TILLY'S, INC. Q1 FY2025 earnings call

• Net sales for the first quarter were within the outlook range. Comparable net sales decreased 7% in Q1 but improved to a 2.2% decrease in May. - Tariffs on product costs remain a concern, though current impact is minor. - Marketing efforts included launching Tilly's TikTok shop, hosting events with influencers/celebrities, and product collaborations. - Ended Q1 with 238 stores, a net decrease of 8 stores from the prior year. - Gross margin improved by 40 basis points due to higher initial markups, offset by inventory valuation reserves. - SG&A expenses decreased by $1.1 million primarily due to reduced store payroll and related benefits and lower non-cash asset write-off charges, but offset by increased marketing expenses.

In fiscal 2025 first quarter, total net sales were $107.6 million, a decrease of 7.1%. Physical stores net sales decreased by 7.4% (representing 79.8% of total net sales), while e-commerce net sales decreased by 5.8% (20.2% of total net sales). Comparable net sales, including both physical and e-commerce, decreased by 7%. Gross margin was 19.8% of net sales compared to 21% last year. Total SG&A expenses were $44 million, with pretax loss at $22.3 million or 20.7% of net sales.

• Second quarter net sales estimated to be approximately $150 to $158 million, with comparable net sales range of a decrease of 5% to flat. - SG&A expected to be approximately $48 million to $49 million excluding potential non-cash asset impairment charges. - Earnings range from a net loss of approximately $2.7 million to net income of $2 million. - Expect to end Q2 with 232 total stores after closing 7 stores and opening 1 new store. - Expect to remain debt-free throughout fiscal 2025.

• Potential impact of tariffs on product costs remains a concern, and the situation could change given its evolving nature.

Q: Activist investors acquiring shares, discussions with activists, board seat requests.

A: No discussions with new investors, no requests for board seats.

Q: Regarding video and product margin leverage.

A: Dollars will continue lower as stores closed. Occupancy costs will come down with store closures, leverage depends on ability to get back to flat and positive comps