Tilly's (TLYS) 6 Jun 242025 Q1 Earnings call transcript

Good day, and welcome to the Tilly's, Inc.

First Quarter 2024 Earnings Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Gar Jackson, IR. Please go ahead.

to Fiscal welcome Earnings First and Call. afternoon, the XXXX Tilly's Quarter Good Vice Financial and and the Henry, a and President Michael Executive will Officer, Chief Chairman Interim and host results; Chief Executive Executive session. company's operating Officer, then Shaked, he Hezy Q&A and President business discuss will

the the also earnings shortly tillys.com. at From able same section, of For please a of the website a Tilly's recorded copy will Investor the this company's visit the call, conclusion to find call of after release, be next press Relations you section of replay days. XX the for

materially Certain judgment current various on affecting made and be June on expectations during Tilly's Tilly's as factors you should statements. forward-looking business. only reliance that differ of undue today, reflect actual forward-looking not from statements analysis these and place X, based this will XXXX, Accordingly, call may results

to our our also to in Q&A the prepared a limited most earnings to those and be of press directly website. any after statements see and earnings with contain over of on more risks call uncertainties on may filings can furnished thorough certain a release, is hour now their which will included with referenced well found that certain SEC disclaimer that call release discussion remarks. I references the in XXXX in as SEC measures turn will our comparable measure our session to as is associated first For Form non-GAAP today Reconciliations measures. call the be corresponding Today's fiscal one GAAP the will other please quarter the regarding statements, to include Mike. disclaimer. This forward-looking X-K forward-looking our

everyone, joining afternoon, thank Good today. us Gar. for you Thanks, and

on each to a within and comp improved outlook both in negative a sales results start our Our March operating remain net provided earlier year. of were March March our space, call. After we and April, pretax ranges were tough to month, first estimated year's earnings continue the quarter, points our the the decline our we during from environment, sales with both relative generate benefiting results but first basis product X, being improvement XXX first Easter quarter the to yet certain others relative in margin able net macro basis last Like of this in headwinds consumer sales. to quarter from face despite stronger competitive our

our As we our discussed earnings results. business we challenging call, during toward our work have of every we last been operating improving aspect as

better ourselves we in For example, to align initial competition with certain decisions product our categories. continue pricing to evaluate

last promotional to pricing to We believe compared have beginning first our we retail certain reconsidered these of quarter product are see efforts based on We unit impact improved drive the of to in improvement our the that margins quarter. first and practices values. markdown average year's

the business efforts impacting believe chance creating short our we the business impact testing to of before We to some the while over ideas of the we guarantee for we early the current focus followed slowed level that that take and tool distribution aftermath have starting new improvement in business, us these to positive to in in longer improve implementation term. From efforts there complications new term. Despite implementations time. towards environment, us challenges, our during term, the May, we center believe the May. kind a X term. get management are that this to a on We replenishment that in we more stores over we continue greater However, distribution have in in to of be April, marketing allocation implemented of same longer the no center light help plan we understand and continue new X customers. believe this short-term can caution stores. with believe improvements efforts the generate right right experienced may lead by base to e-com meaningful efforts this for software the productivity We been longer to month. stores our toward our see back and We are to these early these to us our but we new customer immediate months to it following and of believe but our distribution we management our merchandise connectivity how produce of attract warehouse for able perspective, warehouse give now normal in product complete greater new focus a to can our customer implementation were a they a making are planning over invest software new truly existing We build

implement We believe to plan of help optimization to time. important tools new markdown over improve operational and holiday the season. efficiencies we generate new Additionally, these improve and business search ahead capabilities greater optimization our are software engine

effort for weakening Over be will our believe environment. it customer us consumer we the every bounce challenging we to changes to sales it improve likely time business before our take results continue among see meantime, to seek In to short a this make that better continue in amid to cycle consumer the we will for term, lead demographic. in core can back pass to activity the reported results. make improvements believe and our we

improving remains our focus for term. business Our the long on steadfast

expenses, stores $XXX.X an year; year. We net XX.X% e-commerce of X X.X% X.X%; operating period last net by first ended from while decrease being primarily total XX% distribution to margin, XX-week Gross buying, of net represented e-commerce, at comparable follows: buying, margins by by improvement distribution points and our fiscal compared This an $XXX,XXX with X.X% due sales e-commerce and impairment and store sales increase compared XXXX last and physical deleverage $X.X sales store first non-cash stores net asset were $XX.X quarter Product XX.X% decreased to turning total $X decrease costs year, a of costs stores of $X.X markdown were Now compared costs occupancy physical the charges net sales improved quarter compared first XX.X% in with million, improved last of comparable and sales, occupancy year's increased to carrying to the expenses increased net to including sales. XX.X% stores, to aggregate of lower of was last lower year to from decrease these flat million to were last basis of total of despite costs rate initial for sales. Total total due benefits last the a the to year. including last markups. XX.X% to offset the sales and as was XXX a to total Results of million, net million, SG&A decrease against due results from year last these compared total quarter. net below year, relative of payroll represented total XXX net combination primarily a million. related

