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Tilly’s(TLYS) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total net sales for the fourth quarter of fiscal 2024 were 147.3million,adecreaseof14.9147.3 million, a decrease of 14.9% compared to the same period in fiscal 2023, with an extra week in last year's quarter accounting for 5.7 million in sales [7][10] - Comparable net sales, including both physical stores and e-commerce, decreased by 11.2% for the comparable thirteen-week period [7] - Gross margin was 26% of net sales, down from 27% in the previous year, while product margins improved by 190 basis points due to higher initial markups [8][9] - Total SG&A expenses were 52.4million,or35.652.4 million, or 35.6% of net sales, compared to 55.2 million, or 31.9% of net sales last year [9] Business Line Data and Key Metrics Changes - Net sales from physical stores decreased by 13.7%, representing 73.5% of total net sales, while e-commerce net sales decreased by 17.8%, accounting for 26.5% of total net sales [8] - The company ended the fiscal year with 240 total stores, a net decrease of eight stores compared to the end of fiscal 2023 [8] Market Data and Key Metrics Changes - The company experienced a significant decline in sales during November, with a 21% decrease, while December and January saw declines of 6% to 7% [32] - February's comparable net sales decreased by 5.7%, with a notable improvement during a warm weather period [11][35] Company Strategy and Development Direction - The company is adapting its brand and assortment mixes to improve sales and has planned reduced inventory commitments for fiscal 2025 [6] - Significant expense reductions are targeted through careful management of store leases, distribution, and corporate payroll [6] - The company aims to invest in expanded marketing efforts and new store opportunities while pursuing operational efficiencies [7] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the disappointing fourth quarter performance but expressed cautious optimism for improved sales trends as warmer weather approaches [5][11] - The company plans to operate with lower unit inventories throughout fiscal 2025 and expects to avoid accessing its credit facility if current trends continue [12][43] Other Important Information - Total capital expenditures in fiscal 2024 were 8.2million,downfrom8.2 million, down from 14 million in fiscal 2023 [11] - The company expects to finalize an extension of its asset-backed credit facility with Wells Fargo Bank through July 2028 [12] Q&A Session Summary Question: Impact of tariffs on private label products - Management indicated that the tariff impact would be minor, with only one vendor potentially sharing increased costs [16][17] Question: Consumer impact amid recession concerns - Management expressed hope that merchandising changes could mitigate recessionary headwinds, though no guarantees were made [18] Question: Store openings and capital expenditures - Management stated they are opportunistic regarding store openings, with plans to close more unprofitable stores than to open new ones [21][24] Question: Commentary on fourth quarter comp results - Management noted that November was the weakest month, with a 21% decline, while December and January showed slight improvements [32] Question: Trends in February and future expectations - Management highlighted a significant improvement in sales during a warm weather period in February, leading to cautious optimism for future performance [35][36] Question: Inventory management and credit facility usage - Management confirmed plans to maintain lower inventory levels and indicated that they would not need to access the credit facility unless comp trends deteriorated significantly [42][43]