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Shares of Tile Shop Holdings, Inc. (TTSH - Free Report) have gained 14.8% since the company reported its earnings for the quarter ended March 31, 2025, outperforming the S&P 500 Index’s modest 0.5% rise during the same period. Over the past month, TTSH stock has risen 11.1%, while the broader index has gained 4.3%.
Q1 Performance Snapshot
For the first quarter of 2025, Tile Shop reported net sales of $88 million, a decline of 4.1% year over year from $91.7 million. Comparable store sales dropped 4% year over year, which management attributed to a decrease in store traffic. Net income fell sharply to $172,000 from $1.7 million in the prior-year period, translating to diluted earnings per share of $0.00 compared with $0.04 in the prior year.
Adjusted EBITDA also declined 38.4% to $4.6 million, or 5.2% of net sales, from $7.4 million, or 8.1% of net sales, a year ago. Despite the revenue decline, gross margin improved 20 basis points to 66% from 65.8%, driven by lower inventory write-offs, partially offset by higher delivery costs.
Tile Shop Holdings, Inc. Price, Consensus and EPS Surprise
Total operating income declined sharply to $183,000 from $2.3 million, compressing the operating margin to 0.2% from 2.5%. Selling, general, and administrative (SG&A) expenses declined 0.3% year over year to $57.9 million from $58 million. The decrease was primarily due to a $0.7 million decrease in depreciation, a $0.4 million decrease associated with the closure of one distribution center in the third quarter of 2024 and a $0.4 million decrease in benefits. These factors were partially offset by a $0.7 million increase in advertising costs, a $0.3 million increase in training and a $0.3 million uptick in IT expenses.
Tile Shop ended the quarter with $27.1 million in cash and no outstanding debt, up from $20.9 million in cash at the end of 2024. Operating cash flow totaled $9.9 million in the quarter compared with $18.6 million in the year-ago period.
Pretax Return on Capital Employed fell to 1.2% on a trailing 12-month basis, down from 11.3% a year earlier, reflecting ongoing margin and profitability pressures.
Management Commentary
CEO Cabell Lolmaugh acknowledged the continuing impact of low housing turnover and macro headwinds such as tariffs and cautious consumer sentiment. Still, management emphasized their strategy of focusing on controllable factors — improving customer experience and managing costs. A key highlight was the increase in tile volume sold during the quarter, which the company attributed to an expanded product assortment, particularly entry-level options and the Arbour collection of luxury vinyl tile. This volume growth occurred despite lower average selling prices, suggesting that new offerings are resonating with value-conscious consumers.
Lolmaugh expressed confidence in TTSH’s supplier diversification strategy, noting that Tile Shop now sources from over 25 countries. This positioning is expected to help the company navigate increased tariffs on certain imported goods. Additionally, the retailer has been developing partnerships with domestic manufacturers, which may help offset some international sourcing risks going forward.
CFO Mark Davis elaborated that, despite this shift in product mix, the company was able to maintain average ticket values due to stronger volumes. He also noted the positive impact of new engineered hardwood and laminate products, along with continued traction in large-format tiles.
Factors Influencing the Headline Numbers
The decline in net sales and earnings was primarily driven by lower store traffic, exacerbated slightly by the absence of an extra sales day that benefited the 2024 quarter (due to the leap year). Management estimated that the additional day in the prior-year quarter contributed approximately $1 million in sales. Despite weaker revenues, the company maintained average ticket size by offsetting lower average selling prices with increased tile volumes. This mix shift was underpinned by new product introductions targeting both price-sensitive and design-conscious customers.
Furthermore, while gross margin improved modestly, SG&A expenses absorbed new investments in marketing, employee training, and IT systems. These expenses, although constraining profitability in the short term, are viewed as essential to long-term competitiveness.
Guidance
Tile Shop did not provide formal financial guidance for upcoming quarters. However, management indicated confidence in their spring selling season and reiterated that the company’s inventory strategy and global supplier diversification would help mitigate tariff-related cost pressures. The team emphasized its readiness to respond to evolving trade dynamics by shifting sourcing and implementing pricing strategies if needed.
Other Developments
There were no acquisitions, divestitures, or major business restructurings disclosed for the first quarter of 2025. However, Tile Shop announced it had subleased its New Jersey distribution center through the third quarter of 2026. This sublease is expected to yield $2 million in income, with half of the benefit anticipated to reduce SG&A expenses over the remainder of 2025 and the balance in 2026.
Additionally, Tile Shop expanded its design collaboration with Alison Victoria, a move that aligns with its strategic focus on exclusive, designer-backed offerings to differentiate its product portfolio.
