Tilly's closed 28 stores in two years, cutting its footprint 11%. Q1 net sales rose 15.9% and gross margin hit 28.9%. The retailer plans to open 3 new stores in 2026.
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Tilly's closed 28 stores over the past two years, reducing its footprint by 11% to 220 locations. The cuts came as the retailer reported its best quarterly margin in years.
Net sales for the first quarter of fiscal 2026 rose 15.9% to $124.7 million. Gross profit hit $36.1 million, or 28.9% of sales, compared with 19.8% a year earlier. The improvement came even as the company operated 18 fewer stores than in the comparable quarter.
"Fiscal 2025 was a year of significant store optimization, resulting in 21 total store closures," CEO Nate Smith said on the earnings call. "We are proud of the fact that we were able to deliver sales growth in the fourth quarter with 17 fewer net stores."
Smith called the downsizing difficult but necessary. "It requires discipline, focus, and a willingness to make difficult decisions day after day," he said.
The closures align with broader shifts in mall traffic. Foot traffic at indoor malls rose 1.2% in June from a year earlier, while open-air centers saw a 5.1% increase, according to Placer.ai. A report from Cushman & Wakefield showed top-tier malls at 95% occupancy, compared with 72% for lower-tier properties.
Other retailers have taken similar steps. Michael Kors closed 139 stores over three years. Fossil Group shut 7 stores in the first quarter of 2026.
Tilly's store sales rose 12.1% year over year despite the smaller footprint. E-commerce sales jumped 30.9% and now represent 22.8% of total revenue, up from 20.2%.
The company plans to open three new stores in late July and October, and close two more by year-end. Smith said management is optimistic about expanding the net store count.
"We know there is meaningful work still ahead of us to get to that point," Smith said.
The retailer, founded in 1982, sells brands like Nike and Levi's. It also carries private-label apparel and accessories.
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