Tilly’s, Inc. significantly reduced its loss in the first quarter ended May 2 as same-store sales grew 22.9 percent. Results arrived slightly ahead of expectations, and the action sports-themed chain forecasted same-store gains between 6 percent and 10 percent for the second quarter.

Sales of $124.7 million came in at the high end of guidance in the range of $119 million to $125 million. The same-store gain of 22.0 was just ahead of guidance between 16 percent and 22 percent. The net loss of 26 cents per share topped guidance, which called for a loss of 27 cents to 34 cents.

“The turnaround momentum which began in fiscal 2025 continued through the first quarter of fiscal 2026, extending our streak of comparable net sales growth to three consecutive quarters and nine consecutive months, and delivering our fourth consecutive quarter of year-over-year profit improvement,” commented Nate Smith, president and chief executive officer. “Returning to profitability is our foremost goal for fiscal 2026. We believe the strength of our start to the fiscal year gives us a clear and credible path to get there, provided we can maintain a strong, positive sales trajectory throughout the year.”

Operating Results Overview
Fiscal 2026 First Quarter Compared to Fiscal 2025 First Quarter

The following comparisons refer to the company’s operating results for the first quarter of fiscal 2026, ended May 2, 2026, versus the first quarter of fiscal 2025, ended May 3, 2025.

  • Total net sales were $124.7 million, up 15.9 percent. Total comparable net sales, including both physical stores and e-commerce (e-com), increased by 22.9 percent.
    • Net sales from physical stores were $96.3 million, up 12.1 percent. The company ended the first quarter with 220 total stores, a decrease of 18 stores or 7.6 percent, compared to 238 total stores at the end of the first quarter last year. Comparable net sales from physical stores increased by 20.8 percent relative to the comparable 13-week period ended May 3, 2025. Net sales from physical stores accounted for 77.2 percent of total net sales this year, compared with 79.8 percent last year.
    • Net sales from e-com were $28.4 million, an increase of 30.9 percent. E-com net sales represented 22.8 percent of total net sales this year, compared to 20.2 percent of total net sales last year.
  • Gross profit, including buying, distribution, and occupancy costs, was $36.1 million, or 28.9 percent of net sales, an improvement of $14.8 million or 910 basis points as a percentage of net sales compared to $21.3 million, or 19.8 percent of net sales, last year. Product margins improved by 400 basis points primarily due to improved full-price selling associated with operating with inventories that were more current in terms of aging compared to last year. Buying, distribution, and occupancy costs improved by 520 basis points, or $0.9 million, collectively, primarily due to decreased occupancy costs associated with reduced store count.
  • Selling, general and administrative (“SG&A”) expenses were $44.2 million, or 35.4 percent of net sales, compared to $44.0 million, or 40.9 percent of net sales, last year. The $0.2 million increase in SG&A was primarily attributable to increases in digital marketing expenses and store and corporate payroll and benefits expenses, which were largely offset by lower non-cash asset impairment charges of $1.0 million.
  • Operating loss improved to $8.1 million, or 6.5 percent of net sales, compared to $22.7 million, or 21.1 percent of net sales, last year, due to the combined impact of the factors noted above.
  • Income tax expense was $0.1 million, or (1.7) percent of pre-tax loss, compared to an income tax benefit of $0.1 million, or 0.6 percent of pre-tax loss, last year. Both periods include the continuing impact of a full, non-cash deferred tax asset valuation allowance.
  • Net loss improved to $8.0 million, or 26 cents per share, representing an improvement of $14.2 million or 48 cents per share, compared to a net loss of $22.2 million, or 74 cents per share, last year. Weighted average shares were 30.1 million in both periods.

 Balance Sheet and Liquidity
As of May 2, 2026, the company had total available liquidity of $91.8 million, comprised of $41.1 million in cash, cash equivalents, and marketable securities, and $50.7 million in available, undrawn borrowing capacity under its asset-backed credit facility. Total cash, cash equivalents, and marketable securities were $37.2 million at May 3, 2025. Total inventories decreased by 6.4 percent compared to the end of the first quarter last year. Total year-to-date capital expenditures at the end of the first quarter were $1.4 million this year, compared to $1.5 million at the end of the first quarter of fiscal 2025.

Fiscal 2026 Second Quarter Outlook
Total comparable net sales for fiscal May ended May 30, 2026, increased by 8.3 percent relative to the comparable period of fiscal 2025, marking the company’s 10th consecutive month of comparable net sales growth. Based on current and historical trends, the company currently estimates the following for the second quarter of fiscal 2026, ending August 1, 2026:

  • Net sales in the range of approximately $154 million to $160 million, translating to an estimated comparable net sales increase of 6 percent to 10 percent, respectively, relative to last year’s second quarter;
  • Product margins to be flat to up slightly compared to last year’s company-record rate for a fiscal second quarter;
  • SG&A expenses to be approximately $48 million to $49 million, excluding any potential non-cash asset impairment charges that may arise;
  • Net income of approximately $3.8 million to $6.0 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
  • Net income per diluted share is expected to be in the range of $0.13 to $0.20, compared to $0.10 in last year’s second quarter, with estimated weighted-average diluted shares of approximately 30.3 million.
  • The company currently expects to have 221 stores open at the end of the second quarter of fiscal 2026, down from 232 at the end of last year’s second quarter.

 Image courtesy Tilly’s