Retail clothing company Tilly’s says its net sales for the third quarter of this year totalled $143.4 million, a 13.8 per cent decline versus $166.3 million in the same period last year.

But CEO Hezy Shaked put a positive spin on the numbers, noting several milestones.

“Our third-quarter results included our best quarterly comp sales performance since fiscal 2021, our first month of positive comp sales since February 2022 during fiscal August, and our second consecutive quarter of year-over-year store traffic growth,” explained Shaked.

The quarterly sales decline was primarily due to a calendar shift caused by last year’s 53rd week, which moved some back-to-school sales into the second quarter this year, reducing third-quarter sales by $18.4 million.

Shaked expressed disappointment in the net sales performance of the early stages of the fourth quarter but was optimistic because of the company’s improved product margins. 

Total comparable net sales – which include both physical stores and e-commerce – fell 3.4 per cent during the 13-week comparable period ending November 4 last year.

Net sales from physical stores decreased by 16 per cent to $111.3 million, with comparable store net sales declining 5.6 per cent. Physical stores accounted for 77.6 per cent of total net sales this year, down from 79.6 per cent last year.

E-commerce sales provided a bright spot, representing 22.4 per cent of total net sales, up from 20.4 per cent in the prior year. However, e-commerce net sales fell by 5.4 per cent year-over-year, totalling $32.2 million. 

Meanwhile, Tilly’s reported a gross profit of $37.2 million, or 25.9 per cent of net sales, compared to $48.7 million, or 29.3 per cent, in the prior year. The decline was attributed to lower sales and higher occupancy costs as a percentage of revenue.

Operating losses widened to $14.1 million, or 9.8 per cent of net sales, compared to $2.5 million, or 1.5 per cent, in the same period last year. Net loss for the quarter was $12.9 million.

The company expects to close 10 underperforming stores by the end of the fourth quarter, reducing its store count to 239. It opened three new stores in November.

“We still have a long way to go to return to generating consistent sales growth and profitability,” Shaked concluded.