, and we’re still chasing a little bit—typically more of the labor intense areas,” Brooks said. While areas like screen-printed shirts were able to get up to speed more quickly, “hardgoods and footwear were some that lagged. And I would say even still in footwear, we’re still kind of chasing and trying to get where we want to be from an inventory perspective.”

Even in the midst of the inventory uncertainty, the Gen Z retailers are still in growth mode when it comes to their brick-and-mortar operations.

Zumiez is planning to open 22 new stores in 2021, including approximately five in North America, 12 in Europe and five in Australia. The company is planning to close approximately “five-to-six” stores during the year.

Tilly’s currently has seven new store openings planned for the year that were originally scheduled to open during 2020, with the first launched in Las Vegas on March 1. Tilly’s expects to close one store this month. The retailer also intends to expand hard goods, including skateboards, bikes, roller skates and certain snow products, into 80 stores. Presently, the category represents only 2 percent of Tilly’s sales.

The full fourth-quarter for Zumiez actually improved on the company’s 10-week holiday season through Jan. 9, in which the retailer’s sales dipped 0.7 percent, while Tilly’s had a slight uptick throughout the period with a 3.3 percent sales increase.

Both Zumiez and Tilly’s had slight year-over-year inventory decreases, with Zumiez’s inventory dropping 0.5 percent to $134.3 million, while Tilly’s saw inventory dip 2.1 percent to $55.7 million.

Both companies have provided updates to their first quarter to date.

Total sales at Zumiez for the 35 days ended March 6 were down approximately 3.8 percent year over year, while comparable sales for the period dipped 0.4 percent. By channel, open store comparable sales decreased 6.9 percent and e-commerce sales increased 29.5 percent. During this timeframe, the retailer had roughly 7 percent fewer open store days than the prior year amid coronavirus concerns.

Tilly’s broke out its quarter-to-date numbers in greater depth, noting that total comparable net sales through March 8, including both physical stores and e-commerce, were $45.3 million, a decrease of 4.6 percent ($2.2 million), compared to $47.5 million last year. Total comparable net sales decreased in February 2021, but have been positive thus far in March 2021.

Comparable net sales from physical stores were $34.5 million, a decrease of $5.3 million or 13.3 percent compared to $39.8 million last year. Store traffic has decreased by 28 percent year over year, partially offset by increases in conversion rate and average transaction value.

E-commerce sales were $10.7 million, an increase of $3.1 million or 40.6 percent, compared to $7.6 million last year.


Total net sales for the fourth quarter increased 0.8 percent to $331.5 million from $328.8 million in the quarter last year. Comparable sales for increased 4.7 percent compared to a comparable sales increase of 6.4 percent last year.

For the full year, net sales decreased 4.2 percent to $990.7 million from $1.034 billion in fiscal 2019. Comparable sales increased 13.6 percent.

Net income for the fourth quarter of fiscal 2020 was $42.8 million, or $1.68 per diluted share, compared to net income of $37.9 million, or $1.48 per diluted share in the fourth quarter of the prior fiscal year.

In 2020, Zumiez increased its net income 14 percent to $76.2 million, or $3.00 per diluted share, compared to net income in the prior fiscal year of $66.9 million, or $2.62 per diluted share.

Gross margin for the full year 39.1 percent, 10 basis points ahead of the 39 percent margins in 2019.

As of Jan. 30, Zumiez had cash and current marketable securities of $375.5 million.

Zumiez is not providing an outlook at this time for the first quarter or the full 2021 year.


Total net sales were $177.9 million, an increase of $5.4 million or 3.2 percent, compared to $172.5 million last year. Total comparable net sales, including both physical stores and e-commerce, increased by 2.5 percent compared to last year.

Net income was $8.9 million, or $0.29 per diluted share, compared to $6.3 million, or $0.21 per diluted share, last year.

Net sales for 2020 were $531.3 million, a decrease of $88 million or 14.2 percent, compared to $619.3 million last year primarily as a result of the various periods of store closures, reduced store operating hours, and restrictions on store traffic.

Physical store sales were $357.9 million, down 31.3 percent of $162.9 million, compared to $520.8 million last year. Sales from stores represented 67.4 percent of total net sales compared to 84.1 percent of total net sales last year.

Digital sales totaled $173.4 million, a 76 percent increase over the $98.5 million from e-commerce last year. E-commerce net sales represented 32.6 percent of total net sales compared to 15.9 percent last year.

Net loss for the year was $1.1 million, or 4 cents per basic share, compared to net income of $22.6 million, or $0.76 per diluted share, last year.

Gross margin was 32.7 percent, an improvement of 250 basis points (2.5 percentage points) compared to 30.2 percent last year, led largely by product margins that improved by 210 basis points (2.1 percentage points) due to reduced total markdowns.

As of Jan. 30, Tilly’s had $141.1 million of cash and marketable securities, including $2.2 million of withheld store lease payments, and no debt outstanding.

For the first quarter of 2021, Tilly’s expects net sales and earnings per share will be “significantly improved” compared to its reported net sales of $77.3 million and loss per share of 59 cents during last year’s first quarter. The company is not sharing full 2021 guidance.