Tilly’s, Inc. reported third-quarter earnings topped guidance as the action sports chain delivered its first quarter with positive comp growth since the fourth quarter of its fiscal year ended January 2022.

Sales in the period ended November 1 reached $139.6 million, at the high end of guidance between $134 million and $140 million. The retailer posted a net loss of 5 cents a share, against guidance calling for a loss of 23 cents to 35 cents a share.

“The third quarter of fiscal 2025 produced our first quarter with comparable net sales growth since the fourth quarter of fiscal 2021, and that positive momentum has continued into this year’s fourth quarter,” commented Nate Smith, president and chief executive officer. “Our third quarter results exceeded our expectations, which we believe demonstrates the effectiveness of our initiatives and our team’s ability to execute. Great effort has gone into getting our business to this point, but we also recognize the work that remains to return the company to profitable growth. I am excited to be here with this team as we strive to continue building forward momentum in the fourth quarter and into fiscal 2026.”

Operating Results Overview

Fiscal 2025 Third Quarter Compared to Fiscal 2024 Third Quarter

  • Total net sales were $139.6 million, down 2.7 percent. Total comparable net sales, including both physical stores and e-commerce (e-com), increased by 2.0 percent.
  • Net sales from physical stores were $110.3 million, down 0.9 percent. The company ended the third quarter with 230 total stores, a decrease of 16 stores or 6.5 percent, compared to 246 stores at the end of the third quarter last year. Comparable store net sales from physical stores increased by 5.3 percent relative to the comparable 13-week period ended November 2, 2024. Net sales from physical stores accounted for 79.0 percent of total net sales this year, compared with 77.6 percent last year.
  • Net sales from e-com were $29.3 million, a decrease of 9.0 percent. This decrease was primarily attributable to a 51.0 percent decline in clearance sales relative to last year’s third quarter. E-com net sales represented 21.0 percent of total net sales this year compared to 22.4 percent of total net sales last year.
  • Gross profit, including buying, distribution, and occupancy costs, was $42.6 million, or 30.5 percent of net sales, compared to $37.2 million, or 25.9 percent of net sales, last year. Product margins improved by 390 basis points, primarily due to higher initial markups and lower markdowns resulting from operating with reduced, more current inventory. Buying, distribution, and occupancy costs improved by 70 basis points and $2.0 million, collectively, primarily due to decreased occupancy costs associated with reduced store count.
  • Selling, general and administrative (“SG&A”) expenses were $44.5 million, or 31.9 percent of net sales, compared to $51.3 million, or 35.7 percent of net sales, last year. The $6.7 million decrease in SG&A was primarily attributable to decreases in store payroll and related benefits of $1.5 million, e-com fulfillment labor of $1.5 million, and non-cash asset write-down charges of $1.1 million, among several other smaller reductions in various expenses.
  • Operating loss improved to $1.9 million, or 1.4 percent of net sales, compared to $14.1 million, or 9.8 percent of net sales, last year, due to the combined impact of the factors noted above.
  • Income tax expense was $25 thousand, or 1.8 percent of pre-tax loss, compared to an income tax benefit of $5 thousand, or 0.0 percent of pre-tax loss, last year. Both quarters’ income tax results include the continuing impact of a full, non-cash deferred tax asset valuation allowance. This quarter’s income tax expense includes state net margin taxes despite the company’s pre-tax loss.
  • Net loss improved to $1.4 million, or 5 cents per share, from $12.9 million, or 43 cents per share, last year, representing an improvement of $11.5 million, or 38 cents per share, compared to last year. Weighted average shares were 30.1 million for both periods.

