Editor’s note: Executive Edition members can read our exclusive interview with the Tilly’s leadership team about the concrete actions the company has taken to turnaround the business.Â
Key Takeaways
- Tilly’s posted a 22.9% comparable net sales increase in Q1 fiscal 2026, with every merchandise department and every geographic market delivering double-digit comp gains.
- The company narrowed its net loss to $8 million from $22.2 million a year ago, marking its fourth consecutive quarter of year-over-year profit improvement.
- Management said the improving business has opened conversations about expanding the company’s net store footprint for the first time in years.
Tilly’s delivered one of its strongest first-quarter performances in company history, posting a 22.9% comparable net sales increase and narrowing its net loss by more than $14 million as its multi-year turnaround continues to build momentum.
The Irvine, California-based specialty retailer Wednesday reported total net sales of $124.7 million for the quarter ended May 2, 2026, a 15.9% increase from the same period a year earlier. Every merchandise department posted double-digit comparable sales gains. Every geographic market for stores did the same. The results extended Tilly’s streak of comparable net sales growth to three consecutive quarters and nine consecutive months.
“The turnaround momentum which began in fiscal 2025 continued through the first quarter of fiscal 2026,” CEO Nate Smith said in a statement. “Returning to profitability is our foremost goal for fiscal 2026. We believe the strength of our start to the fiscal year gives us a clear and credible path to get there, provided we can maintain a strong, positive sales trajectory throughout the year.”
The company also reported that comparable net sales for May, the start of the second quarter, rose 8.3%, extending the monthly comp growth streak to 10 consecutive months.
Tilly’s Q1 Fiscal 2026 Financial Results
- Total net sales: Up 15.9% to $124.7 million compared to Q1 fiscal 2025
- Total comparable net sales: Up 22.9% compared to Q1 fiscal 2025
- Physical store net sales: Up 12.1% to $96.3 million compared to Q1 fiscal 2025; comparable store sales up 20.8%
- E-commerce net sales: Up 30.9% to $28.4 million compared to Q1 fiscal 2025; represented 22.8% of total net sales vs. 20.2% last year
- Gross profit: Up 910 basis points to 28.9% of net sales, or $36.1 million, compared to 19.8% of net sales, or $21.3 million, in Q1 fiscal 2025
- Product margins: Up 400 basis points compared to Q1 fiscal 2025
- Net loss: Improved to $8 million, or $(0.26) per share, from $22.2 million, or $(0.74) per share, in Q1 fiscal 2025
- Total cash, cash equivalents, and marketable securities: $41.1 million as of May 2, 2026, compared to $37.2 million at May 3, 2025
- Total available liquidity: $91.8 million, including $50.7 million of undrawn borrowing capacity
- Store count: 220 stores at end of Q1, down from 238 a year ago
Business Trends: Consistency Is the Story
Smith framed the quarter not as a single strong result, but as evidence of a durable pattern. The company has now delivered four consecutive quarters of year-over-year profit improvement, and management is increasingly confident the trajectory is real.
“The trend of our business has been moving in the right direction, and it is doing so with increasing consistency,” Smith said on the earnings call. “That consistency is not something we take lightly. It reflects real progress in the business.”
CFO Michael Henry noted on the earnings call that Q1 comparable sales broke down as follows: fiscal February was up 20.1%, March surged 39.5%, aided by an earlier Easter shift that pulled business forward, and April finished at 5.1%, bringing the quarter to a 22.9% blended comp.
Sales per square foot have risen from $260 a quarter ago to $271 at the end of Q1, though executives said the company’s historical performance above $300 per square foot remains the target.
Smith said the business is realistic about external headwinds, however.
“We are also clear-eyed about the external environment. There are headwinds out there. But we have demonstrated that we can execute, and we enter the balance of fiscal 2026 with confidence in our plan and in the people carrying it out,” he said on the earnings call.
Merchandise Performance: Every Department, Every Market
The breadth of the comp improvement stood out. Every merchandise department delivered double-digit comparable sales gains in Q1. Every geographic market did the same.
Product margins improved 400 basis points, driven by better full-price selling from inventories that were more current in terms of aging than a year ago. It was the company’s sixth consecutive quarter of product margin rate improvement relative to the corresponding prior-year period.
“We believe the work we have put in to more clearly understand and define our key customer profiles has helped us build and merchandise assortments both in store and online with clearer strategy and focus than in the past,” Smith said on the earnings call. “This, in turn, has resulted in greater and more consistent customer engagement for us.”
Customer loyalty program membership with activity in the past year grew 10%. The company’s TikTok following doubled since launching TikTok Shop in March of the prior year. Smith described TikTok as a channel that is both expanding Tilly’s total addressable customer base and increasing purchase frequency among existing customers, while reducing the company’s long-term dependence on expensive paid acquisition.
“Our customer doesn’t think in channels,” Smith said on the earnings call. “They might discover us on TikTok, research us online, and buy wherever is most convenient for them at the moment. Our job is to remove that friction between intent and purchase.”
New Initiatives: AI Allocation Tool, Digital Improvements, and Store Expansion Conversations
Tilly’s is investing in operational infrastructure to support the improving sales trend. The company said it has been reviewing and making changes to strategic and tactical elements of its online business and digital marketing efforts, which it believes are beginning to generate improved site performance and efficiency.
Before the holiday season, the company expects to launch an AI-driven merchandise allocation tool designed to improve initial allocation accuracy across stores and online.
On the store count front, for years, Tilly’s has been contracting its physical footprint. Now, management said the business improvement has opened the door to a different conversation.
“The improvement in our business has us looking forward with optimism, including the possibility of expanding our net store footprint in fiscal 2026,” Smith said on the earnings call. “We are not ready to commit to specific numbers or locations just yet, but we are having those conversations. And that alone marks a meaningful shift in how we are thinking about future opportunities of this business.”
The company currently expects to open two new stores in late July and one more in late October, while closing one store in mid-July and another at year end. It expects to end Q2 with 221 total stores.
Fiscal 2026 Second Quarter Outlook
Tilly’s provided the following guidance for the second quarter of fiscal 2026 ending Aug. 1, 2026:
- Net sales: Approximately $154 million to $160 million, translating to a comparable net sales increase of 6% to 10%
- Net income: Approximately $3.8 million to $6 million, or $0.13 to $0.20 per diluted share, compared to $0.10 per diluted share in last year’s second quarter
If achieved, the quarter would represent the company’s fifth consecutive quarter of year-over-year profit improvement.