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TTSH Stock Gains Despite Q1 Earnings Decline, Gross Margin Improves
Shares of Tile Shop Holdings, Inc. (TTSH - Free Report) have gained 14.8% since the company reported its earnings for the quarter ended March 31, 2025, outperforming the S&P 500 Index’s modest 0.5% rise during the same period. Over the past month, TTSH stock has risen 11.1%, while the broader index has gained 4.3%.
Q1 Performance Snapshot
For the first quarter of 2025, Tile Shop reported net sales of $88 million, a decline of 4.1% year over year from $91.7 million. Comparable store sales dropped 4% year over year, which management attributed to a decrease in store traffic. Net income fell sharply to $172,000 from $1.7 million in the prior-year period, translating to diluted earnings per share of $0.00 compared with $0.04 in the prior year.
Adjusted EBITDA also declined 38.4% to $4.6 million, or 5.2% of net sales, from $7.4 million, or 8.1% of net sales, a year ago. Despite the revenue decline, gross margin improved 20 basis points to 66% from 65.8%, driven by lower inventory write-offs, partially offset by higher delivery costs.
Tile Shop Holdings, Inc. Price, Consensus and EPS Surprise
Tile Shop Holdings, Inc. price-consensus-eps-surprise-chart | Tile Shop Holdings, Inc. Quote
Other Key Business Metrics
Total operating income declined sharply to $183,000 from $2.3 million, compressing the operating margin to 0.2% from 2.5%. Selling, general, and administrative (SG&A) expenses declined 0.3% year over year to $57.9 million from $58 million. The decrease was primarily due to a $0.7 million decrease in depreciation, a $0.4 million decrease associated with the closure of one distribution center in the third quarter of 2024 and a $0.4 million decrease in benefits. These factors were partially offset by a $0.7 million increase in advertising costs, a $0.3 million increase in training and a $0.3 million uptick in IT expenses.
Tile Shop ended the quarter with $27.1 million in cash and no outstanding debt, up from $20.9 million in cash at the end of 2024. Operating cash flow totaled $9.9 million in the quarter compared with $18.6 million in the year-ago period.
Pretax Return on Capital Employed fell to 1.2% on a trailing 12-month basis, down from 11.3% a year earlier, reflecting ongoing margin and profitability pressures.
Management Commentary
CEO Cabell Lolmaugh acknowledged the continuing impact of low housing turnover and macro headwinds such as tariffs and cautious consumer sentiment. Still, management emphasized their strategy of focusing on controllable factors — improving customer experience and managing costs. A key highlight was the increase in tile volume sold during the quarter, which the company attributed to an expanded product assortment, particularly entry-level options and the Arbour collection of luxury vinyl tile. This volume growth occurred despite lower average selling prices, suggesting that new offerings are resonating with value-conscious consumers.
Lolmaugh expressed confidence in TTSH’s supplier diversification strategy, noting that Tile Shop now sources from over 25 countries. This positioning is expected to help the company navigate increased tariffs on certain imported goods. Additionally, the retailer has been developing partnerships with domestic manufacturers, which may help offset some international sourcing risks going forward.
CFO Mark Davis elaborated that, despite this shift in product mix, the company was able to maintain average ticket values due to stronger volumes. He also noted the positive impact of new engineered hardwood and laminate products, along with continued traction in large-format tiles.
Factors Influencing the Headline Numbers
The decline in net sales and earnings was primarily driven by lower store traffic, exacerbated slightly by the absence of an extra sales day that benefited the 2024 quarter (due to the leap year). Management estimated that the additional day in the prior-year quarter contributed approximately $1 million in sales. Despite weaker revenues, the company maintained average ticket size by offsetting lower average selling prices with increased tile volumes. This mix shift was underpinned by new product introductions targeting both price-sensitive and design-conscious customers.
Furthermore, while gross margin improved modestly, SG&A expenses absorbed new investments in marketing, employee training, and IT systems. These expenses, although constraining profitability in the short term, are viewed as essential to long-term competitiveness.
Guidance
Tile Shop did not provide formal financial guidance for upcoming quarters. However, management indicated confidence in their spring selling season and reiterated that the company’s inventory strategy and global supplier diversification would help mitigate tariff-related cost pressures. The team emphasized its readiness to respond to evolving trade dynamics by shifting sourcing and implementing pricing strategies if needed.
Other Developments
There were no acquisitions, divestitures, or major business restructurings disclosed for the first quarter of 2025. However, Tile Shop announced it had subleased its New Jersey distribution center through the third quarter of 2026. This sublease is expected to yield $2 million in income, with half of the benefit anticipated to reduce SG&A expenses over the remainder of 2025 and the balance in 2026.
Additionally, Tile Shop expanded its design collaboration with Alison Victoria, a move that aligns with its strategic focus on exclusive, designer-backed offerings to differentiate its product portfolio.