Fiscal 2025 Year-to-Date Third Quarter Compared to Fiscal 2024 Year-to-Date Third Quarter

  • Total net sales were $398.5 million, down 5.6 percent. Total comparable net sales, including both physical stores and e-commerce (“e-com”), decreased by 3.0 percent.
  • Net sales from physical stores were $319.0 million, down 5.2 percent. Comparable store net sales from physical stores decreased by 1.9 percent relative to the comparable 39-week period ended November 2, 2024. Net sales from physical stores accounted for 80.0 percent of total net sales this year, compared with 79.7 percent last year.
  • Net sales from e-com were $79.5 million, a decrease of 7.3 percent. This decrease was due in part to a 22.6 percent decline in clearance sales relative to last year. E-com net sales represented 20.0 percent of total net sales this year compared to 20.3 percent of total net sales last year.
  • Gross profit, including buying, distribution, and occupancy costs, was $113.0 million, or 28.4 percent of net sales, compared to $111.4 million, or 26.4 percent of net sales, last year. Product margins improved by 230 basis points, primarily due to higher initial markups and lower markdowns resulting from operating with reduced, more current inventory. Buying, distribution, and occupancy costs deleveraged by 30 basis points, despite being $5.2 million lower than last year, collectively, primarily due to carrying these costs against a lower level of net sales this year. Occupancy costs decreased by $4.3 million, primarily due to operating 16 fewer net stores than last year.
  • Selling, general and administrative (“SG&A”) expenses were $134.9 million, or 33.9 percent of net sales, compared to $147.1 million, or 34.9 percent of net sales, last year. The $12.2 million reduction in SG&A was primarily attributable to decreases in store payroll and related benefits of $4.4 million, non-cash asset write-down charges of $2.5 million, and e-com fulfillment labor of $1.8 million, among several other smaller reductions in various expenses.
  • Operating loss improved to $21.9 million, or 5.5 percent of net sales, compared to $35.7 million, or 8.5 percent of net sales, last year, due to the combined impact of the factors noted above.
  • Income tax benefit was $155 thousand, or 0.8 percent of pre-tax loss, compared to $22 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. The income tax rate for fiscal 2025 also includes the refund of certain income tax credit carryback and state net operating loss carryback claims.
  • Net loss improved to $20.4 million, or 68 cents per share, compared to $32.6 million, or $1.08 per share, last year, representing an improvement of $12.2 million, or 40 cents per share, compared to last year. Weighted average shares were 30.1 million this year compared to 30.0 million last year.

Balance Sheet and Liquidity
As of November 1, 2025, the company had total available liquidity of $100.7 million, comprised of $39.0 million of cash and cash equivalents and $61.6 million of available, undrawn borrowing capacity under its asset-backed credit facility. Total inventories decreased by 12.8 percent compared to the end of the third quarter last year. Total year-to-date capital expenditures at the end of the third quarter were $3.4 million this year, compared to $6.7 million at the end of the third quarter of fiscal 2024.

Fiscal 2025 Fourth Quarter Outlook

  • Total comparable net sales for the fourth quarter of fiscal 2025 through December 2, 2025, increased by 6.7 percent relative to the comparable period ended December 3, 2024. Based on current and historical trends, the company currently estimates the following for the fourth quarter of fiscal 2025 ending January 31, 2026.
  • Net sales in the range of approximately $146 million to $151 million, translating to an estimated comparable net sales range of an increase of 4 percent to 8 percent, respectively, relative to the comparable period last year.
  • Product margin improvement of approximately 300 to 350 basis points relative to last year’s fourth quarter.
  • SG&A expenses to be approximately $50 million to $51 million, excluding any potential non-cash asset impairment charges that may arise.
  • Net loss of approximately $5.6 million to $3.5 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.
  • Per share results to be in the range of a net loss of 19 cents to 12 cents, respectively, compared to a net loss per share of 45 cents for last year’s fourth quarter, with an estimated weighted average share of approximately 30.1 million.
  • Total fiscal year-ending store count of 223, a decrease of 7.1 percent from 240 total stores at the end of fiscal 2024, assuming seven store closures during the fourth quarter of fiscal 2025. The number of store closures may increase based on the outcome of certain store lease negotiations yet to be completed prior to the end of the fiscal year.

Image courtesy Tilly’s