of a net to primary basis XXXX. than by was as per expense last of sales of a partially due costs was $XX.X million XX.X% just negligible $XX.X the $XX.X higher smaller or the $X.X net year of last This continuing rate factors result absence otherwise year. been year $XX store as On loss full, non-GAAP or last allowance. $XX.X a or was million points year. XX.X% basis, and million of at XX% deferred non-GAAP tax hourly against absence first would result allowance, average income $X.XX share deleveraged pretax been assuming tax valuation of share, a combined rose a of loss tax tax sales. Pretax $X.X would these to a effective X% tax XXX have of have compares our exact to $X.XX compared variety income rate or compared reductions sales expense or these A of million middle impact of noted. X net pre-pandemic last X% $X.XX offset payroll valuation income in approximately original in lower the the over valuation for allowance, million. Net per range million the to XX.X% in share loss benefit benefit quarter. net SG&A of total the $XX,XXX, XX.X% rate carrying of normalized essentially a increases. Income our asset outlook a loss million was per or per the benefit basis, tax non-cash On Our

marketable first the this with $XX first quarter sheet. to and no cash and end the of quarter week credit last of total up this under $XX our total debt million X.X% year. the quarter our debt Turning the week quarter and first Total $XX to year securities of facility to ended no compared end comparable year. outstanding first million were million the end at ended asset-backed last down inventories We the compared at the X% of the versus balance We with inventories last year.

the net that Turning X.X% trends, X-week XXXX period Based to translating currently May estimate ended X%, approximately comparable sales by for of Total year. our and net relative range for current the comparable to quarter year. on comparable XXXX fiscal last net in the sales to million quarter our of comparable X, million, respectively, XXXX. for XX-week XX% will approximately for second a historical to fiscal decreased we fiscal be total in outlook period $XXX decline June of second the range the $XXX the to of last sales

impact asset in be and second valuation of million results tax impact $XX to million, to to on the We our be tax be the net share in at near have approximately continuing due expect after-tax of XXX a per X% store to $XX the be loss $X.XX the end quarter week million of it of quarter note, XXX deferred a be range the our to of weekly to call, approximately the this compared week a was meaningful effective be a We for year's non-cash our fiscal third respectively. We in end will our to of second year's year's specific expect noted, non-cash assets. results million additional charges the the in net respectively, sales currently I for second during while loss earnings full, become quarter to to quarter our of SG&A stores the today, of the to now range into last $X.XX, week the week when million back-to-school the impairment the of last net for year. income to first Using $X.X from quarter quarter. to what estimate sales absence of allowance rate and comparing comparable any third week of the last net total results, range in $X.X $XX.X in any sales the should due second third shift not will final of that last a XXXX, there year's XXrd quarter. One are the outlook at net we mentioned last as providing

The creating quarter this relative comp to before comparable quarter, our week $X.X last net go last becomes million week decline to year's of year assumption. Operator, the the of first third consideration session. $XX.X the week, sales of third which was quarter this for sales now fourth a of we'll year's net any sales final year, Q&A a million quarter third

The Instructions] The Marni Tracker. from Shapiro first [Operator Retail question with comes

your it's quickly, impact is what because year if back significant can is it's the had the the percentage the I'm know you in more are sales But what in are are I'm curious and -- green the particularly of of this changes a inventory. to there point? It for inventory at some is this part see spends small were shoots distribution where if the definitely on stores, like? selling you in ahead this a and look somebody the any you some challenged I And quarter. of to the how with on noticeable not of just half seeing standing if trying I'm able myself, side. front lot but junior seeing centers a And store, But of going. I'm this curious, time trend. be of curious I'm very issues to going

It's on, I'll Short telling what's address fine. try that. you to of exactly going

started of as meaningful, don't tell want signs but too on of we in. decisions going ahead you of So beginning see I what initiatives cannot February. our more of and trend we it some can expand we filtered get in more It's you're is seeing positive more the the that part of are and that get the see more right obviously, the already to Overall, you back inventory. because we much to in ourselves.

can shoppers? long And you. when bringing more great. feels very about they're drive lapsed -- to we you traffic improve, your will thinking in importantly, -- marketing? improve you can fold, it feel of or just How because in kind shoppers they're loyal mean also drive guys history bringing marketing start things proud we a I you as you to the customer, talk as about Have of into you begin have are that about really sort until in think hold of? that Is something should younger things you how back to

No, we presenting of ourselves all. believe new not ago. our a a We campaign, months started way at couple we be -- should the

As and seen would be more things more we the meaningful, to and go, more going it's more public. and be in

is, the age the we of and we're have we what at exactly age stage all in February, to started exploration June process this of We the our the is remember, want are of what customer, customer now. still

getting end you'll of fourth to and we're and implementing results, what a do, the out But toward figuring it. we of need the third start we quarter. see So lot

Fantastic. great, The I'm turning just in merchandise looks of stores bring It guys. best front is I so your telling luck better. much fast. wish you it already I could so looks the so myself. of

you're You it chasing categories, how absolutely several I actually we're constantly. you on. increased but We don't -- know that, know and spot

It looks fantastic. Yes.

