Tilly's, Inc.

Greetings. Welcome to the Tillys Inc. Fourth 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'll now turn the conference over to your host, Gar Jackson of Investment Relations. You may begin.

Good afternoon and welcome to the Tilly's fiscal 2021 fourth 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, March 10, 2022, and actual results may differ materially from current expectations based on various factors affecting Tilly'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 fourth 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 now turn the call over to Ed.

Thanks, Gar. Good afternoon, everyone, and thank you for joining us today. Fiscal 2021 was our most profitable year ever. Our fourth quarter comparable net sales grew by 12.5%, and our earnings per share of 38 cents represented our best fourth quarter earnings in our public company history. From a product perspective, all departments count positive in the fourth quarter, with accessories men's and boys' especially strong, with double-digit percentage increases. As we begin fiscal 2022, we have seen good early reads from our spring assortment offerings in shorts, dresses, and more fashionable tops. Graphic tees with retro content from the 1990s and Y2K era are growing in popularity. We've launched a print-on-demand t-shirt initiative through a third-party service provider that is off to a nice start, and we expect this initiative to grow over the course of fiscal 2022 and beyond. In footwear, global brands are driving growth for us, although adequate and timely supply remains a moving target with the ongoing supply chain challenges. SWIM has also hit disproportionately by the supply chain delays, but we still expect this category to be a meaningful contributor to the spring-summer season. The return of in-person school festivals and travel has driven a strong bags business. Long bottoms continue to do well with a combination of new fits, proportions, colors, and fabrics. We believe the newness that is available across several departments will continue to be important in driving sales. The positive momentum in our business for the past five quarters continued into the early part of the first quarter of fiscal 2022, although our comparable net sales have recently started to decline relative to last year. Given the unique impacts of last year's pent-up demand exiting 2020's pandemic restrictions and federal stimulus payments, which created a significant acceleration in our business for the later half of the first quarter last year, we expect this recent decline relative to last year to continue and get more pronounced. While we continue to encounter risks and uncertainties relating to the COVID-19 pandemic, supply chain difficulties, labor challenges, and increasing costs generally, we remain cautiously optimistic at this time about our business prospects for fiscal 2022 as a whole to our pre-pandemic performance due to the newness in merchandise trends that are available. In terms of real estate, we continue to expect to open 15 to 20 new stores during fiscal 2022, 10 of which are nearing lease execution at this time. We expect six of those stores to open during the second quarter and four to open during the third quarter. Any additional new stores are expected to open in or around November. On existing leases, we are roughly halfway done with our fiscal 2022 lease decisions. We have been generally pleased with the results of our negotiations overall, yet in a few cases we have decided to close stores due to proposed rent increases. Our store traffic is still down relative to 2019, continuing a multi-year decline that started well before the pandemic hit. And thus, we remain focused on ensuring our leases make economic sense to us in that environment. As we noted during our last earnings call, our capital expenditure priorities for fiscal 2022 beyond new stores include upgrading our mobile app, and website platforms, IT infrastructure and cybersecurity investments, and improving distribution efficiencies. In order to position ourselves for longer-term anticipated future growth, we have also begun evaluating additional potential distribution investments to support that growth. We do not have any specific details to share at this time, but anticipate we'll have more to share about this at a future date. In closing, we remain cautiously optimistic about the current momentum in our business relative to pre-pandemic times and our long-term growth opportunities. I will now turn the call over to Mike to provide additional details on our fiscal 2021 fourth quarter operating performance and to introduce our fiscal 2022 first quarter outlook. Mike?