Tillys 2026 Q3 Earnings 89.1% Net Loss Reduction Amid Strategic Turnaround

Tilly's (TLYS) reported fiscal 2026 Q3 earnings on Dec 4, 2025, with a 89.1% reduction in net losses to $-1.41 million compared to $-12.88 million in 2025 Q3. The company posted its first positive quarterly comparable net sales since Q4 2021, driven by merchandise and marketing initiatives. Guidance for Q4 2025 reflects improved revenue projections and margin expansion, signaling a strategic turnaround.

Revenue

Tilly's total revenue declined 2.7% year-over-year to $139.59 million, with retail stores accounting for the largest share at $110.31 million. E-commerce sales, while down 9%, contributed $29.28 million, reflecting challenges in clearance activity. The decline in total revenue contrasted with strong performance in comparable store sales, underscoring the impact of strategic inventory and product mix adjustments.

Earnings/Net Income

The company narrowed its net loss to $-1.41 million in 2026 Q3, representing a 89.1% improvement from the prior year. Earnings per share improved from a $0.43 loss to a $0.05 loss, demonstrating progress in cost management and operational efficiency. This reduction in losses highlights Tilly’s ability to execute its restructuring and margin-enhancement strategies.

Post-Earnings Price Action Review

The strategy of buying TLYS when earnings beat and holding for 30 days resulted in a significant loss, returning -86.02% and underperforming the benchmark by 171.91%. With a maximum drawdown of 0.00% and a Sharpe ratio of -0.52, the strategy indicated high risk and poor risk-adjusted returns. Despite short-term volatility, the stock has shown resilience with a 26.43% surge over the past week.

CEO Commentary

Nate Smith, CEO, emphasized Tilly’s first positive quarterly comparable net sales since Q4 2021, driven by merchandise assortment, inventory planning, and marketing. He outlined a 40% annualized target for proprietary brand sales penetration to boost exclusivity and margins. Investments in social commerce, including TikTok shop and influencer campaigns, and AI-driven tools for pricing and inventory efficiency, were cited as key growth drivers.

Guidance

Tilly’s expects Q4 2025 revenue of $146–151 million, with 4–8% comp sales growth, and product margin improvements of 300–350 basis points. SG&A expenses are projected at $50–51 million, with a pretax loss of $5.6–$3.5 million. The company plans to close 7 stores by year-end, reducing the total to 223, and anticipates RFID and AI implementations to enhance operational efficiency.

Additional News

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Tilly's announced plans to close seven stores by year-end, reflecting a 7.1% reduction in store count since fiscal 2024. The company also launched AI-driven pricing tools and expanded social commerce initiatives, including a TikTok shop. Additionally, Tilly's increased proprietary brand sales penetration to 40% on an annualized basis, aiming to strengthen margins and exclusivity.