Tilly’s(TLYS) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total net sales for Q4 2024 were $147.3 million, a decrease of 14.9% compared to Q4 2023 [11] - Comparable net sales decreased by 11.2% for the 13-week period ended February 1, 2025 [12] - Gross margin was 26% of net sales, down from 27% in the previous year [13] - Net loss was$ 13.7 million or $0.45 per share, compared to a net loss of$ 20.6 million or $0.69 per share in the previous year [15] Business Line Data and Key Metrics Changes - Physical store net sales increased by 13.7% but decreased by 9.8% on a comparable basis [12] - E-commerce net sales decreased by 17.8%, representing 26.5% of total net sales [13] Market Data and Key Metrics Changes - The company ended the fiscal year with 240 total stores, a net decrease of eight stores compared to the end of fiscal 2023 [12] - Total inventories were 9.5% higher than at the end of fiscal 2023, but as of March 1, 2025, inventories were 6.1% below last year's level [16] Company Strategy and Development Direction - The company is focusing on reducing inventory commitments and improving product margins for fiscal 2025 [9] - Significant expense reductions are targeted through careful management of store leases and operational costs [11] - The company plans to continue investing in marketing and new store opportunities while pursuing operational efficiencies [11] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment in Q4 performance but noted improvements in trends for the first quarter of fiscal 2025 [7][18] - There is cautious optimism regarding sales performance as warmer weather approaches, which may positively impact sales [45] - The company expects to operate without accessing its credit facility throughout fiscal 2025, provided that sales do not decline significantly [21][55] Other Important Information - Total capital expenditures in fiscal 2024 were$ 8.2 million, down from $14 million in fiscal 2023 [17] - The company anticipates a net loss per share in the range of$ 0.68 to $0.58 for the first quarter of fiscal 2025 [19] Q&A Session Summary Question: Impact of tariffs on the company - Management indicated that the tariff impact would be minor, affecting only one vendor for private label products [25] Question: Consumer impact from economic conditions - Management hopes that merchandising changes will help mitigate potential consumer headwinds [27] Question: Store openings and capital expenditures - The company plans to be opportunistic with store openings, having opened two profitable stores recently, but expects to close more unprofitable stores [31][32] Question: Commentary on Q4 comparable sales decline - Management noted that November was particularly weak, with a 21% decline, while December and January saw smaller declines [41] Question: Trends in February sales - February saw a 5.7% decline in comparable net sales, with a brief period of positive sales due to warmer weather [45] Question: Timing of merchandising changes - Management expects to see results from merchandising changes by July [50] Question: Inventory balance and credit facility usage - The company plans to maintain lower unit inventories throughout the year and does not expect to access the credit facility unless sales decline significantly [55]