What Happened?
Shares of young adult apparel retailer Tilly’s (NYSE: TLYS) fell 3.3% in the afternoon session after investor concerns were raised regarding the company's declining sales and profitability.
Reports highlighted that Tilly's experienced a 2.2% year-over-year decrease in comparable store sales, which was driven by reduced customer traffic and a drop in the number of transactions. In addition to the sales weakness, the company's gross margin contracted to 19.8%, falling short of consensus expectations and raising concerns about its financial health. Reflecting these weaknesses in the business, the stock's technical forecast was also downgraded to a "Sell candidate," signaling a negative outlook for its performance.
The shares closed the day at $1.49, down 2.6% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Tilly's? Access our full analysis report here.
What Is The Market Telling Us
Tilly’s shares are extremely volatile and have had 82 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 27 days ago when the stock dropped 4.6% on the news that a confluence of negative economic data pointed to a weak economy. The latest Survey of Consumer Expectations from the New York Fed revealed that households' short-term inflation expectations are rising, while their outlook on the labor market is deteriorating. Consumers expressed greater concern about potential job losses and expect lower earnings growth, factors that directly impact discretionary spending. Adding to the unease, Chief Economist at Moody's Analytics, Mark Zandi, warned that 22 states are already showing clear signs of a recession, placing the broader U.S. economy in a precarious position. The ongoing U.S. government shutdown further dampens sentiment, threatening to weigh on incomes and purchasing power.
Tilly's is down 67.3% since the beginning of the year, and at $1.49 per share, it is trading 68.2% below its 52-week high of $4.68 from December 2024. Investors who bought $1,000 worth of Tilly’s shares 5 years ago would now be looking at an investment worth $222.72.
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