This small-cap retailer has the money and flexibility to weather the pandemic
Brick and mortar retailers are struggling to overcome the effects of COVID-19. It was to be expected. It is difficult to run such a business while being forced to close its doors to customers. So much so that some will not pass to the other side of the pandemic.
Again, Tilly (NYSE: TLYS) is a retailer that has strategically positioned itself to support the coronavirus epidemic. As cities and states continued their phases of reopening plans, it continues to consolidate its balance sheet and cautiously advances store reopening – aware it may have to close at any time if there is an increase. of the coronavirus case. And with states like Florida, Texas, Arizona and California seeing an increase in COVID-19 cases, the likelihood of further closures is increasing. Let’s take a closer look at how Tilly’s is prepared to weather the pandemic.
Tilly’s has reopened 85% of its stores. Image source: Getty Images.
Money is king for Tilly’s as he squats
The company informed investors on July 15, showing that its balance sheet was strong. Tilly’s has $ 151 million in cash and marketable securities. If you exclude the rent he withholds from landlords and his short-term loans on his credit facility, he has $ 114 million. That’s almost $ 4 per share in cash, and the share is trading at just over $ 6 per share. Contextually, net income was negative $ 17.4 million in the first fiscal quarter.
In addition, it reduced its inventory to 24% below the levels of the previous year. Above all, lower levels are needed to cope with declining sales. It would usually be a period of high income due to back-to-school purchases. But with so many schools choosing to do the semester remotely and people still being reluctant to leave their homes, this effect is should be muted this year.
Finally, 203 of its 239 stores are open, with 28 of the 36 closed stores expected to remain closed for at least three more weeks. Granted, with the bulk of its stores located in California and Florida, two states with an increase in coronavirus cases, it may need to close more of its stores. Nevertheless, the company is prepared with lower inventory levels and a e-commerce site that absorbs sales this would normally have happened in stores. It is important to note that digital sales increased 166% compared to the same period last year.
Tilly’s has $ 114 million in cash and marketable securities. Image source: Getty Images.
What this means for investors
The coronavirus pandemic is wreaking havoc around the world. Brick and mortar retailers are some of the companies most affected by the epidemic. In addition to having to close their doors, traders are embarrassed by the uncertainty surrounding the situation, which makes it difficult to adapt.
Tilly’s management has taken steps to ensure she gets to the other side of this pandemic, in a bid to err on the side of caution. His decisions put the company in a relatively stable position compared to other retailers. Investors looking to recoup a beating Stock may want to put Tilly on their radar.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.
