Tile Shop Holdings Reports Decline in Net Sales and Profitability for Q1 2025

Tile Shop Holdings, Inc. reported its financial results for the first quarter of 2025, revealing a decline in net sales and profitability compared to the same period in 2024. The company generated net sales of $88.0 million, a decrease of 4.1% from $91.7 million in the prior year. Gross profit also fell to $58.1 million, down from $60.3 million, while the gross margin improved slightly to 66.0% from 65.8%. The company recorded a net income of $172,000, a significant drop from $1.7 million in the first quarter of 2024, resulting in earnings per share of $0.00, compared to $0.04 in the previous year.

The decline in sales was attributed to a 4.0% decrease in comparable store sales, primarily due to reduced customer traffic. Despite the drop in sales, the company managed to lower its cost of sales to $29.9 million from $31.4 million, contributing to the slight improvement in gross margin. Selling, general, and administrative expenses decreased marginally by 0.3% to $57.9 million, reflecting a reduction in depreciation and costs associated with the closure of a distribution center, although this was offset by increased advertising and training expenses.

Operationally, Tile Shop Holdings maintained a stable presence with 142 stores across 31 states and the District of Columbia as of March 31, 2025. The company reported an increase in cash and cash equivalents to $27.1 million from $21.0 million at the end of 2024, and it had no outstanding borrowings on its revolving line of credit, which has a capacity of $75 million. The company also noted a customer deposit balance of $12.8 million, up from $10.9 million, indicating ongoing customer engagement despite the sales decline.

Looking ahead, Tile Shop Holdings is evaluating strategic options to manage cost pressures, particularly in light of recent changes in U.S. trade policy and elevated tariffs on imported goods. The company anticipates that its sublease agreements for distribution center space will generate approximately $1.0 million in income in both 2025 and 2026, which will help offset some operational costs. Management remains focused on leveraging its supplier relationships and product offerings to navigate the current market challenges and improve performance in the upcoming quarters.