Tile Shop's Q2 2025 Earnings Call: Contradictions on Housing Market, Sales Dynamics, and Store Performance

Housing market conditions and store traffic, unit volume sales and average ticket, store traffic and sales performance, and housing market conditions and impact on Tile Shop are the key contradictions discussed in Tile Shop's latest 2025Q2 earnings call.



Challenging Housing Market and Sales Performance:
- The Tile Shop's comparable store sales decreased by 3.5% during Q2 2025, due to lower levels of store traffic.
- While housing turnover remains at historically low levels, there was a modest improvement in unit volume sales, partially offset by greater use of discounting and sales of lower-priced products.

Gross Margin Decline:
- The gross margin rate during Q2 2025 was 64.4%, representing a 160 basis point decrease compared to Q2 2024.
- The decline was attributed to an increase in discounting and an increase in product costs.

Cost Reduction and Operational Efficiency:
- SG&A expense for Q2 2025 was $56.4 million, $2.1 million lower than the previous year, primarily due to asset impairment, marketing, and depreciation reductions.
- The company also closed distribution centers and reduced its corporate workforce to combat profitability challenges, aiming to reduce expenses and identify efficiencies.

Assortment Expansion and Product Diversification:
- The Tile Shop expanded its product assortment with new LVT, laminate, engineered wood flooring options, and large-format tiles.
- The expansion aimed to appeal to a broader range of customers and increase square footage volumes in response to the challenging housing market.