Company Overview
| Company Name |
TILLY'S, INC. |
| Company Address |
10 WHATNEY
IRVINE, CA 92618 |
| Company Phone |
(949) 609-5599 |
| Company Website |
www.tillys.com |
| CEO |
Daniel Griesemer |
| Employees (as of 1/28/2012) |
3600 |
| State of Inc |
DE |
| Fiscal Year End |
1/31 |
| Status |
Priced (5/4/2012) |
| Proposed Symbol |
TLYS |
| Exchange |
New York Stock Exchange |
| Share Price |
$15.50 |
| Shares Offered |
8,000,000 |
| Offer Amount |
$124,000,000.00 |
| Total Expenses |
$2,703,204.00 |
| Shares Over Alloted |
0 |
| Shareholder Shares Offered |
400,000 |
| Shares Outstanding |
8,000,000 |
| Lockup Period (days) |
180 |
| Lockup Expiration |
10/31/2012 |
| Quiet Period Expiration |
6/13/2012 |
| CIK |
0001524025 |
We estimate that the net proceeds from our sale of 7,600,000 shares of our
Class A common stock in this offering will be approximately $107.6 million
at an offering price of $15.50 per share and after deducting the underwriting
discount and estimated offering expenses payable by us, a portion of which
will be reimbursed to us by the underwriters. We will not receive any proceeds
from the sale of shares of our Class A common stock by the selling
stockholders, which includes one of our officers and directors, including
any shares sold by the selling stockholders in connection with the exercise
of the underwriters’ option to purchase additional shares.
The principal purposes of this offering are to obtain capital to pay all
undistributed cumulative earnings to date to the current shareholders of
World of Jeans & Tops, obtain additional capital, create a public market
for our common stock and facilitate our future access to the public equity
markets. Prior to completion of this offering, World of Jeans & Tops will
issue notes to its then-existing “S” Corporation shareholders, which will
reflect the amount of undistributed cumulative earnings remaining in World
of Jeans & Tops from the date of its formation up to the date of termination
of its “S” Corporation status. The notes have a term of 15 days and their
interest rate will be the one-month LIBOR rate as of the date of their
execution. We expect to use $84.0 million of the net proceeds from this
offering to pay in full the principal amount of the notes, as well as any
accrued interest. Therefore, our stockholders immediately following this
offering, who were also the shareholders of World of Jeans & Tops prior to
termination of its “S” Corporation status, will receive most of the net
proceeds from the sale of shares offered by us.
We expect net proceeds in excess of the final “S” Corporation distribution
to be approximately $23.6 million, after deducting the underwriting discount
and estimated offering expenses payable by us. We intend to use such excess
proceeds for working capital and other general corporate purposes, which may
include funding new store openings and funding other operating costs such
as merchandise inventories, payroll, store rent, marketing and infrastructure
expenditures. The amounts and timing of any expenditures will vary depending
on the amount of cash generated by our operations, competitive and
technological developments and the rate of growth of our business. Therefore,
we do not currently have a specific plan for the excess proceeds from this
offering and our management will have significant flexibility in applying the
net proceeds. Pending their use, we intend to invest the excess proceeds from
this offering in short term, investment-grade, interest-bearing instruments.
The teenage and young adult retail apparel, accessories and footwear industry
is highly competitive. We compete with other retailers for customers, store
locations, store associates and management personnel. We currently compete
with other teenage-focused retailers such as, but not limited to, Abercrombie
& Fitch Co., Aeropostale, Inc., American Eagle Outfitters, Inc., The Buckle,
Inc., Forever 21, Inc., Hot Topic, Inc., Pacific Sunwear of California, Inc.,
The Wet Seal, Inc., Urban Outfitters, Inc. and Zumiez, Inc. In addition, we
compete with independent specialty shops, department stores and direct
marketers that sell similar lines of merchandise and target customers
through catalogs and e-commerce. Further, we may face new competitors
and increased competition from existing competitors as we expand into
new markets and increase our presence in existing markets. Given the
extensive number and types of retailers with which Tilly’s competes for
customers, we believe that our target market is highly fragmented and we
do not believe we have a significant share of this market.
