TILE SHOP HOLDINGS, INC. (TTSH)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 showed stabilizing top-line with net sales down 4.1% YoY to $88.0m and comps -4.0% (improved vs Q4’s -5.8% and Q3’s -7.9%); gross margin expanded 20 bps YoY to 66.0% on lower inventory write-offs, but operating leverage remained weak as SG&A rate rose YoY to 65.8% .
• Profitability was modest: net income of $0.2m ($0.00 diluted EPS) and Adjusted EBITDA of $4.6m (5.2% margin); sequentially better than Q4 EBITDA but below Q1 2024 on softer traffic and higher delivery mix .
• Management highlighted tariff risk mitigation via diversified sourcing across 25+ countries, domestic supplier partnerships, and pricing/sourcing levers; no formal financial guidance was issued, but a newly executed NJ DC sublease should reduce 2025 SG&A (≈$1m benefit in 2025, $2m total through Q3’26) .
• Estimates: S&P Global consensus for Q1 2025 EPS and revenue was not available; investors should anchor on company actuals and watch for estimate resets post-print (Values retrieved from S&P Global).*

What Went Well and What Went Wrong

• What Went Well

  • Gross margin held firm at 66.0% (+20 bps YoY) driven by lower inventory write-offs, partially offset by higher customer delivery mix .
  • Product strategy gained traction: higher tile volumes despite lower ASPs, supported by expanded opening-price assortment, Arbour LVT launch, and additions of engineered hardwood and laminate .
  • Balance sheet strength: $27.1m cash, no debt; sublease of NJ DC to provide ~$2m income through Q3’26 with roughly half benefiting 2025 SG&A .

• What Went Wrong

  • Traffic remained soft, driving comps -4.0% and a YoY decline in adjusted EBITDA to $4.6m (5.2% margin) from $7.4m (8.1%) in Q1 2024 .
  • SG&A deleverage: SG&A rate rose to 65.8% vs 63.3% in Q1 2024, reflecting higher marketing, training, and IT, offsetting savings from depreciation, DC closure, and benefits .
  • Macro/tariffs remain overhangs: management is evaluating mitigations amid increased U.S. tariffs on certain imports; no quantitative guidance provided .

Financial Results

KPIs and Operating Metrics

Notes: “N/A” indicates data not disclosed on a comparable quarterly basis in the cited documents.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO (press release): “In light of recent changes to U.S. trade policy, including increased tariffs on certain imported goods, we are evaluating multiple options to manage the anticipated cost pressures including sourcing adjustments and pricing strategies… our diversified supplier base has positioned us to implement strategies that will help reduce the impact of additional tariffs.”
• CEO (call): “We saw an increase in the volume of tiles that we sold… driven by the expansion of entry-level competitively priced products… our Arbour collection of high-quality luxury vinyl tile… and additions of engineered hardwood and laminate.”
• CFO (call): “2024 included an extra day… due to it being a leap year… approximately $1 million during the first quarter of 2024.”
• CFO (call): “We anticipate receiving $2 million of sublease income [NJ DC]… approximately half… reflected as a reduction of our SG&A expenses over the balance of 2025 with the remaining balance… during the first 3 quarters of 2026.”
• CFO (press release/call): “Gross margin rate during the first quarter was 66%, a 20 bps increase… driven by a decrease in inventory write-offs and partially offset by an increase in customer delivery mix.”

Q&A Highlights

• No analyst Q&A occurred on the call; operator concluded there were no questions, and management ended the call after prepared remarks .

Estimates Context

• S&P Global consensus for Q1 2025 EPS and revenue was not available at the time of analysis; therefore, no beat/miss vs consensus is shown. Investors should watch for post-quarter estimate resets given comps stabilization, tariff commentary, and SG&A sublease benefits (Values retrieved from S&P Global).*

Key Takeaways for Investors

• Comps trajectory improving (-7.9% → -5.8% → -4.0%), signaling stabilization as assortment and value initiatives lift unit volumes despite macro headwinds .
• Gross margin durability (66.0%) amid mix and freight normalization provides a cushion against traffic softness; watch delivery cost mix and any tariff pass-through efficacy .
• Cost structure tailwinds: NJ DC sublease (~$1m SG&A benefit in 2025; $2m through Q3’26) plus prior DC closure actions build operating leverage potential if volumes recover .
• Category expansion (Arbour LVT, engineered wood, laminate) and design collaborations continue to support volume growth and differentiation with pros/designers .
• Balance sheet is a strategic asset (no debt, $27.1m cash) enabling flexibility on pricing, inventory positioning, and tariff mitigation .
• Catalysts: tariff-policy clarity, comps inflection during peak renovation season, and visibility on SG&A savings conversion could drive sentiment; lack of formal guidance keeps focus on quarterly execution .
• Risk checks: sustained traffic pressure, higher delivery/customer-mix costs, and tariff impacts not fully offset by pricing/sourcing could weigh on margins and EBITDA .

Footnotes:
*Estimates unavailability and any referenced estimated values are from S&P Global.