Sep 2, 2026 earnings call — Turnaround momentum: comp sales, margins, profitability
Company returned to profitability with net income of $8.4 million, $0.27 per diluted share in Q2.
Revenue $0.2B (est $0.2B) · EPS $0.27 (est $0.17) · Next-quarter revenue outlook $0.1B–$0.2B
Key quotes
"First, we have now produced 4 consecutive quarters and 13 consecutive months of year-over-year comparable net sales growth, including our 12.1% comp sales increase in the recently completed second quarter, and our 14.6% comp sales increase in fiscal August to begin the third quarter."
"We are not only seeing stronger full-price sales overall, but we are also seeing significantly improved average unit retails on aged clearance items from the impact of the AI price optimization investment we made last year."
"We believe our improved focus on social media platforms has helped reach new audiences based on our TikTok follower count nearly doubling to over 325,000 and our 1-year active loyalty program membership growing by 20% to 4.6 million members since this time last year."
Analyst Q&A 2
Why sales are accelerating and inventory setup
Q (Matt Koranda · ROTH Capital Partners,): He asked why August comps accelerated to about 15%, whether TikTok shop or other assortment changes helped, how inventory is positioned for fall and holiday, whether they are chasing inventory, whether better results change vendor conversations, and what is built into guidance on SG&A leverage.
A: Management said the strength was broad-based: almost every department was up double digits and momentum continued through back-to-school. They said inventories were well managed (sales up 8% with inventory down 1% in dollars in Q2), they feel good about the setup for fall and holiday, and the buying team is continually sharpening the assortment. On vendors, they said the business inflection did not change conversations with brands; on SG&A they said there should be some improvement versus last year but bonus accruals are adding to SG&A and are a non-comparable expense.
"So we feel good about Q2, and we feel strongly about how we're sorted and how we're preparing for Q3 and holiday." — Nate Smith (CEO)
What could prevent Q3 reaching top guidance
Q (Gowshihan Sriharan · Singular): He asked what the single biggest swing factor is that could keep Q3 from the top of the range, whether Q4 can hold double-digit comps versus the prior year, whether e-commerce and distribution still leverage on a positive comp, and how many leases come up for renewal.
A: They said most scenarios point to the upper end of the Q3 range, but noted historical patterns where September often slowed (3 of the last 4 years saw September decelerate by about 8 comp points vs August), and October is the toughest comparison. On Q4 they have no specific guidance yet but said the 2-year view suggests they can comp the 10% and they expect a positive comp for Q4. For e-commerce and cost leverage, they said occupancy dollars are mostly straight-line and stable while variable distribution costs are e-comm shipping and shipping to stores; buying costs are relatively consistent. On leases, they said they are negotiating regularly, have 20 lease decisions left this fiscal year that they expect to keep, and have roughly 60 to 65 lease decisions for fiscal 2027 expirations that they are beginning to discuss.
"Most of the scenarios that we look at do point towards the upper end of our range." — Michael Henry (CFO)