Tile Shop (TTSH) Q1 2025 earnings summary

Executive summary

• Net sales for Q1 2025 decreased 4.1% year-over-year to $88.0 million, with comparable store sales down 4.0% due to lower store traffic and external market challenges.

• Gross margin improved by 20 basis points to 66.0%, mainly due to reduced inventory write-offs, partially offset by higher delivery costs.

• Net income declined to $0.2 million from $1.7 million in Q1 2024, reflecting lower sales and reduced operating income.

• Tile volume sold increased, driven by expansion into entry-level, competitively priced, and new luxury vinyl tile and engineered hardwood offerings.

• Management is focused on customer experience, innovation, expense management, and maintaining a robust, diversified supplier base.

Financial highlights

• Net sales: $88.0 million (down from $91.7 million year-over-year); comparable store sales down 4.0%.

• Gross profit: $58.1 million (down from $60.3 million year-over-year); gross margin rate up to 66.0%.

• SG&A expense: $57.9 million, flat year-over-year, with shifts in depreciation, distribution, benefits, marketing, training, and IT costs.

• Operating cash flow: $10.0 million for the quarter, increasing cash balance to $27.1 million at quarter end.

• Adjusted EBITDA: $4.6 million (5.2% of sales), down from $7.4 million (8.1% of sales) year-over-year.

Outlook and guidance

• Management expects sufficient liquidity for operations and capital expenditures over the next twelve months, supported by cash, cash flow, and a $75 million credit facility with $73.8 million available.

• Sublease of the New Jersey distribution center is expected to provide $2 million in income through Q3 2026, with half benefiting 2025 SG&A expenses.

• Ongoing evaluation of sourcing and pricing strategies to address anticipated cost pressures from increased tariffs.