Introduces Third Quarter Outlook with Continued Improvement in Sequential Sales Trend

Tilly's, Inc. (NYSE:TLYS, the ", Company", )) today announced financial results for the second quarter of fiscal 2025 ended August 2, 2025.

"We believe we are beginning to see the positive impacts of our efforts to stabilize our business. Our comparable net sales trend has improved each quarter since the end of fiscal 2024, including through fiscal August to begin the third quarter," commented Hezy Shaked, Co-Founder and Executive Chairman. "I am excited to welcome Nate Smith to Tillys as our new Chief Executive Officer, and I look forward to working with him and our team as we seek to continue building upon our progress made thus far toward generating improved sales results and profitability over time."

Operating Results Overview

Fiscal 2025 Second Quarter Operating Results Overview

The following comparisons refer to the Company's operating results for the second quarter of fiscal 2025 ended August 2, 2025 versus the second quarter of fiscal 2024 ended August 3, 2024.

Total net sales were $151.3 million, a decrease of 7.1%. Total comparable net sales, including both physical stores and e-commerce ("e-com"), decreased by 4.5%.
- Net sales from physical stores were $122.7 million, a decrease of 7.3%. The Company ended the second quarter with 232 total stores, a decrease of 15 stores or 6.1%, compared to 247 total stores at the end of the second quarter last year. Comparable store net sales decreased 4.1% relative to the comparable 13-week period ended August 3, 2024. Net sales from physical stores represented 81.1% of total net sales this year compared to 81.3% of total net sales last year.
- Net sales from e-com were $28.5 million, a decrease of 6.6%. E-com net sales decreased 6.2% relative to the comparable 13-week period ended August 3, 2024. E-com net sales represented 18.9% of total net sales this year compared to 18.7% of total net sales last year.
Gross profit, including buying, distribution, and occupancy costs, was $49.1 million, or 32.5% of net sales, compared to $49.9 million, or 30.7% of net sales, last year. Product margins improved by 210 basis points primarily due to the combination of higher initial markups and lower markdowns as a result of operating with reduced, more current inventory. Buying, distribution, and occupancy costs deleveraged by 30 basis points collectively, despite being $2.4 million lower than last year, primarily due to carrying these costs against a lower level of net sales this year. Occupancy costs decreased by $1.7 million, primarily due to operating 15 fewer net stores compared to last year. Distribution costs decreased by $0.6 million due primarily to reduced temporary labor expenses.
Selling, general and administrative ("SG&A") expenses were $46.4 million, or 30.7% of net sales, compared to $50.8 million, or 31.2% of net sales, last year. The $4.4 million decrease in SG&A was primarily attributable to decreases in store payroll and related benefits of $1.9 million, non-cash asset write-down charges of $0.7 million, e-com fulfillment temporary labor of $0.5 million, and corporate payroll and related benefits of $0.4 million, among other items.
Operating income was $2.7 million, or 1.8% of net sales, compared to operating loss of $0.9 million, or 0.5% of net sales, last year, due to the combined impact of the factors noted above.
Income tax benefit was $41 thousand, or (1.3)% of pre-tax income, compared to income tax benefit of $4 thousand, or 6.2% of pre-tax loss, last year. Both years' income tax results include the continuing impact of a full, non-cash deferred tax asset valuation allowance. This year's income tax benefit includes the refund of certain income tax credit carryforwards and state income tax carryback claims.
Net income was $3.2 million, or $0.10 per diluted share, compared to net loss of $0.1 million, or $0.00 per share, last year. Weighted average diluted shares were 30.3 million this year compared to 30.0 million shares last year.

Fiscal 2025 First Half Operating Results Overview

The following comparisons refer to the Company's operating results for the first half of fiscal 2025 ended August 2, 2025 versus the first half of fiscal 2024 ended August 3, 2024.

