Tilly’s(TLYS) - 2026 Q2 - Quarterly Results

Executive Summary and Business Highlights Executive Summary and Business Highlights Tilly's highlights improved Q2 FY25 operating results from stabilization efforts and announces a new Chief Executive Officer Management Commentary and Strategic Direction Tilly's reported improved Q2 FY25 comparable net sales trends from stabilization efforts and appointed Nate Smith as the new CEO - Comparable net sales trend has improved each quarter since the end of fiscal 2024, including through fiscal August to begin the third quarter[2] - Nate Smith has been welcomed as the new Chief Executive Officer[2] Fiscal 2025 Second Quarter Financial Review Q2 FY25 Operating Results Overview Tilly's reported a 7.1% decrease in total net sales for Q2 FY25, achieving an operating income of $2.7 million and net income of $3.2 million | Metric | Q2 FY25 (Millions) | Q2 FY24 (Millions) | Change (%) | | :----- | :----------------- | :----------------- | :--------- | | Total Net Sales | $151.3 | $162.9 | -7.1% | | Operating Income (Loss) | $2.7 | $(0.9) | N/A | | Net Income (Loss) | $3.2 | $(0.1) | N/A | | Diluted EPS | $0.10 | $(0.00) | N/A | Q2 FY25 Sales Performance Total net sales for Q2 FY25 decreased by 7.1% to $151.3 million, with comparable net sales declining by 4.5% across physical stores and e-commerce | Sales Metric | Q2 FY25 | Q2 FY24 | Change (%) | | :----------- | :------ | :------ | :--------- | | Total Net Sales | $151.3 million | $162.9 million | -7.1% | | Total Comparable Net Sales | -4.5% | N/A | N/A | | Physical Store Net Sales | $122.7 million | N/A | -7.3% | | E-com Net Sales | $28.5 million | N/A | -6.6% | - Company ended Q2 FY25 with 232 total stores, a decrease of 15 stores or 6.1%, compared to 247 total stores at the end of Q2 FY24[3] Q2 FY25 Profitability Analysis Gross profit percentage improved to 32.5% due to better product margins, and reduced SG&A expenses led to a $2.7 million operating income | Profitability Metric | Q2 FY25 | Q2 FY24 | Change | | :------------------- | :------ | :------ | :----- | | Gross Profit | $49.1 million | $49.9 million | -1.6% | | Gross Profit % of Net Sales | 32.5% | 30.7% | +180 bps | | SG&A Expenses | $46.4 million | $50.8 million | -8.7% | | SG&A % of Net Sales | 30.7% | 31.2% | -50 bps | | Operating Income (Loss) | $2.7 million | $(0.9) million | N/A | - Product margins improved by 210 basis points primarily due to higher initial markups and lower markdowns as a result of operating with reduced, more current inventory[3] - Occupancy costs decreased by $1.7 million, primarily due to operating 15 fewer net stores compared to last year[3] Fiscal 2025 First Half Financial Review H1 FY25 Operating Results Overview For H1 FY25, Tilly's reported a 7.1% decrease in total net sales, with a narrowed operating loss of $20.0 million and a net loss of $19.0 million | Metric | H1 FY25 (Millions) | H1 FY24 (Millions) | Change (%) | | :----- | :----------------- | :----------------- | :--------- | | Total Net Sales | $258.9 | $278.7 | -7.1% | | Operating Loss | $(20.0) | $(21.6) | -7.4% | | Net Loss | $(19.0) | $(19.7) | -3.6% | | Diluted EPS | $(0.63) | $(0.66) | -4.5% | H1 FY25 Sales Performance Total net sales for H1 FY25 decreased by 7.1% to $258.9 million, with comparable net sales down 5.5% across all channels | Sales Metric | H1 FY25 | H1 FY24 | Change (%) | | :----------- | :------ | :------ | :--------- | | Total Net Sales | $258.9 million | $278.7 million | -7.1% | | Total Comparable Net Sales | -5.5% | N/A | N/A | | Physical Store Net Sales | $208.6 million | N/A | -7.3% | | E-com Net Sales | $50.2 million | N/A | -6.3% | H1 FY25 Profitability Analysis Gross profit percentage for H1 improved to 27.2% from better product margins, and reduced SG&A expenses narrowed the