Tillys 2026 Q1 Earnings Misses Targets as Net Income Declines 12.9%

Tilly's (TLYS) reported its fiscal 2026 Q1 earnings on June 5th, 2025. The company underperformed market expectations with a significant decline in net income. Despite the broader market's optimistic view, the actual financial outcomes fell short. The guidance for the next quarter also suggests a cautious outlook, aligning with the company's current challenges. Analysts had anticipated better results, and the deviation from these expectations reflects ongoing operational hurdles.

Revenue
Tilly's reported a 7.1% decline in total revenue for fiscal 2026 Q1, amounting to $107.61 million compared to $115.86 million in the previous year. Retail store sales contributed $85.91 million, while e-commerce sales added $21.70 million, culminating in total net sales of $107.61 million.

Earnings/Net Income
Tilly's experienced a deeper loss with earnings per share worsening to $0.74 from $0.65 in the previous year, reflecting a 13.8% increase in losses. The net loss widened to $22.15 million, up 12.9% from the $19.62 million loss recorded in 2025 Q1. This performance indicates a challenging quarter for Tilly's.

Price Action
The stock price of Tilly's has climbed 6.57% during the latest trading day, surged 33.94% over the past full trading week, and increased 7.35% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing TLYS shares following a revenue miss and holding for 30 days has proven ineffective. Historical data indicate a notable loss of 61.60%, with an excess return of -139.86%, underscoring the strategy's inability to yield positive returns. The negative Sharpe ratio of -0.31 further emphasizes the poor risk-adjusted returns. A concerning maximum drawdown of -93.03% highlights the high level of risk associated with this approach. Overall, the data suggests that this strategy may not be suitable for investors seeking reliable returns from Tilly's stock, especially in light of its recent performance.

CEO Commentary
Hezy Shaked, Chief Executive Officer, expressed optimism about Tilly's business performance, noting, "We believe our merchandise assortment is on trend and moving us in the right direction," highlighting a sequential improvement in comparable net sales. Shaked emphasized the importance of building customer engagement and stated, "We are working to drive customer engagement in creative ways." He acknowledged challenges with tariffs but reassured that the impact appeared minor. Looking ahead, he indicated, "We believe we are beginning to see signs of stabilization in our business," underscoring an encouraging outlook for future growth.

Guidance
For the second quarter of fiscal 2025, Tilly's estimates net sales between $150 million to $158 million, projecting a comparable net sales decrease of 5% to flat. The company anticipates SG&A expenses of approximately $48 million to $49 million, with an expected net loss ranging from $2.7 million to net income of $2 million. Tilly's expects to end the quarter with a debt-free balance sheet and total liquidity of approximately $106 million to $111 million, indicating a cautious but positive financial outlook.

Additional News
Recently, Tilly's has announced a strategic decision to close eight stores and is considering the closure of up to 15 more locations, contingent on lease negotiations. This move reflects Tilly's efforts to optimize its store footprint amid changing consumer behaviors and market conditions. Meanwhile, Hezy Shaked, the Chief Executive Officer, continues to drive forward the company's initiatives focusing on merchandise assortments and customer engagement strategies. Tilly's remains committed to navigating the current retail landscape, aiming to bolster its market position and improve operational efficiencies while adapting to evolving retail dynamics.