Total net sales were $258.9 million, a decrease of 7.1%. Total comparable net sales, including both physical stores and e-commerce ("e-com"), decreased by 5.5%.
- Net sales from physical stores were $208.6 million, a decrease of 7.3%. Comparable store net sales decreased 5.3% relative to the comparable 26-week period ended August 3, 2024. Net sales from physical stores represented 80.6% of total net sales this year compared to 80.8% of total net sales last year.
- Net sales from e-com were $50.2 million, a decrease of 6.3%. E-com net sales decreased 6.4% relative to the comparable 26-week period ended August 3, 2024. E-com net sales represented 19.4% of total net sales this year compared to 19.2% of total net sales last year.
Gross profit, including buying, distribution, and occupancy costs, was $70.4 million, or 27.2% of net sales, compared to $74.2 million, or 26.6% of net sales, last year. Product margins improved by 140 basis points primarily due to higher initial markups and lower markdowns as a result of operating with reduced, more current inventory. Buying, distribution, and occupancy costs deleveraged by 80 basis points collectively, despite being $3.2 million lower than last year, primarily due to carrying these costs against a lower level of net sales this year. Occupancy costs decreased by $2.7 million, primarily due to operating 15 fewer net stores compared to last year.
Selling, general and administrative ("SG&A") expenses were $90.4 million, or 34.9% of net sales, compared to $95.9 million, or 34.4% of net sales, last year. The $5.5 million decrease in SG&A was primarily attributable to decreases in store payroll and related benefits of $2.9 million and non-cash asset write-down charges of $1.2 million, among other items.
Operating loss was $20.0 million, or 7.7%% of net sales, compared to $21.6 million, or 7.8% of net sales, last year, due to the combined impact of the factors noted above.
Income tax benefit was $0.2 million, or 0.9% of pre-tax loss, compared to $17 thousand, or 0.1% of pre-tax loss, last year. Both years' income tax results include the continuing impact of a full, non-cash deferred tax asset valuation allowance. This year's income tax benefit also includes the refund of certain income tax credit carryforwards and state income tax carryback claims.
Net loss was $19.0 million, or $0.63 per share, compared to $19.7 million, or $0.66 per share, last year. Weighted average shares were 30.1 million this year compared to 30.0 million shares last year.

Balance Sheet and Liquidity

As of August 2, 2025, the Company had total available liquidity of $113.7 million, comprised of $50.7 million of cash and cash equivalents and $63.0 million of available, undrawn borrowing capacity under its asset-backed credit facility. Total inventories decreased by 14.5% compared to August 3, 2024. Total year-to-date capital expenditures at the end of the second quarter were $2.1 million this year compared to $4.6 million at the end of the second quarter of fiscal 2024.

Fiscal 2025 Third Quarter Outlook

Total comparable net sales for fiscal August ended August 30, 2025 increased by 0.9% relative to the comparable period of last year. Based on current and historical trends, the Company currently estimates the following for the third quarter of fiscal 2025 ending November 1, 2025:

Net sales in the range of approximately $134 million to $140 million, translating to an estimated comparable net sales range of a decrease of 2% to an increase of 2%, respectively, relative to the comparable period last year;
SG&A expenses to be approximately $47 million, excluding any potential non-cash asset impairment charges that may arise;
Net loss of approximately $10.5 million to $7 million, respectively, with a near-zero effective income tax rate due to the continuing impact of a full, non-cash valuation allowance on deferred tax assets; and
Per share results to be in the range of a net loss of $0.35 to $0.23, respectively, compared to a net loss per share of $0.43 for last year's third quarter.
Total quarter-ending store count of 230 compared to 246 at the end of last year's third quarter, with four store closures and two new store openings during the quarter. At this time, the Company expects to close two additional stores in the fourth quarter, although more are possible at the end of the fiscal year depending upon the outcome of lease renewal negotiations with landlords.
Total quarter-ending liquidity of approximately $83 million to $86 million with no debt, comprised of total cash, cash equivalents and marketable securities in the range of approximately $20 million to $25 million, and available, undrawn borrowing capacity of approximately $61 million to $63 million under its asset-backed credit facility. The Company does not anticipate needing to initiate borrowings under its credit facility at any time during fiscal 2025.