operating loss to $20.0 million | Profitability Metric | H1 FY25 | H1 FY24 | Change | | :------------------- | :------ | :------ | :----- | | Gross Profit | $70.4 million | $74.2 million | -5.1% | | Gross Profit % of Net Sales | 27.2% | 26.6% | +60 bps | | SG&A Expenses | $90.4 million | $95.9 million | -5.7% | | SG&A % of Net Sales | 34.9% | 34.4% | +50 bps | | Operating Loss | $(20.0) million | $(21.6) million | -7.4% | - Product margins improved by 140 basis points primarily due to higher initial markups and lower markdowns as a result of operating with reduced, more current inventory[8] Balance Sheet and Liquidity Financial Position and Capital Expenditures Tilly's maintained strong liquidity of $113.7 million, with increased cash, reduced inventories, and significantly lower capital expenditures | Metric | As of Aug 2, 2025 (Millions) | As of Aug 3, 2024 (Millions) | Change (%) | | :----- | :--------------------------- | :--------------------------- | :--------- | | Total Available Liquidity | $113.7 | N/A | N/A | | Cash and Cash Equivalents | $50.7 | $36.7 | +37.9% | | Undrawn Borrowing Capacity | $63.0 | N/A | N/A | | Total Inventories | N/A | N/A | -14.5% | | Year-to-Date Capital Expenditures | $2.1 | $4.6 | -54.3% | Fiscal 2025 Third Quarter Outlook Q3 FY25 Financial Guidance Tilly's projects Q3 FY25 net sales between $134 million and $140 million, anticipating a net loss of $10.5 million to $7 million | Metric | Q3 FY25 Outlook | Q3 FY24 Actual | | :----- | :-------------- | :------------- | | Net Sales | $134M - $140M | N/A | | Comparable Net Sales | -2% to +2% | N/A | | SG&A Expenses | ~$47M | N/A | | Net Loss | $10.5M - $7M | N/A | | Diluted EPS | $(0.35) - $(0.23) | $(0.43) | - Comparable net sales for fiscal August ended August 30, 2025, increased by 0.9% relative to the comparable period of last year[9] Q3 FY25 Store Operations and Liquidity Projections The company expects to end Q3 FY25 with 230 stores and projects total liquidity of $83 million to $86 million without credit facility borrowings | Metric | Q3 FY25 Outlook | Q3 FY24 Actual | | :----- | :-------------- | :------------- | | Quarter-Ending Store Count | 230 | 246 | | Total Liquidity | $83M - $86M | N/A | | Cash & Cash Equivalents | $20M - $25M | N/A | | Undrawn Borrowing Capacity | $61M - $63M | N/A | - The Company expects to close two additional stores in the fourth quarter, although more are possible at the end of the fiscal year depending upon the outcome of lease renewal negotiations[11] - The Company does not anticipate needing to initiate borrowings under its credit facility at any time during fiscal 2025[11] Consolidated Financial Statements Consolidated Balance Sheets The consolidated balance sheets detail Tilly's financial position, including assets, liabilities, and equity as of August 2, 2025, and prior periods | ASSETS (in thousands) | Aug 2, 2025 | Feb 1, 2025 | Aug 3, 2024 | | :-------------------- | :---------- | :---------- | :---------- | | Cash and cash equivalents | $50,680 | $21,056 | $36,749 | | Merchandise inventories | $81,229 | $69,178 | $95,011 | | Total current assets | $150,570 | $130,960 | $194,422 | | TOTAL ASSETS | $345,531 | $342,463 | $429,197 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | | | | | Total current liabilities | $132,687 | $99,383 | $143,028 | | Total long-term liabilities | $130,344 | $142,209 | $159,396 | | Total liabilities | $263,031 | $241,592 | $302,424 | | Total stockholders' equity | $82,500 | $100,871 | $126,773 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $345,531 | $342,463 | $429,197 | Consolidated Statements of Operations The statements of operations detail Tilly's revenues, expenses, and net income (loss) for Q2 and H1 FY25, showing a shift to net income in Q2 | (In thousands, except per share