US' Tilly's swings to profit despite 7.1% sales decline in Q2 FY25

The sales from physical stores totalled $122.7 million, down 7.3 per cent YoY, with comparable store net sales decreasing 4.1 per cent. Tilly’s operated 232 stores at quarter-end, 15 fewer than last year. Store sales accounted for 81.1 per cent of total sales, nearly flat compared to last year.

E-commerce revenue reached $28.5 million, a decline of 6.6 per cent YoY. Comparable e-commerce sales slipped 6.2 per cent, though the e-commerce share of total sales rose slightly to 18.9 per cent from 18.7 per cent last year, Tilly’s said in a press release.

The gross profit was $49.1 million or 32.5 per cent of sales, up from 30.7 per cent a year ago, aided by improved product margins, up 210 basis points (bps) through higher markups and lower markdowns. SG&A expenses fell to $46.4 million, down $4.4 million YoY, mainly due to reduced payroll, fulfilment labour, and asset write-down charges.

The operating income was $2.7 million (1.8 per cent of sales), compared with an operating loss of $0.9 million in Q2 FY24. The net income stood at $3.2 million, or $0.1 per diluted share, reversing a loss of $0.1 million last year.

“We believe we are beginning to see the positive impacts of our efforts to stabilise our business. Our comparable net sales trend has improved each quarter since the end of fiscal 2024, including through fiscal August to begin the third quarter. I am excited to welcome Nate Smith to Tilly’s as our new chief executive officer, and I look forward to working with him and our team as we seek to continue building upon our progress made thus far toward generating improved sales results and profitability over time,” said Hezy Shaked, co-founder and executive chairman at Tilly’s.

For the first half (H1) of FY25, net sales dropped 7.1 per cent to $258.9 million, with comparable sales down 5.5 per cent. The gross profit in H1 decreased to $70.4 million, though margins improved by 140 basis points (bps) to 27.2 per cent. The company posted a net loss of $19 million ($0.63 per share) versus a $19.7 million loss in the first half of FY24.

For the third quarter (Q3) ending November 1, Tilly’s expects net sales of $134-$140 million. Comparable sales change between -2 per cent and 2 per cent, and SG&A expenses near $47 million. The net loss of $7-$10.5 million ($0.23–0.35 per share), versus a $0.43 per-share loss last year. Quarter-ending liquidity is projected at $83–$86 million, with no debt. The company foresees closing two additional stores in Q4, potentially more depending on lease negotiations.

ALCHEMPro News Desk (SG)