Hezy Shaked is finding a tough going in his return as chief executive of Tilly’s Inc., the company he founded in 1982.
The company on Dec. 5 reported fiscal third quarter sales fell 14% to $143.8 million. Its net loss widened to $12.9 million, up from an $800,000 loss in the same period a year ago.
Still, Shaked found reasons to be optimistic. He said total comparable net sales – a measurement of sales from physical stores – fell 3.4% during the quarter compared to a 9% drop a year ago.
“Our third quarter results included our best quarterly comp sales performance since fiscal 2021,” Shaked said in a statement. He also noted it was the company’s second consecutive quarter of year-over-year store traffic growth.
“We believe our renewed marketing efforts via social media and our recently launched brand campaign are beginning to take root when considering our improved store traffic for the last two quarters,” the CEO told analysts on the quarterly earnings call.
After prior CEO Ed Thomas resigned in January, Shaked, then the executive chairman, took over on an interim basis and was named the permanent CEO in September. He expects to reduce the store count from 246 in December to 239 by January.
“We still have a long way to go to return to generating consistent sales growth and profitability,” Shaked added. “We are disappointed in our net sales performance in the early stages of the fourth quarter, yet somewhat encouraged by our improved product margins thus far in the fourth quarter.”
The two analysts covering the company expect fiscal fourth quarter revenue to fall 7.6% to $159.9 million; the company itself is projecting $149 million to $156 million.
Analysts are projecting sales will fall 6.8% to $580.7 million in fiscal 2024; they don’t see a big jump in sales in fiscal 2025, predicting a 1.2% increase to $587.8 million.
After the Dec. 5 report, the shares hit $3.22 each on Dec. 18, the lowest price in more than a decade. Since then, they have rebounded to $4.44 at press time with a $133.9 million market cap (NYSE: TLYS).
Prolonged Improvements
A report from B. Riley Securities analysts Jeff Van Sinderen and Richard Magnusen reiterated a neutral rating for Tilly’s while lowering its price target from $6 to $5 based on the mixed third quarter results.
The analyst firm also lowered its sales estimates for this fiscal year and the next while remaining optimistic about the company’s future.
“Our FY26/FY27 projections reflect the potential for a more gradual/prolonged recovery (considering the unknown magnitude of traction with turnaround initiatives and ongoing macro headwinds),” Sinderen and Magnusen wrote.