Conference Call Information

A conference call with analysts to discuss these financial results is scheduled for today, September 3, 2025, at 4:30 p.m. ET (1:30 p.m. PT). Analysts interested in participating in the call are invited to dial (877) 300-8521 (domestic) or (412) 317-6026 (international). The conference call will also be available to interested parties through a live webcast at www.tillys.com. Please visit the website and select the "Investor Relations" link at least 15 minutes prior to the start of the call to register and download any necessary software. A telephone replay of the call will be available until September 10, 2025, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the conference identification number: 10201716.

About Tillys

Tillys is a destination specialty retailer of casual apparel, footwear, and accessories for young men, young women, boys and girls with an extensive selection of iconic global, emerging, and proprietary brands rooted in an active, outdoor and social lifestyle. Tillys is headquartered in Irvine, California and currently operates 231 total stores across 33 states, as well as its website, www.tillys.com.

Forward-Looking Statements

Certain statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, statements regarding our current operating expectations in light of historical results, the improvement in our comparable net sales trend and our ability to maintain or improve upon it, the impacts of inflation, tariffs, and potential recession on us and our customers, including on our future financial condition or operating results, expectations regarding changes in the macro-economic environment, customer traffic, our supply chain, our ability to properly manage our inventory levels, and any other statements about our future cash position, financial flexibility, expectations, plans, intentions, beliefs or prospects expressed by management are forward-looking statements. These forward-looking statements are based on management's current expectations and beliefs, but they involve a number of risks and uncertainties that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including, but not limited to the impact of inflation on consumer behavior and our business and operations, supply chain difficulties, and our ability to respond thereto, our ability to respond to changing customer preferences and trends, attract customer traffic at our stores and online, execute our growth and long-term strategies, expand into new markets, grow our e-commerce business, effectively manage our inventory and costs, effectively compete with other retailers, attract talented employees, or enhance awareness of our brand and brand image, general consumer spending patterns and levels, including changes in historical spending patterns, the markets generally, our ability to satisfy our financial obligations, including under our credit facility and our leases, and other factors that are detailed in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission ("SEC"), including those detailed in the section titled "Risk Factors" and in our other filings with the SEC, which are available on the SEC's website at www.sec.gov and on our website at www.tillys.com under the heading "Investor Relations". Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We do not undertake any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. This release should be read in conjunction with our financial statements and notes thereto contained in our Form 10-K.

Tilly's, Inc. Consolidated Balance Sheets (In thousands, except par value) (unaudited)

	August 2, 2025			February 1, 2025			August 3, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	50,680		$	21,056		$	36,749
Marketable securities		—			25,653			39,947
Receivables		10,410			4,094			13,176
Merchandise inventories		81,229			69,178			95,011
Prepaid expenses and other current assets		8,251			10,979			9,539
Total current assets		150,570			130,960			194,422
Operating lease assets		157,342			169,805			188,711
Property and equipment, net		35,844			40,139			44,612
Other assets		1,775			1,559			1,452
TOTAL ASSETS	$	345,531		$	342,463		$	429,197

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	41,703		$	11,120		$	42,961
Accrued expenses		19,327			12,750			20,011
Deferred revenue		13,004			14,116			13,615
Accrued compensation and benefits		10,121			9,418			11,488
Current portion of operating lease liabilities		44,832			48,384			51,414
Current portion of operating lease liabilities, related party		3,581			3,423			3,269
Other liabilities		119			172			270
Total current liabilities		132,687			99,383			143,028
Long-term liabilities:
Noncurrent portion of operating lease liabilities		116,205			126,216			141,565
Noncurrent portion of operating lease liabilities, related party		14,015			15,844			17,596
Other liabilities		124			149			235
Total long-term liabilities		130,344			142,209			159,396
Total liabilities		263,031			241,592			302,424
Stockholders' equity:
Common stock (Class A)		23			23			23
Common stock (Class B)		7			7			7
Preferred stock		—			—			—
Additional paid-in capital		175,648			174,829			173,939
Accumulated deficit		(93,178	)		(74,191	)		(47,652	)
Accumulated other comprehensive income		—			203			456
Total stockholders' equity		82,500			100,871			126,773
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	345,531		$	342,463		$	429,197

Tilly's, Inc. Consolidated Statements of Operations (In thousands, except per share data) (unaudited)

