Tilly's Reports 13.8% Decline in Net Sales and Increased Operating Loss in Q3 Fiscal 2024

Tilly's, Inc. reported a significant decline in financial performance for the third quarter of fiscal 2024, ending November 2, 2024. The company recorded net sales of $143.4 million, a decrease of 13.8% compared to $166.5 million in the same period last year. This decline was attributed primarily to a calendar shift that moved a portion of the back-to-school sales into the previous quarter, resulting in an estimated $18.4 million reduction in sales for the current quarter. The company's gross profit also fell to $37.2 million, representing 25.9% of net sales, down from 29.3% in the prior year.

In terms of profitability, Tilly's reported an operating loss of $14.1 million, compared to a loss of $2.5 million in the same quarter last year. The increase in operating loss was driven by higher selling, general, and administrative (SG&A) expenses, which rose to $51.3 million, or 35.7% of net sales, from $51.2 million, or 30.8% of net sales, in the prior year. The net loss for the quarter was $12.9 million, translating to a loss per share of $0.43, compared to a loss of $0.03 per share in the same quarter last year.

Operationally, Tilly's maintained 246 stores at the end of the quarter, down from 249 stores a year earlier. Comparable store net sales decreased by 3.4%, while e-commerce sales also saw a decline of 5.4%, totaling $32.2 million. Despite the overall decrease, e-commerce sales represented 22.4% of total net sales, an increase from 20.4% in the previous year. The company continues to focus on enhancing its online presence, which has become increasingly important in the current retail landscape.

Looking ahead, Tilly's plans to open three new stores in November 2024 and anticipates closing ten underperforming locations by the end of the fiscal year. The company expects capital expenditures for fiscal 2025 to range between $10 million and $15 million, primarily for new store openings and upgrades to technology. However, Tilly's management has expressed concerns about the ongoing impact of inflation on consumer spending and operational costs, which could affect future performance.

As of November 2, 2024, Tilly's reported working capital of $41.8 million, a decrease from $71.5 million at the beginning of the fiscal year. The company has also entered into an asset-backed credit agreement with Wells Fargo Bank, providing a revolving credit facility of up to $65 million, which it plans to utilize to support its operations and capital expenditures. The management remains cautious about the economic environment and its potential impact on the business, emphasizing the need for strategic adjustments to navigate the challenges ahead.