Tilly's, Inc.

Greetings. Welcome to the TILES Incorporated First Quarter 2021 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Gar Jackson. You may begin.

Good afternoon, and welcome to the TILES Fiscal 2021 First Quarter Earnings Call. Ed Thomas, President and CEO, and Michael Henry, CFO, will discuss the company's results and then host a Q&A session. For a copy of Tilly's earnings press release, please visit the investor relations section of the company's website at tillys.com. From the same section, shortly after the conclusion of the call, you will also be able to find a recorded replay of this call for the next 30 days. Certain forward-looking statements will be made during this call that reflect Tilly's judgment and analysis, only as of today, June 3, 2021, and actual results may differ materially from current expectations based on various factors affecting Philly's business. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with any forward-looking statements, please see the disclaimer regarding forward-looking statements that is included in our fiscal 2021 first quarter earnings release, which was furnished to the SEC today on Form 8K, as well as our other filings with the SEC referenced in that disclaimer. Today's call will be limited to one hour and will include a Q&A session after our prepared remarks. I will now turn the call over to Ed.

Thanks, Gar. Good afternoon, everyone. Thank you for joining us today. Fiscal 2021 is off to a record-setting start with our best first quarter net sales and earnings per share since becoming a public company in 2012. This follows ending fiscal 2020, with record quarterly net sales and our most profitable fourth quarter in the last eight years. We believe these results are being driven by a compelling merchandising offering and excellent execution by our corporate and store teams, as well as several favorable environmental factors, including increased consumer activity generally, the impact of federal stimulus checks on consumer spending, a return to in-person learning in many schools, the reopening of public venues. I'm going to discuss our fiscal 2021 performance relative to fiscal 2019's pre-pandemic first quarter as a better indicator of how our business performed. We expected our results to be significantly better than last year due to the pandemic-related store closures, we experienced in the later half of last year's first quarter. But we were pleasantly surprised at how strong our business performance was relative to any quarter of the last several years. Both physical stores and e-com produced double digit positive comps in the first quarter compared to fiscal 2019. Store comps were positive in all regions relative to 2019. In terms of merchandising, all departments count positive in the first quarter compared to fiscal 2019 with women's, men's, and girls posting double-digit percentage increases and boys' footwear and accessories posting single-digit percentage increases. The atypical back-to-school timing during the first quarter resulted in an aggregate increase in backpack and denim sales of nearly $5 million over 2019 first quarter. Hard goods produced $2 million in total net sales during the first quarter, still very small as percentage of our total business, but continuing to grow. Hard goods were in 70 stores at the end of the first quarter, and our plan is for them to be in half of our stores by the end of the second quarter. We launched our sustainability program during the first quarter, which highlights the work we have been doing with our third-party brand to curate a collection of more sustainable products that have a reduced impact on the environment. So far, we have introduced over 700 products on our website from brands like the North Face, Billabong, Levi's, Jansport, Obey, Hydro Flask, Piva, and Adidas. that contains sustainability features that increase the use of recycled materials or support other positive outcomes. We plan to grow this assortment to more than 1,000 products by the end of the third quarter. We are also currently working with our proprietary brand suppliers to encourage the use of recycled materials in certain of our rescue branded products. As an update on real estate, We continue to believe there are significant opportunities for us to grow our store footprint over time. We have added two additional new stores to fiscal 2021 since our last earnings call, bringing the total new store count for the year to nine from seven. Eight of these stores have already opened. One store opened in early March, one opened in late April, and the remaining six opened in May. The ninth store is scheduled to open in early November. We are encouraged by the early results of these new stores and intend to continue to open a mix of both mall and off-mall stores over time, remaining very selective as we do and only with what we believe to be appropriate rent economics relative to the retail environment that continues to produce negative customer traffic to 2019. Turning to the second quarter of fiscal 2021, again, relative to fiscal 2019, due to the varying periods of pandemic store closures we experienced last year, total comparable net sales increased 30% through May 31st. We have experienced a significant shift in business towards stores and away from e-com over the last several weeks, which has resulted in e-com comp turning negative since April week two compared to last year, but still up nearly 85% relative to fiscal 2019. We are encouraged by the strong performance of our business thus far in fiscal 2021, and we remain excited about the long-term future of Tilly's business and its prospects for continuing profitable growth. I will now turn the call over to Mike to provide details on our first quarter operating performance.