Tilly’s(TLYS)2024-12-06 00:28Financial Data and Key Metrics Changes - For Q3 2024, net sales were 18.4 million in net sales from Q3 to Q2 [11] - Comparable net sales for the 13-week period ended November 2, 2024, decreased by 3.4%, with a decline in store sales of 5.6% and an increase in e-commerce sales of 4.9% [11] - The net loss was 0.43 per share, compared to a net loss of 0.03 per share in the previous year [15] Business Line Data and Key Metrics Changes - Net sales from physical stores decreased by 16% and represented 77.6% of total net sales, while e-commerce net sales decreased by 5.4% and represented 22.4% of total net sales [11] - Gross margin was 25.9% of net sales, down from 29.3% last year, with buying, distribution, and occupancy costs deleveraging by 320 basis points [12] Market Data and Key Metrics Changes - Store traffic increased for the second consecutive quarter, although comparable sales in stores remained negative [9] - Comparable net sales through December 3, 2024, decreased by 15.3% relative to the same period last year, attributed to the timing shift of Thanksgiving and Black Friday [17] Company Strategy and Development Direction - The company is focusing on improving sales growth and profitability, with renewed marketing efforts and a new sponsorship with the Los Angeles Chargers aimed at mental health awareness [9] - A new price optimization tool is expected to launch in early 2025 to enhance pricing decisions and merchandise management efficiency [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges in generating consistent sales growth and profitability but noted positive highlights in Q3 performance [7] - The company expects total net sales for Q4 to be in the range of approximately 156 million, with a comparable net sales decline of 9% to 5% [18] Other Important Information - The company ended Q3 with total cash and marketable securities of $52 million and no debt [15] - Inventory levels were up 11.8% compared to the previous year, due to a strategic decision to pull forward inventory receipts [16] Q&A Session Summary Question: Is Hezy on the call today? - Hezy confirmed his presence on the call [23] Question: Can you clarify the merchandise margin situation? - Management discussed changes in merchandise strategy and the impact of markdowns on gross margins, indicating a roadmap for improvement [27][28] Question: What is the status of inventory levels? - Management explained the increase in inventory was a conscious decision to ensure timely delivery for Black Friday, with a temporary timing blip noted [33][36] Question: Can you clarify the Thanksgiving holiday sales figures? - Management clarified that the minus 10% figure was a quarter-to-date comparison, with a shifted basis providing a better perspective on sales performance [42][44] Question: What promotional strategies are in place? - Management indicated that typical holiday promotions would be utilized, focusing on profitability and productivity in gross margin dollars [60] Question: Any surprises in SG&A costs? - Management stated there were no unexpected costs, with careful planning of temporary labor needs based on expected volumes [62]