Tilly's Q2 sales drop by 16 percent, expects sharp decline in Q3

For its second quarter, Tilly’s, Inc., total net sales were 135.8 million dollars, a decrease of 25.9 million dollars or 16 percent compared to last year. The company said in a statement that net sales from physical stores were 83.9 million dollars, a decrease of 55.1 million dollars or 39.6 percent, while net sales from e-commerce were 52 million dollars, an increase of 29.2 million dollars or 127.8 percent. Gross profit was 41.7 million dollars or 30.7 percent of net sales, compared to 51.7 million dollars or 32 percent of net sales last year and net income was 5.3 million dollars or 18 cents per diluted share, compared to 9.3 million dollars or 31 cents per diluted share, last year.

“Our second quarter results were much better than we anticipated considering that the quarter started with all stores closed. The third quarter has been significantly impacted by the delay in back-to-school dates thus far, but we continue to carefully manage our inventory levels and expenses to protect our long-term health to the best of our ability in this largely unpredictable environment,” said Ed Thomas, Tilly’s President and Chief Executive Officer.

First half results overview of Tilly’s performance

Total net sales for the first half were 213.1 million dollars, a decrease of 78.9 million dollars or 27 percent. The company added that net sales from physical stores were 130.8 million dollars, a decrease of 118.7 million dollars or 47.6 percent, while net sales from e-commerce were 82.3 million dollars, an increase of 39.8 million dollars or 93.8 percent.

Gross profit for the period was 43.3 million dollars or 20.3 percent of net sales, compared to 87.4 million dollars or 29.9 percent of net sales last year and net loss was 12.1 million dollars or 41 cents per share, compared to net income of 10 million dollars or 33 cents per diluted share, last year.

Tilly’s expects to report sharp drop in Q3 sales

Tilly’s total net sales for August were 50.2 million dollars, a decrease of 27.7 million dollars or 35.6 percent, while net sales from physical stores, including all periods of store closures and net sales from new stores not yet open for a full year, were 36.6 million dollars, a decrease of 31.6 million dollars or 46.3 percent, and net sales from e-commerce were 13.6 million dollars, an increase of 4 million dollars or 40.6 percent.

The company said, due to significant delays in back-to-school dates and adjustments of some or all of their curriculum to an online or remote format, there has been a highly negative start to the third quarter of fiscal 2020 in terms of comparable net sales for the company. Although comparable net sales remained highly negative for the rest of the month compared to last year, results improved trend-wise from week to week as the month progressed.

Also the company entered the third quarter with 33 of its California-based stores closed as a result of government response to the Covid-19 pandemic. These closed stores represent 14 percent of the company’s current total store count, and accounted for 22 million dollars or 14 percent, of total net sales during the third quarter of fiscal 2019. On August 31, 2020, the company reopened 15 of these stores on August 31, 2020, an additional six stores reopened on September 1, 2020, and one additional store reopened on September 2, 2020 and the company expects to open one additional store on September 4, 2020. Tilly’s further said that cumulative comparable store net sales in reopened stores have decreased 25.5 percent.

As a result, the company currently expects its third quarter net sales to be significantly below the net sales of 154.8 million dollars that it reported for the third quarter of fiscal 2019.

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