Sep 3, 2026 earnings call — Lilly assortment problems and revised fiscal 2026 guidance
Company set fiscal 2026 sales guidance to $1.43 billion to $1.47 billion and cut adjusted EPS to $1.60 to $2.
Revenue $0.4B (est $0.4B) · EPS $1.34 (est $1.31) · Next-quarter revenue outlook $0.3B–$0.3B
Key quotes
"The core problem is the assortment, with the key issue being that we shifted far too much of our inventory investment out of our entry price points to higher price points."
"As our largest brand, its positive comparable sales growth provided important support to the overall portfolio and helped offset pressure elsewhere in the business."
"The strong cash flow we generated enabled us to make meaningful progress reducing debt in the second quarter. Refunds of previously paid tariffs contributed to that reduction."
Analyst Q&A 4
Tommy Bahama sales drivers and Lilly timing
Q (Ashley Owens · KeyBanc): What drove the return to positive comps in Florida for Tommy Bahama and whether strength is similar in men's and women's? Also, should Lilly be viewed as a spring '27 recovery, could promotions help comps this year, and what supports your gross margin guidance given higher Lilly promotions?
A: Management said Florida turning positive was important and that women's in Tommy Bahama has been up, actually more than men's. For Lilly, they said spring '27 is the first season where they could fully reshape the assortment because the rest of '26 product was already in the pipeline; there could be some fourth-quarter upside and the resort line may give early reads. On gross margin, they said they are starting with higher IMUs and expect wholesale to be a smaller percent of mix, which should more than offset higher promotional cadence at Lilly.
"Women's has actually been up more than men's, which we're happy to see." — Thomas Chubb (CEO·CHAIR)
Why Tommy differs from other brands
Q (Ethan Saghi · BTIG): What is driving any divergence between Tommy Bahama and the rest of the portfolio—product, demographics, geography, or other factors?
A: Management said there is not a large divergence between Tommy and most of the portfolio. They identified a clear divergence between Tommy and Lilly driven by Lilly's assortment challenges, described Johnny Was as focused on improving profitability even with lower sales, and said Southern Tide is the main laggard within Emerging Brands with a new leader recently hired.
"I don't think there's really a big divergence between Tommy and most of the rest of the portfolio." — Thomas Chubb (CEO·CHAIR)
Quarter-to-date comps and Lilly assortment strategy
Q (Mauricio Serna Vega · UBS): What are quarter-to-date comps overall and for Tommy, and how sustainable are Tommy's comps for the year? Also, how are you changing Lilly's assortment and why are you converting some stores to Lilly Pulitzer?
A: They said quarter-to-date comps are down slightly and noisy due to promotion timing and a late Labor Day, so they'll normalize as the quarter continues. For the year, they expect Tommy to be slightly positive. On Lilly, they explained they shifted prices up too quickly, reducing the under-$200 dress entry bucket to about 35%, and plan to move back toward the '25 mix by spring '27; store conversions are happening because Lilly is still profitable and certain locations suit Lilly better than Johnny Was or Southern Tide, giving quicker profitability in those markets.
"They're down slightly, but it's -- there's a lot of noise in them this early in the quarter that will normalize more as the quarter goes on." — K. Grassmyer (CFO)
Traffic, AUR, baskets, and freight impact
Q (Tracy Kogan): What were traffic, AUR, and average basket trends in Q2 for Tommy and Lilly, and are you seeing freight delays or changes that affect gross margin assumptions since Q1?
A: They said traffic has been pretty good, conversion rates a bit off, and average basket sizes and order values have been a bright spot; AURs have edged down due to the amount of promoted product despite higher IMUs and MSRPs. On freight, they built in slight increases but have some offset from renegotiated outbound parcel contracts; they expect some additional fuel surcharges in the second half and slightly higher containers from Asia, but called the net impact not material.
"Traffic has been pretty good. Conversion rates have been off a little bit." — Thomas Chubb (CEO·CHAIR)