Competition in our sector is based, among other things, upon merchandise
offerings, store location, price and the ability to identify with the
customer. We believe that we compete favorably with many of our competitors
based on our differentiated merchandising strategy, store environment,
flexible real estate strategy and company culture. However, many of our
competitors are larger, have significantly more stores, and have substantially
greater financial, marketing and other resources than we do. Moreover, we
recognize that we do not possess exclusive rights to many of the elements
that comprise our in-store experience and product offerings. Our competitors
can emulate facets of our business strategy and in-store experience, which
could result in a reduction of any competitive advantage or special appeal
that we might possess.
Company Description
Tilly’s is a fast-growing destination specialty retailer of West Coast
inspired apparel, footwear and accessories. We believe we bring together
an unparalleled selection of the most sought-after brands rooted in action
sports, music, art and fashion. Our stores are designed to be a seamless
extension of our teen and young adult consumers’ lifestyles with a balance
of guys’ and juniors’ merchandise in a stimulating environment. We believe
our success across a variety of real estate venues and geographies in the
United States demonstrates Tilly’s portability. Our motto “If it’s not
here it’s not happening” exemplifies our goal to serve as a destination for
the latest, most relevant merchandise and brands important to our customers.
As of January 28, 2012, we operated 140 stores in 14 states, averaging
approximately 7,800 square feet. We also sell our products through our
e-commerce website, www.tillys.com. Our business is characterized by the
following key elements:
• Extensive assortment of relevant merchandise in a larger store format. Our
larger stores allow us to carry a more extensive selection of the most
relevant, established and emerging brands and offer a greater assortment
of apparel styles, sizes and price points across multiple categories. This
broad selection enhances our ability to rapidly identify and respond to
trends and consistently offer our customers both proven fashion items and
core styles. We strive to keep our merchandising mix current by introducing
additional brands and styles in response to the ever-evolving desires of our
customers.
• The Tilly’s experience. Tilly’s is a customer-driven lifestyle brand. We
are energized and inspired by our customers’ individuality and passion for
action sports, music, art and fashion. Our stores bring these interests
together in a vibrant, stimulating and authentic environment that is an
extension of our customers’ high velocity, multitasking lifestyle. We do
this by blending the most relevant brands and styles with music videos,
product-related visuals and a dedicated team of store associates. We believe
the Tilly’s experience drives customer awareness, loyalty and repeat visits
while generating a buzz and excitement for our brand.
• Flexible real estate strategy across real estate venues and geographies.
We currently operate stores in 40 markets in 14 states across a variety of
real estate venues including malls, power centers, neighborhood and lifestyle
centers, outlet centers and street-front locations. Our geographic portability
and real estate flexibility provide us with a wider scope of opportunities and
enhance our ability to open new stores.
Our West Coast heritage dates back to 1982 when our founders, Hezy Shaked
and Tilly Levine, opened our first store in Orange County, California. Over
the last five years, we have demonstrated an ability to grow rapidly, having
more than doubled our store count while entering 29 new markets. During this
same period, we invested over $20 million in infrastructure and systems to
support our recent and long-term growth. We believe our team’s passion for
the West Coast inspired and action sports lifestyle, sense of urgency and
pursuit of excellence enables Tilly’s to consistently deliver a superior
customer experience and positions us to successfully execute our long-term
growth strategy. In fiscal 2011, we increased net sales to $400.6 million
from $332.6 million in fiscal 2010, or 20%, and we increased operating income
to $34.9 million from $24.9 million in fiscal 2010, or 40%. Our comparable
store sales increased 10.7% in fiscal year 2011 after a 6.7% increase in
fiscal year 2010.
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Tilly’s, Inc. was incorporated in Delaware in May 2011. We are a holding
company, and all of our business operations are conducted through World of
Jeans & Tops, a California corporation, which, following the Reorganization
Transaction, will be our wholly owned subsidiary. Our founders opened their
first store in 1982 and formed World of Jeans & Tops in 1984. World of Jeans
& Tops operates under the name “Tilly’s”.
Our principal executive office is located at 10 Whatney, Irvine, California
92618. Our telephone number is (949) 609-5599 and our fax number is
(949) 609-5508. Our website address is www.tillys.com.