Van question comes from Sinderen Jeff B. next Riley FBR. The with

or of on don't guess to performance So the business side relative question, I and performance to first between on the my relative if of the color genders. I growth women's. versus Any can performance follow merchandise wondering business, Just the you just gave guide up there? the X the relative add side and line know there. of the thinking men's kind of you of spoke the

can give I Yes. little a you bit.

it women, it one the right, and What we is we that and men female. have. So balance what want is is of the is to what between faced, questions male today,

think we're right in I the now. spot right

today, line guys believe year. There's quote much you many opinions. but And will in going with a do different we shop we're guys have shop the So I'm is there's Obviously, ladies. in my is with which it internally, you we girls men's. to that with the lead not going for girls lead that men, the the do lead forward where store, don't always I same, go balance is, of exactly how to always remainder discussion store.

changing but head is. in the Now our this a is bit, granted last where X it's little years,

merchant stands? Okay. CEO for And any then then can you any give on us to update the plans the search, the And where changes team? that

No changes in positions. either of plan

then Okay. And I squeeze could more, one if in. it

wondering might up where how and this negotiations for year? stores stand on many XXXX end you Just closing you lease

update we right think you give now. an I don't have we that can

no you We down we a As leases we There and look shut lot them, know, hoping locations. but have is -- some. to of losing don't that any update yet. renegotiating have on still

year. still the much one new X at we have of to Jeff, we we one to -- this And mid-November. I a so with point of you tell will have But at numbers But can dozens deal store can the known play pin moment and specific that down remaining X to is a for change this year. open, dozens to X it's happen closures of in leases end stores July, negotiate. towards obviously to when what number in hard those have we the result left as in then have to

best you this tell moment. So we that's the at can

is roughly to I'm And still deal have total that what? the Okay. you sorry, with

number I in of me. don't specific front have a

Mitch Kummetz The Seaport Research. next from with question comes

hit what standpoint? think mentioned you translate earnings might you Can an third the say to on from the maybe quarter $XX.X Yes. that or sales. million Mike, you

I actually back-to-school weeks weeks in quarter to the of The I figure be for can't is we're to going second going season starts don't how XQ, and back-to-school the we're the week that reads in what the know that July, I comp until we when second because out very weeks X assumption of mentioned, X last that final think X to look final quarter I XXrd the that's of see the season. the second forward sales X fiscal to reason. And going year start largest and shifted quarter last start the of quarter, might The headed is the in on of of the last start as was the third early of XXXX. for like. what impact back-to-school the week weeks of

back-to-school this a what it headed, of hole last million certainly hit on starting earnings create something fiscal specific compared have read direction $XX more to is we're quarter. year's means prelim what I and But an at when be going I can't an you're time. until any to from So third

much given sales are how And that the quarter second benefit anticipating the of shift? you in

benefit $XX million the to just quarter, last same the shifting. as a of start noted third because I approximately second second second quarter, It's quarter have year's the quarter for end of dynamic from you

on one outlook $XXX was So year's of you look quarter sales $XXX our second when $XXX million total last a number hand, at of the million, million. to

adds number, our the that that's It's positive it's impact X% not. of negative raw say, range a because of growth, to XX%. second sales. we "Oh, shifting of back-to-school noted, of into you But But isn't actually on the So that significant week as in outlook comp a amount quarter, comp?" it

that pretty I'm about like Or quarter-to-date could in it Yes. just right believe up is reason And the a X% there is that's then back-to-school event that an kind event. down more middle a to showing within for XX% the maybe is comp range. obviously, seems It I in that how that year, your than range? curious consumer last, back-to-school. is than much know, the between that, be essentially you comp, of noticed think and Are I better assuming don't back-to-school that given of to X.X%, period? minus an the they on that is quarterly your are your events over events you

It to no be back-to-school like. could Sitting have end being what what visibility up better to here, I going we're suggesting. behavior is than

the we're is rate have So May with comp quarters. something that not consistent is we can't our X counting That's we of down run X.X%. on see. What last