	Thirteen Weeks Ended						Twenty-Six Weeks Ended
	August 2, 2025			August 3, 2024			August 2, 2025			August 3, 2024
Net sales	$	151,256		$	162,867		$	258,867		$	278,723

Cost of goods sold (includes buying, distribution, and occupancy costs)		101,222			112,013			186,616			202,625
Rent expense, related party		932			934			1,864			1,865
Total cost of goods sold (includes buying, distribution, and occupancy costs)		102,154			112,947			188,480			204,490
Gross profit		49,102			49,920			70,387			74,233

Selling, general and administrative expenses		46,291			50,648			90,132			95,616
Rent expense, related party		133			131			266			264
Total selling, general and administrative expenses		46,424			50,779			90,398			95,880

Operating income (loss)		2,678			(859	)		(20,011	)		(21,647	)
Other income, net		446			786			844			1,940
Income (loss) before income taxes		3,124			(73	)		(19,167	)		(19,707	)
Income tax benefit		(41	)		(4	)		(180	)		(17	)
Net income (loss)	$	3,165		$	(69	)	$	(18,987	)	$	(19,690	)
Basic net income (loss) per share of Class A and Class B common stock	$	0.11		$	(0.00	)	$	(0.63	)	$	(0.66	)
Diluted net income (loss) per share of Class A and Class B common stock	$	0.10		$	(0.00	)	$	(0.63	)	$	(0.66	)
Weighted average basic shares outstanding		30,091			30,029			30,075			29,995
Weighted average diluted shares outstanding		30,266			30,029			30,075			29,995

Tilly's, Inc. Consolidated Statements of Cash Flows (In thousands) (unaudited)

	Twenty-Six Weeks Ended
	August 2, 2025			August 3, 2024
Cash flows from operating activities
Net loss	$	(18,987	)	$	(19,690	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		5,606			6,305
Insurance proceeds from casualty loss		—			131
Stock-based compensation expense		819			1,167
Impairment of assets		1,134			2,499
Loss (gain) on disposal of assets		18			(35	)
Gain on maturities of marketable securities		(363	)		(1,121	)
Changes in operating assets and liabilities:
Receivables		(6,054	)		(6,863	)
Merchandise inventories		(12,051	)		(31,983	)
Prepaid expenses and other assets		2,599			3,003
Accounts payable		30,570			28,436
Accrued expenses		6,927			7,048
Accrued compensation and benefits		703			1,586
Operating lease liabilities		(3,869	)		(4,112	)
Deferred revenue		(1,112	)		(1,342	)
Other liabilities		(90	)		(232	)
Net cash provided by (used in) operating activities		5,850			(15,203	)

Cash flows from investing activities
Purchases of marketable securities		—			(39,290	)
Purchases of property and equipment		(2,051	)		(4,625	)
Proceeds from maturities of marketable securities		25,816			48,500
Insurance proceeds from casualty loss		—			23
Proceeds from sale of property and equipment		9			23
Net cash provided by investing activities		23,774			4,631

Cash flows from financing activities
Proceeds from exercise of stock options		—			294
Net cash provided by financing activities		—			294

Change in cash and cash equivalents		29,624			(10,278	)
Cash and cash equivalents, beginning of period		21,056			47,027
Cash and cash equivalents, end of period	$	50,680		$	36,749

Tilly's, Inc. Store Count and Square Footage

	Store Count at Beginning of Quarter	New Stores Opened During Quarter	Stores Permanently Closed During Quarter	Store Count at End of Quarter	Total Gross Square Footage End of Quarter (in thousands)
2024 Q1	248	2	4	246	1,784
2024 Q2	246	1	—	247	1,791
2024 Q3	247	—	1	246	1,780
2024 Q4	246	4	10	240	1,730
2025 Q1	240	1	3	238	1,707
2025 Q2	238	1	7	232	1,657

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Investor Relations Contact:

Michael Henry, Executive Vice President, Chief Financial Officer

(949) 609-5599, ext. 17000

irelations@tillys.com

Tilly's, Inc. Reports Fiscal 2025 Second Quarter Operating Results