Tilly’s sales drop, expects negative trend to continue in Q3

Tilly’s, Inc. second quarter net sales were 168.3 million dollars, a decrease of 33.6 million dollars or 16.7 percent compared to last year.

The company’s total comparable net sales, including both physical stores and e-commerce decreased by 16.4 percent.

"We believe our second quarter operating results were negatively affected by the impact on our customers of the highest inflationary environment in 40 years, which we expect will also adversely impact our third quarter results," commented Ed Thomas, Tilly’s president and chief executive officer.

Highlights of Tilly’s Q2 results

Net sales from the company’s physical stores were 137.1 million dollars, a decrease of 27.5 million dollars or 16.7 percent with a comparable store net sales decrease of 16.5 percent. Net sales from physical stores represented 81.5 percent of total net sales both this year and last year. The company ended the second quarter with 242 total stores compared to 244 total stores at the end of the second quarter last year.

Net sales from e-com were 31.2 million dollars, a decrease of 6.1 million dollars or 16.4 percent, which represented 18.5 percent of total net sales both this year and last year.

Gross profit was 52 million dollars or 30.9 percent of net sales compared to 74.7 million dollars or 37 percent of net sales, last year. Operating income was 5.2 million dollars or 3.1 percent of net sales compared to 26.4 million dollars or 13.1 percent of net sales, last year.

Net income was 3.8 million dollars or 13 cents per diluted share compared to 20.4 million dollars or 66 cents per diluted share, last year.

Tilly’s H1 sales decrease 14 percent

Total net sales were 314.1 million dollars, a decrease of 51 million dollars or 14 percent, compared to 365.1 million dollars last year. Total comparable net sales, including both physical stores and e-com, decreased by 14.9 percent.

Net sales from physical stores were 254.6 million dollars, a decrease of 12.9 percent with a comparable store net sales decrease of 14.1 percent. Net sales from stores represented 81.1 percent of total net sales compared to 80.1 percent last year.

Net sales from e-com were 59.5 million dollars, a decrease of 18.3 percent. E-com net sales represented 18.9 percent of total net sales compared to 19.9 percent of total net sales last year.

Gross profit was 95.8 million dollars or 30.5 percent of net sales compared to 129.6 million dollars or 35.5 percent of net sales, last year. Operating income was 6.3 million dollars or 2 percent of net sales, compared to 41.3 million dollars or 11.3 percent of net sales, last year. Net income was 4.6 million dollars or 15 cents per diluted share, compared to 31.4 million dollars or 1.02 dollars per diluted share, last year.

Tilly’s expects negative sales trend to continue in Q3

Tilly’s said, total comparable net sales through August 30, 2022, including both physical stores and e-com, decreased by 10.6 percent relative to the comparable period last year.

Based on this result, current and historical trends, and anticipating a significant decline in the post back-to-school period of the quarter, the company currently estimates that its third quarter net sales will be in the range of approximately 165 million dollars to 170 million dollars with a comparable net sales decrease of 18 percent to 21 percent.

Operating income is expected to be in the range of approximately 1.9 million dollars to 4.6 million dollars and earnings per diluted share to be in the range of 5 cents to 11 cents.

The company expects to have 247 total stores open at the end of the third quarter, a net increase of four from 243 total stores at the end of last year's third quarter.