data) | Thirteen Weeks Ended Aug 2, 2025 | Thirteen Weeks Ended Aug 3, 2024 | Twenty-Six Weeks Ended Aug 2, 2025 | Twenty-Six Weeks Ended Aug 3, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :--------------------------------- | :------------------------------- | | Net sales | $151,256 | $162,867 | $258,867 | $278,723 | | Gross profit | $49,102 | $49,920 | $70,387 | $74,233 | | Selling, general and administrative expenses | $46,424 | $50,779 | $90,398 | $95,880 | | Operating income (loss) | $2,678 | $(859) | $(20,011) | $(21,647) | | Net income (loss) | $3,165 | $(69) | $(18,987) | $(19,690) | | Diluted net income (loss) per share | $0.10 | $(0.00) | $(0.63) | $(0.66) | Consolidated Statements of Cash Flows The statements of cash flows break down cash from operating, investing, and financing activities for H1 FY25, showing increased cash from operations | (In thousands) | Twenty-Six Weeks Ended Aug 2, 2025 | Twenty-Six Weeks Ended Aug 3, 2024 | | :------------- | :--------------------------------- | :--------------------------------- | | Net cash provided by (used in) operating activities | $5,850 | $(15,203) | | Net cash provided by investing activities | $23,774 | $4,631 | | Net cash provided by financing activities | $0 | $294 | | Change in cash and cash equivalents | $29,624 | $(10,278) | | Cash and cash equivalents, end of period | $50,680 | $36,749 | Operational Metrics and Corporate Information Store Count and Square Footage This section provides a quarterly breakdown of Tilly's store count changes and total gross square footage from Q1 2024 to Q2 2025 | Quarter | Store Count at Beginning | New Stores Opened | Stores Permanently Closed | Store Count at End | Total Gross Square Footage (in thousands) | | :------ | :----------------------- | :---------------- | :------------------------ | :----------------- | :---------------------------------------- | | 2024 Q1 | 248 | 2 | 4 | 246 | 1,784 | | 2024 Q2 | 246 | 1 | 0 | 247 | 1,791 | | 2024 Q3 | 247 | 0 | 1 | 246 | 1,780 | | 2024 Q4 | 246 | 4 | 10 | 240 | 1,730 | | 2025 Q1 | 240 | 1 | 3 | 238 | 1,707 | | 2025 Q2 | 238 | 1 | 7 | 232 | 1,657 | About Tillys Tillys is a destination specialty retailer offering casual apparel, footwear, and accessories for young demographics, operating 231 stores and an e-commerce site - Tillys is a destination specialty retailer of casual apparel, footwear, and accessories for young men, young women, boys and girls[10] - Headquartered in Irvine, California, Tillys currently operates 231 total stores across 33 states, as well as its website, www.tillys.com[10](index=10&type=chunk) Conference Call Details Details for the conference call with analysts to discuss financial results are provided, including date, time, dial-in numbers, and webcast access - A conference call with analysts to discuss these financial results is scheduled for September 3, 2025, at 4:30 p.m. ET (1:30 p.m. PT)[9] - Analysts can dial (877) 300-8521 (domestic) or (412) 317-6026 (international) or access a live webcast at www.tillys.com under 'Investor Relations'[9] Forward-Looking Statements This section cautions readers about forward-looking statements, highlighting inherent risks and uncertainties that could impact actual results - Statements regarding current operating expectations, comparable net sales trends, impacts of inflation, tariffs, potential recession, and future financial condition are forward-looking statements[12] - These statements involve risks and uncertainties such as supply chain difficulties, ability to respond to changing customer preferences, and competition, detailed in the Annual Report on Form 10-K[12] - Readers are urged not to place undue reliance on these forward-looking statements, and the company does not undertake any obligation to update or alter them[12]