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Investing.com -- Tilly’s, Inc. (NYSE: TLYS) saw its shares surge 4.9% after the specialty retailer reported better-than-expected second-quarter earnings and provided an optimistic outlook, signaling potential stabilization in its business despite ongoing sales challenges.
The company posted earnings per share of $0.10 for the second quarter ended August 2, 2025, significantly outperforming analyst expectations of -$0.03. Revenue came in at $151.3 million, slightly below the consensus estimate of $153.77 million and down 7.1% compared to the same period last year. Comparable sales declined 4.5% YoY.
Despite the revenue shortfall, Tilly’s shares jumped on the earnings beat and signs of improving sales trends. The company noted that comparable net sales have improved each quarter since the end of fiscal 2024, including a 0.9% increase in fiscal August to begin the third quarter.
"We believe we are beginning to see the positive impacts of our efforts to stabilize our business," said 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."
Gross profit margin improved to 32.5% from 30.7% last year, driven by a 210 basis point increase in product margins due to higher initial markups and lower markdowns. The company also reduced selling, general and administrative expenses by $4.4 million to $46.4 million.
For the third quarter, Tilly’s expects revenue between $134 million and $140 million, slightly below the consensus of $141.1 million, with comparable sales ranging from a 2% decrease to a 2% increase. The company forecasts a loss per share of -$0.35 to -$0.23, better than analysts’ expectations of -$0.37.
The retailer ended the quarter with $50.7 million in cash and no debt, while reducing inventory by 14.5% compared to the previous year. Tilly’s operated 232 stores at quarter-end, 15 fewer than a year ago.