• Q3 earnings drop to US$5.1m
  • Gross margin widens to 30.9%
  • Sales grow 6%

Apparel, footwear and accessories retailer Tilly's says there is more work to be done to improve earnings and sales, but is encouraged by its third-quarter performance.

In the three months ended 1 November, earnings dropped to US$5.1m from $6.1m a year earlier.

Gross margin widened to 30.9% compared to 30.6% in the third quarter of 2013, primarily due to a 30 basis point increase in product margins.

Total net sales grew 6% to $131.3m from $123.8m a year earlier, while comparable store sales, which include e-commerce sales, dropped 1.2%.

CEO Daniel Griesemer said the company was pleased with the "meaningful progress" it is making on its initiatives to increase sales and profitability as its third-quarter results exceeded expectations.

"While we recognise there is more work to be done, we are encouraged that our focus on product differentiation and innovation, and improved digital capabilities, in conjunction with a slightly better teen retail environment, are contributing to a general improvement in customer response," he added.

"These efforts, as well as strong inventory management, resulted in increased product margins in the quarter. Our product offering continued to resonate well with our customer through November, giving us confidence that we are well-positioned for the remaining holiday selling season."