Tilly's closes 28 stores

Tilly's closes 28 stores

Tilly's, a 44-year-old mall retailer, has closed 28 stores in two years, reducing its footprint by 11%. The company has 220 operational stores remaining, down from the 248 it had at the end of the first quarter of fiscal 2024.

This move is part of the company's strategy to optimize its operations and improve margins. According to Tilly's CEO Nate Smith, the downsizing was a difficult but necessary decision to get back to historical sales levels. The company's management explained that margins also improved because of improved full-price selling and lower buying, distribution, and occupancy costs "due to decreased occupancy costs associated with reduced store count.

Tilly's recently reported its first quarter of fiscal 2026 results, with total net sales of $124.7 million, up 15.9% compared to the same period in 2025. Net sales from physical stores were $96.3 million, an increase of 12.1%, while net sales from e-commerce were $28.4 million, an increase of 30.9%.

The company's gross profit was $36.1 million, or 28.9% of net sales, compared to $21.3 million, or 19.8% of net sales, last year. Net loss improved to $8.0 million, or $(0.26) per share, compared to a net loss of $22.2 million, or $(0.74) net loss per share, last year.

Tilly's is not the only retailer to close stores in recent years. Other major mall staples, such as Michael Kors, Vera Bradley, Marshall Rousso & Misura, and Fossil Group, have also shuttered stores as part of their own optimization strategies. However, according to Neil Saunders, a retail analyst and managing director of analytics firm GlobalData, vacancy rates remain relatively low, and people should not make too much of store closures, as physical retail is not dead or dying.

In fact, according to the June 2026 Placer.ai Mall Index, foot traffic actually rose 5.7% year-over-year at open-air shopping centers and 1.9% at indoor malls. A report by Cushman & Wakefield citing Green Street data further underscores this divide, showing that top-tier malls maintain a healthy 95% occupancy rate, while lower C-rated properties languish at just 72%.

Tilly's plans to open new stores, with two new stores scheduled to open in late July, and one more in late October. The company will also close one existing store in mid-July and another at the end of the fiscal year. The CEO added that management is optimistic about the possibility of expanding its net store footprint.

According to Placer.ai, "Visits to indoor malls, open-air shopping centers, and outlet malls all remained in positive YoY territory in June 2026, with indoor mall visits up 1.2%, open-air shopping center visits up 5.1%, and outlet mall visits up 1.0% compared to June 2025."

Tilly's also plans to invest and launch an "AI-driven merchandise allocation tool before the holiday season to help us improve initial allocation accuracy across our stores and online."

Family Dollar closed 28 stores in Ohio since July 2025, the second-most closures of any state. Since the sale, at least 350 Family Dollar locations in the U.S. Have closed, according to an analysis by local AI search visibility platform Local Falcon.

The company's performance improved after its quiet downsizing. Net sales from physical stores grew 12.1% year over year, even though the company operated 18 fewer stores than in the comparable quarter.