Tilly’s(TLYS) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q1 fiscal 2025, total net sales were $107.6 million, a decrease of 7.1% compared to the previous year [7] - Comparable net sales decreased by 7%, an improvement from an 11.2% decrease in Q4 fiscal 2024 [4] - Gross margin was 19.8% of net sales, down from 21% last year, while product margins improved by 40 basis points [9] - Net loss was$ 22.2 million or $0.74 per share, compared to a net loss of$ 19.6 million or $0.65 per share last year [11] Business Line Data and Key Metrics Changes - Net sales from physical stores decreased by 7.4%, while e-commerce net sales decreased by 5.8% [7] - Physical stores represented 79.8% of total net sales, while e-commerce represented 20.2% [8] Market Data and Key Metrics Changes - Total comparable net sales for May 2025 decreased by 2.2%, indicating a sequential improvement [11] - The company ended Q1 with 238 total stores, a net decrease of eight stores compared to the previous year [9] Company Strategy and Development Direction - The company is focusing on building mindshare with customers through marketing initiatives, including the launch of a TikTok shop [5] - Plans to close additional stores based on lease negotiations, with up to 15 potential closures by the end of the fiscal year [12] Management Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about stabilization in business trends, particularly with the upcoming back-to-school season [20] - The impact of tariffs on product costs is currently considered minor, with expectations for product margins to be consistent or slightly better than last year [5][24] Other Important Information - Total liquidity at the end of Q1 was$ 92.6 million, with no borrowings and an undrawn borrowing capacity of $55.4 million [11] - The company expects to maintain a debt-free balance sheet throughout fiscal 2025 [12] Q&A Session Summary Question: Can you unpack the cadence of the first quarter sales? - February was down 5.7%, March down 13.8%, and April up 1.5%, with traffic down low single digits [16][17] Question: What are the expectations for the second quarter guidance? - The bulk of sales volume occurs at the end of the quarter, with cautious optimism for the back-to-school season [20] Question: Are there any impacts from tariffs on margins? - No material impact is expected from tariffs for the remainder of the year, with product margins anticipated to be consistent with last year [22][24] Question: Are there discussions with activist investors? - No discussions have occurred with new investors, and no requests for board seats have been made [37] Question: What is the outlook for product margins? - Product margins are expected to continue to leverage, depending on the ability to achieve flat or positive comparable sales [39]