Tilly's, Inc.

Greetings. Welcome to the Tilly's Inc. Second 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, Investor Relations. Thank you. You may begin.

Good afternoon and welcome to the Tilly's fiscal 2021 second quarter earnings call. Ed Thomas, president and CEO, and Michael Henry, CFO, will discuss the company's results and then host the 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'll 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 Kili's judgment and analysis only as of today, September 2, 2021, and actual results may differ materially from current expectations based on various factors affecting Kili'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 second quarter earnings release, which is furnished to the SEC today on form 8K, as well as our other filings that 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 has been a record-setting year for us thus far. Our second quarter results included a record level of net sales and earnings per share for any quarter since our 2012 IPO. On a year-to-date basis, the first half of fiscal 2021 produced earnings per share that exceed the results of any fiscal year since becoming a public company. We believe these results were driven by considerable pent-up consumer demand compared to last year, aided by government stimulus payments, compelling merchandising offerings, and excellent execution by our store and corporate teams. Compared to fiscal 2019 second quarter, our total net sales increased by 24.9%. which was driven by a total comparable net sales increase of 18.3% in operating 15 net additional stores. Store comps were positive in all markets and were strongest in our two most recent primary expansion areas, New England and Texas, each of which posted comp sales increases over 20% compared to 2019. In terms of merchandising, men's and women's apparel were very strong, led by our proprietary brands, Rescue and Full Tilt, which were our number one and number two overall brands in both the second quarter and first half of fiscal 2021, as well as strong performance from our curated assortment of iconic global and specialty brands. Apparel growth has been driven by new trends in bottoms, a surging graphic t-shirt business, and a high adoption rate on newness generally. Comparable net sales of accessories and girls increased by a single-digit percentage relative to 2019, while boys and footwear decreased by a single-digit percentage relative to 2019. Hard goods, which we did not have as a material part of our assortment in 2019, produced $2.1 million in total net sales during the second quarter, and portions of this assortment are now in nearly two-thirds of our stores. We anticipate that all stores will have at least a portion of our hard goods assortment by the coming holiday season. We expanded our sustainable merchandise program during the second quarter, ending the quarter with over 1,000 items from over 40 brands in our sustainability shop on our website that contain features such as the certified recycled materials, certified organic cotton, or reusable accessories. During the third quarter, we have launched over 40 styles under our rescue brand that featured similar sustainability attributes. We also just launched a collection of vintage and upcycled product with over 200 unique pieces along with selected product in 25 of our stores. These collections currently represent roughly 4% of our total inventory. Outside of merchandise, we are continuing to reinvest in our business. We have opened eight of our planned nine new stores for fiscal 2021 and continue to seek attractive opportunities for additional stores in 2022. We've also launched several initiatives this year designed to improve convenience and efficiency for our customers. These customer experience initiatives include an upgrade to our website platform from our current version of Salesforce to their latest more mobile responsive SFRA version. Upgrading our mobile app from a simple wrap of our website to a version that offers greater mobile functionality, including loyalty and in-store experience features and continuing to improve our omnichannel capabilities, including in-store pickup, curbside pickup, same-day delivery, and ship from store. We are also reinvesting in distribution efficiencies to expand capacity for anticipated future growth. We do not currently expect our total capital expenditures for fiscal 2021 to exceed $20 million. Due to our strong cash position resulting from the strength of our business performance and our disciplined inventory and expense management through the pandemic, our board of directors approved a special cash dividend to stockholders of $1 per share during the second quarter, which was paid on July 9th. This represents the fifth consecutive year where we have provided a direct return to us in the form of a special cash dividend. Turning to the third quarter of fiscal 2021, the back-to-school season is off to a strong start. Total net sales for fiscal August were up 94.4% compared to last year, partially due to operating 39 additional stores than at this time last year. 33 of our California indoor mall stores were closed throughout August of last year, and we opened six net new stores in the past year. Compared to 2019, total comparable net sales for fiscal August increased 20.4%. Despite ongoing concerns about the current resurgence of COVID-19 cases across the country, retail supply chain disruptions labor challenges, and increasing costs generally, we remain cautiously optimistic about our business prospects for the second half of 2021. I will now turn the call over to Mike to provide additional details on our second quarter operating performance and to introduce our third quarter outlook.