Tilly's Q2 2026 net income rises as sales growth extends

Tilly's (NYSE: TLYS ) released second-quarter financial results and hosted an earnings call on Wednesday.

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For comprehensive financial data and transcripts, visit Access the full call at Summary Tilly’s reported its third consecutive quarter of double-digit comparable sales growth, with a 12.1% increase in Q2 and a 14.6% increase in August, marking 13 consecutive months of year-over-year sales growth.

The company achieved a gross margin improvement of 300 basis points to 35.5%, driven by better full-price sales and improved inventory management, aided by AI price optimization.

Tilly’s posted a net income of $8.4 million in Q2, a substantial increase from the $3.2 million reported in the previous year’s second quarter.

The company plans to open new stores while closing some underperforming ones, aiming for 218 total stores by the end of the year.

E-commerce sales rose by 20.9%, supported by an increased social media presence, especially on TikTok, which helped nearly double their follower count.

Strategic investments include AI-driven inventory management tools and the upcoming implementation of RFID in stores to enhance customer experience and operational efficiency.

Future guidance projects net sales of $150 million to $155 million for Q3, with continued double-digit comparable net sales growth.

Management emphasized ongoing efforts to sustain profitability and improve operational efficiencies, projecting a potential return to full-year profitability for the first time since 2022.

Full Transcript OPERATOR Greetings and welcome to the Tilly's second quarter 2026 earnings conference call.

At this time all parties are in a listen-only mode.

A question-and-answer session will follow the formal presentation.

If anyone should require operator assistance, please press star-zero on your telephone keypad.

It is now my pleasure to introduce your host, Gary Jackson with Investor Relations.

Thank you.

You may begin.

Thank you.

Gary Jackson, Investor Relations Good afternoon and welcome to Tilly's fiscal 2026 second quarter earnings call.

Nate Smith, President and Chief Executive Officer, and Mike Henry, Executive Vice President and Chief Financial Officer, will discuss the company's business and operating results, followed by a Q&A session with analysts.

For a copy of Tilly's earnings press release, please visit the Investor Relations section of the company's website at tillys.com.

From the same section, shortly after the conclusion of the call, you will also be able to find a recorded replay of this call for the next 30 days.

Certain forward-looking statements will be made during this call that reflect Tilly's judgment and analysis only as of today, specifically September 2, 2026, and actual results may differ materially from current expectations based on various factors affecting Tilly's business.

Accordingly, you should not place undue reliance on these forward-looking statements.

For a more thorough discussion of the risks and uncertainties associated with any forward-looking statements, please see the disclaimer regarding forward-looking statements that is included in our fiscal 2026 second quarter earnings release, which is furnished to the SEC today on Form 8-K, as well as our other filings with the SEC referenced in that disclaimer.

Today's call will be limited to one hour and will include a Q&A session after our prepared remarks.

I now turn the call over to Nate.

Nate Smith, President and Chief Executive Officer Thanks, Gar, and to all for joining us today.

Good afternoon.

A couple of weeks ago I completed my first full year at Tilly's, and I can say without a doubt that it's an exciting time being part of the team.

The company has once again executed with discipline, delivering our third straight quarter of double-digit comp sales growth in the second quarter, with that momentum holding strong through back-to-school in July and August.

In reflecting on this past year, we have clearly demonstrated a consistency in execution that we can be proud of.

I'd like to acknowledge some important achievements that speak to the turnaround momentum that we have been building over the last year.

First, we have now produced four consecutive quarters and 13 consecutive months of year-over-year comparable net sales growth, including our 12.1% comp sales increase in the recently completed second quarter and our 14.6% comp sales increase in fiscal August to begin the third quarter.

Next, we have now delivered seven consecutive quarters of year-over-year product margin improvement.