Tilly’s Inc. logged a slightly wider loss in the first quarter ended May 3 as same-store sales dropped 7.0 percent. The sales decline was smaller than in the fourth quarter, with further improvement seen so far in the second quarter.

“Our fiscal 2025 first quarter comparable net sales, while a decrease compared to last year’s first quarter, were a sequential improvement in trend compared to the fourth quarter of fiscal 2024. Fiscal May, to start the second quarter, produced further sequential trend improvement relative to the first quarter,” commented Hezy Shaked, President and Chief Executive Officer. “We believe our merchandise assortment is on trend, and we are encouraged by these signs that our business may be starting to stabilize. We continue to seek opportunities to accelerate progress toward improving our business.”

Fiscal 2025 First Quarter Operating Results Overview

The following comparisons refer to the company’s operating results for the first quarter of fiscal 2025 ended May 3, 2025 versus the first quarter of fiscal 2024 ended May 4, 2024.

Total net sales were $107.6 million, a decrease of 7.1 percent. Total comparable net sales, including both physical stores and e-commerce (“e-com”), decreased by 7.0 percent relative to the comparable 13-week period ended May 4, 2024. This result represented a 4.2 comp point improvement in sequential trend from fiscal 2024’s fourth quarter comparable net sales decrease of 11.2 percent. Results were at the lower end of guidance calling for sales in the range of $105 million to $111 million.

Net sales from physical stores were $85.9 million, a decrease of 7.4 percent. Comparable store net sales decreased 7.1 percent relative to the comparable 13-week period ended May 4, 2024. Net sales from physical stores represented 79.8 percent of total net sales this year compared to 80.1 percent of total net sales last year. The company ended the first quarter with 238 total stores compared to 246 total stores at the end of the first quarter last year.

Net sales from e-com were $21.7 million, a decrease of 5.8 percent. E-com net sales decreased 6.6 percent relative to the comparable 13-week period ended May 4, 2024. E-com net sales represented 20.2 percent of total net sales this year compared to 19.9 percent of total net sales last year.

Gross profit, including buying, distribution, and occupancy costs, was $21.3 million, or 19.8 percent of net sales, compared to $24.3 million, or 21.0 percent of net sales, last year. Product margins improved by 40 basis points primarily due to improved initial markups, partially offset by increased inventory valuation reserves. Buying, distribution, and occupancy costs deleveraged by 160 basis points collectively, despite being $0.8 million lower than last year, primarily due to carrying these costs against a lower level of net sales this year.

Selling, general and administrative (“SG&A”) expenses were $44.0 million, or 40.9 percent of net sales, compared to $45.1 million, or 38.9 percent of net sales, last year. The $1.1 million decrease in SG&A was primarily attributable to a decrease in store payroll and related benefits of $0.9 million and lower non-cash asset write-down charges of $0.5 million, partially offset by an increase in marketing expenses of $0.7 million. SG&A deleveraged by 190 basis points as a result of carrying these costs against a lower level of net sales this year.

Operating loss was $22.7 million, or 21.1 percent of net sales, compared to $20.8 million, or 17.9 percent of net sales, last year, due to the combined impact of the factors noted above.

Income tax benefit was $0.1 million, or 0.6 percent of pre-tax loss, compared to $13 thousand, or 0.1 percent of pre-tax loss, last year. Both years’ income tax results include the continuing impact of a full, non-cash deferred tax asset valuation allowance. This year’s income tax benefit also includes the refund of certain income tax credit carry forwards and state income tax carry back claims.

Net loss was $22.2 million, or $0.74 per share, compared to $19.6 million, or $0.65 per share, last year. Weighted average shares were 30.1 million this year compared to 30.0 million shares last year. The loss was lower than guidance, estimating a loss in the range of 68 cents to 58 cents.

Balance Sheet and Liquidity

As of May 3, 2025, the company had $37.2 million of cash, cash equivalents and marketable securities and $55.4 million of available, undrawn borrowing capacity under its asset-backed credit facility. Total inventories decreased by 3.8 percent as of May 3, 2025 compared to May 4, 2024. Total year-to-date capital expenditures at the end of the first quarter were $1.5 million this year compared to $2.1 million at the end of the first quarter of fiscal 2024.

Fiscal 2025 Second Quarter Outlook

Total comparable net sales for fiscal May ended May 31, 2025 decreased by 2.2 percent relative to the comparable period of last year. Based on current and historical trends, the company currently estimates the following for the second quarter of fiscal 2025 ending August 2, 2025:

  • Net sales in the range of approximately $150 million to $158 million, translating to an estimated comparable net sales range of a decrease of 5 percent to flat, respectively, relative to the comparable period last year;
  • SG&A expenses in the range of approximately $48 million to $49 million, excluding any potential non-cash asset impairment charges that may arise;
  • Net loss of approximately $2.7 million to net income of approximately $2.0 million, respectively, with a near-zero effective income tax rate due to the continuing impact of a full, non-cash valuation allowance on deferred tax assets; and
  • Per share results to be in the range of a net loss of $0.09 to net income of $0.07, respectively.
  • Total quarter-ending store count of 232 compared to 247 at the end of last year’s second quarter, with seven store closures and one new store opening during the quarter. At this time, the company expects to close two additional stores in the third quarter and there are potentially 15 additional store closures which could occur toward the end of the fiscal year depending on the outcome of lease renewal negotiations with landlords.
  • Total quarter-ending liquidity of approximately $106 million to $111 million with no debt, comprised of total cash, cash equivalents and marketable securities in the range of approximately $43 million to $48 million, and available, undrawn borrowing capacity of approximately $63 million under its asset-backed credit facility. Based on its current projections, the company does not anticipate needing to initiate borrowings under its credit facility at any time during fiscal 2025. The company estimates it would take a consistent comparable net sales decrease of approximately 10 percent or more over the course of the remainder of the year to require any level of borrowing this year.

Photo courtesy Tilly’s