Tilly’s, Inc. shares jumped 18.6 percent on Thursday, June 4, after reporting one of its strongest quarters to date, while competitor Zumiez saw shares collapse ~24 percent in late-afternoon trading on Friday as the action sports retailer offered weak guidance amid signs of a pullback in discretionary spending.
The Buckle also delivered a solid first quarter, led by girls’ denim offerings.
Zumiez’s Shares Crash on Poor Outlook
At Zumiez, the investor focus was on guidance calling for second-quarter sales to range from negative 2 percent to positive 0.5 percent – a range that came in below expectations. Comps are expected to align with the overall trend.
Operating income for the second quarter is projected to range between negative 1.5 percent of sales and breakeven. EPS is expected to range from a loss of 23 cents a share to 8 cents, compared to a loss of 6 cents in the prior year, also short of targets.
Company CFO Christopher Work further stated on an analyst conference call on Friday call that the company’s sales outlook for the “back half of the year is down slightly from our original expectations, given in March.”
The updated guidance comes as Zumiez faced increased pressure on consumer discretionary spending in the latter part of its fiscal first quarter ended May 2 and that pressure continued into May. During May, comparable sales slipped 0.1 percent, with a 1.9 percent comp decline in North America partially offsetting 10.7 percent growth in the company’s International segment, which includes the Blue Tomato banner in Europe and the Fast Times brand in Australia.
Work said in the Q&A section of the call, “We know our consumer is pushed right now about discretionary income, and things are just tighter, right? And as a full-price retailer, this does put probably more pressure on our business.”
He stated it’s “prudent to look forward with an appropriate level of conservatism given these consumer headwinds.”
Work noted that the second quarter has historically been the hardest to forecast for Zumiez, as it is highly dependent on back-to-school selling. He noted that May accounted for only about a quarter of Zumiez’s second-quarter sales. Work said, “Like a lot of retailers, we won’t really know how the quarter ends up until we get to the end of July.”
The subpar guidance comes as Zumiez delivered mid-single-digit comp gains in the first quarter for the second consecutive year, marking the eighth straight quarter of positive growth. Net sales for the quarter climbed 4.9 percent to $193.3 million, just ahead of guidance calling for sales in the range of $189 to $193 million.
The net loss was $13.3 million, or 82 cents per share, compared to a net loss of $14.3 million, or 79 cents, in the Q1 period a year ago. The loss was in line with guidance calling for a loss in the range of 77 cents to 87 cents and slightly below Wall Street’s consensus of an 81-cent loss.
The first quarter of 2025 was negatively impacted by $2.9 million, or approximately 13 cents per share, related to the settlement of a wage and hours lawsuit in California.
CEO Richard Brooks said said on the conference call that the comp gains were supported by continued strength in North America, which posted a 4.4 percent gain, and by a 5.5 percent improvement in Europe.
“Our first quarter results were largely in line with our expectations, even as the operating environment became more dynamic as the quarter progressed, and we observed increasing pressure on consumers during the latter part of the quarter,” said Brooks. “Despite these headwinds, our merchandise assortments and customer experience initiatives continue to resonate with our core customer base, demonstrating the resilience of our business model and the strength of our strategic positioning.”
Brooks called out the recovery in Europe. He said the region has been mimicking the company’s North America region’s recent heightened focus on newness and full-price selling to deliver sales gains and “meaningful bottom-line improvements” over the last two quarters.
From a category perspective, the overall gains were “broad-based,” with men’s leading the growth, followed by hardgoods, women’s and accessories. Footwear was the only negative-comping category. The consolidated increase in comparable sales was driven by higher dollars per transaction, partially offset by lower transactions.
Said Brooks, “This diversified strength across multiple categories reinforces the effectiveness of our merchandising approach and the investments we’ve made in product newness and private label expansion.”
Looking ahead, Brooks said Zumiez will continue to build on the “momentum” it’s seeing in 2026, resulting from the introduction last year of over 150 new and emerging brands. Brooks said, “This newness continues to generate strong customer response and represents an increasingly important component of our sales mix.”
He also noted that private label “remains a standout success story,” and continues as a priority. Representing 34 percent of sales, private label maintained the highest penetration levels in company history.
Brooks said Zumiez feels “pretty good” about inventory levels, which were up 0.7 percent on a constant-currency basis at the quarter’s close. The retailer has not been canceling orders due to recent top-line softness, but it has the flexibility with its buys to react to emerging BTS trends. Brooks said, “We have great partners, too, that are willing to work with us as business trends shape up. So, I think we always feel that however we come through back-to-school, we also can adjust looking forward relative to heading into the peak of the holiday.”
Tilly’s Strong Turnaround Continues
Tilly’s, Inc. significantly reduced its loss in the first quarter ended May 2 as same-store sales leaped 22.9 percent, just ahead of guidance calling for same-store gains between 16 percent and 22 percent.
The net loss of 26 cents per share also topped guidance, which called for a loss of between 34 cents and 27 cents. Analysts’ consensus estimate was a 33-cent loss.
Tilly’s also reported same-store sales grew 8.3 percent in May, marking the company’s 10th consecutive month of comp growth.
For the second quarter, Tilly’s expects comparable sales to increase between 6 percent and 10 percent year-over-year and EPS in the range of 13 cents and 20 cents, up from 10 cents a year ago.