X% back, realm. you is been starting this If X% the look in has This now comp that quarter fifth minus range. in our to

little would require negative could better, predict to to back-to-school good think what like, I to back that darn So our the X% for just outperform range do double I digits. but to expect a negative contemplates into the because there's that end. opportunities range, I a And off deteriorate to that's that towards XX% get here, particularly do don't can it negative it look this potentially getting I but as I sit start. sure not us cannot. think love going future, I'd know I to

question Koranda comes Capital. next from ROTH The Matt with

Maybe the around Mike, -- notable? there just anything following you outlook and saw that the you just Any Anything cadence Memorial all? May-to-date terms of quarter saw was up holiday, in was you that on in at that can comps. help the of if second out, terms notable call weekly Day

Sure.

new the in remarks did implementation immediate that. prepared of system, we of merch noted and tool the complications our new I some upon warehouse in have our allocation aftermath So the management that

May around a quite So bounced bit.

complications both to double low properly. single stores as are the with in-between negative with other with having new replenishment May were week The of communicating weeks the week the were systems and each digits first digits, negative last some and we

but to there. starting product little in back final So middle see of of that better off X we to May have back in bit stores better this some did results fiscal weeks we're on results started seen week, and experience now We has out the reflow out track. the June, slowdown and a the week believe month, did get

potentially X volume should large with of So going X/X in opportunity if impacts consistent we'd the is the any those worst stay of to to of going the terms implementation the like X be quarter an to of is sales having it think end see at weeks quarter, some the better to and anything, us behind forward. But in that, we weeks quarter. again, of the results last those basically, of

So that as as are, forward. to here, better Hezy earlier, noted of exactly that's we our cautiously what really like. out away better as continue know things from go difficult look that we're we'll as and assortment to far sitting optimistic, we But to see going

aggregate comps, guess That the we're terms what seems not a much in in relative Okay. in But on I counting necessarily pickup also fair. one to on we least. at not May saw of

management questions, else basis? on in one the Okay. Hezy, then out? those. on little slightly are that heavier that's terms you call of of get are curious the helpful heavier you can something maybe that's was working? Or a to It of we I'm of would than that And a you seeing really on just be? the bit curious, inventory, what per I in on want to there system reasons one store warehouse -- is was year-over-year based for just for And then where particular, we're inventory earlier we terms inventory moving the going in chasing be

sellers. Yes, chasing the we're Yes... Yes. best

Go ahead, sorry...

Yes.

inventory things me for the let also So a here. second. There's address X

how can little give look merchandise, you at we a things a I we As the on how and far it. as bit. we do bit changed little

X fluctuation or earlier. more We inventory X week, guys things I do, things you earlier, little told thing say, things part something will this larger a sizes. the we it, is, be as the which looked necessary way all We're we it's so gross that X differently that, today. X we reason That's We will or margins, the and we the at changed at focusing the fine-tune but it gave as before, maybe fire we there. There there way bringing we see it under you happened. are the away, no produce it, on looked of that not some instead better portion It's until and inventory a do sale. we're look let's at we're to cost then store. The that, coming at sell things negotiation spreading at in but one how merchandise in markdowns. we at IMUs actually to And we changes inventory of the some for the looking the inventory unfortunately, over times and will margins. was and past, reason cost. Due months, at initial we're that's a the bringing looked be of In out initial of never

I'd... And the other thing

Yes. Mike. Go ahead,

other of X The sheet, weeks. thing when you're X difference, because to X because I'd weird not it too, happens a comparable years, purely add offset week the of little to you're that, was weeks. looking some They're comparing that Matt, at is again, every of timing bit balance XXrd that

a that added I this as on it a timing our notation difference. like-for-like inventories the were entered why actually So was down It's X% we week, temporary week.

as were a did went So there, knew to coming. try implementations ahead potential consciously We we that the timing of through bit help those. we it's just offset especially risk little difference of a any

So it's just concern. a temporary condition, of significant nothing

front least. maybe about It the quarter sounds on got of we there. in the on Fair just product Maybe could guess might up like what margin ask at Okay. almost sort if seeing math a seems you're gross I standpoint. markdowns. flat the little I'm margins bit Maybe a outlook gross second I based see my enough. in what better like we on to imputing one more It just margin from and talk

could may deleverage still we just offsetting to good add a experience. that's the But BD&O little So if that a guy bit more maybe that. you

Yes, Mike, answer let that. me

in can't second it and for everything expect gross margin be So air This what we're yet on. now. right what we improvement. exactly do quarter, estimate is up will is We working the

on predict so things many very working are different hard to it be will the We future. that until

you it you will to can just up. be I So it flat tell be can't up. how much expect will that

question-and-answer I Henry the over conference to closing concludes Mike to This turn any our remarks. back session. for like would

forward our for today. quarter results Thanks, evening. and second September. appreciate you look a in we Thank us and your you all with We have sharing early interest, to good joining

attending included. now today's conference presentation. The is for Thank you

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