Shares of Tilly’s rose 83 cents, or 18.7 percent, to $5.27 on Thursday, June 4, following the issuance of the report on Wednesday evening.
The performance comes as Tilly’s delivered its first full-year profit since 2021.
“The turnaround momentum that we began building in fiscal 2025 has carried meaningfully into the new year, and we are pleased with how we have started fiscal 2026,” said Nate Smith, president and CEO, on an analyst call.
Calling out numerous highlights for the quarter, Smith noted that for the third consecutive quarter and ninth consecutive month, comps landed at the top of the outlook range. Total net sales from physical stores increased 12.1 percent, despite a 7.6 percent reduction in quarter-end store count compared to last year’s first quarter. E-commerce sales jumped 30.9 percent, expanding to 22.8 percent of total sales, up from 20.2 percent last year.
All category departments posted double-digit comp sales gains as both store and online traffic grew. Said Smith, “Performance was strong across both proprietary and third-party brands, with very few exceptions.”
The retailer’s customer loyalty program continues to expand, with 10 percent growth in customers who have been active in the last year, while its TikTok following has doubled since launching a TikTok shop last March.
Product margins improved by 400 basis points, driven by stronger full-price selling and better-aged inventory versus last year. The quarter marked the 6th consecutive quarter in which its product margin rate improved relative to the prior-year period.
“We believe the work we have put into more clearly understanding and defining our key customer profiles has helped us build and merchandise assortments both in-store and online with clearer strategy and focus than in the past. This, in turn, has resulted in greater and more consistent customer engagement for us,” said Smith.
Michael Henry, EVP, CFO and corporate secretary, noted that the quarter marked the first time Tilly’s had returned to building cash year over year since the end of the third quarter of fiscal 2021.
Smith said that while Tilly’s remains “clear-eyed about the external environment. There are headwinds out there,” it’s growing more confident in its ability to return to historical levels of store sales productivity and operating performance. Smith said, “The trend of our business has been moving in the right direction, and it is doing so with increasing consistency. Returning to profitability in fiscal 2026 is our foremost priority. While there is still work ahead of us, the sales trends we have been seeing, assuming they continue, give us genuine confidence that we are on the right path to potentially get there.”
The Buckle’s Q1 Comps Climb 5 Percent on Girls Denim Strength
Profits at The Buckle, Inc. rose 33.2 percent in the first quarter ended May 2 to $46.9 million, or 93 cents a share, although the gains benefited from a litigation settlement. Sales climbed 6.1 percent to $288.7 million, with comparable-store sales up 5.1 percent.
For the quarter, UPTs (units per transaction) decreased approximately 1 percent, average unit retail increased approximately 4.5 percent, and average transaction value increased approximately 3.5 percent.
On an analyst call, Adam Akerson, VP of Finance, said Buckle’s women’s segment led the gains, with sales up 11 percent in the quarter on top of a 10.5 percent increase in Q1 2025. Women’s business represented approximately 52 percent of sales compared to 50 percent last year. The women’s denim category remained the leading contributor to revenue growth, with sales up 8 percent year-over-year.
Women’s also saw “great growth in our alternative pant collection with strong trend adoption of expanded brand offerings. Our women’s top business remains strong, highlighted by growing private-label penetration and a favorable response to newness and color selections. We also had a great early response to our denim shorts business as we moved into the spring and summer selling seasons,” according to Akerson.
In men’s, sales increased 2 percent year over year in the quarter, representing approximately 48 percent of total sales, down from 50 percent last year. The men’s denim business was down about 1.5 percent, although private denim brands are still seeing growth. Akerson said the men’s tops business “was a meaningful contributor to growth, led by strong performance in tees and polos, along with solid momentum in our short sleeve button fronts. Across a range of styles in both solos and prints, our shorts business also performed well with strength in both denim and athletic styles.”
On a combined basis across men’s and women’s, accessory sales for the quarter increased approximately 6 percent against the prior year, and footwear sales inched up 0.5 percent. Those two categories combined accounted for approximately 11.5 percent of sales in the quarter.
Kids turned in “another standout performance,” with sales up approximately 16 percent in the quarter. Overall, denim accounted for approximately 42.5 percent of sales, and tops accounted for approximately 28 percent.
Buckle’s earnings benefited from the recognition of a $19.1 million interchange fee litigation settlement during the first quarter of 2026, as disclosed in Buckle’s 2025 10K filing. With the settlement payment, SG&A expenses for the quarter were reduced to 25.6 percent of sales, down from 30.7 percent in the first quarter of 2025. Absent the impact of the settlement, SG&A expenses were up 150 basis points for the quarter.
Gross margin for the quarter declined 50 basis points to 46.2 percent, reflecting a 10-basis-point reduction in merchandise margins, along with a 40-basis-point impact from increased buying distribution and occupancy expense.
Thomas Heacock, SVP of Finance, Treasurer and CFO, on the call, said the decline in merchandising margins primarily reflects tough comparisons against “record high levels” a year ago. Heacock said, “We still feel like we’re maintaining a full, strong, regular price business and pleased with margins where they are. In terms of what caused the decrease, probably a little bit of cost pressure from tariffs.”
Image courtesy Zumiez
