Tilly's, Inc.

Good afternoon and welcome to the TILES first quarter 2023 results conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Gar Jackson, Investor Relations. Please go ahead.

Good afternoon, and welcome to the Tilly's Fiscal 2023 First Quarter Earnings Call. Ed Thomas, President and CEO, and Michael Henry, TFO, 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 1, 2023, 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 as included in our fiscal 2023 first 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, and thank you for joining us today. Our first quarter results were within our estimated outlook ranges. April results were less negative in terms of comparable net sales than in February and March. We believe the combination of an uncertain and inflationary economic environment for our teen, young adult, young family customer demographic in prolonged unseasonable weather in California during February and March, along with certain assortment issues resulting in a weak quarter overall. Not surprisingly, considering the cold wet weather in the West in particular, our spring summer product categories were more challenged than our winter product categories during the first quarter. Footwear performed best with a single digit negative sales comp percentage compared to last year, while all other merchandising departments produced double digit negative sales comp results. California, with 40% of our total stores, was our weakest performing geographic area in both stores and online. Total store transactions decreased by a high teens percentage during the quarter although better in April than earlier in the quarter. The less negative April trend as carried into the second quarter thus far, our total comparable sales, net sales through May 30th decreased 11.5%. Our spring-summer product categories have performed better than they did during the first quarter, led by women's and girls, which have come positive compared to last year. On an overall basis, footwear and girls have calmed positive thus far in the second quarter, while all other departments remain negative. We generally feel good about our spring-summer merchandise assortment, and our inventory aging was more current entering the second quarter compared to last year. However, the negative impacts of inflation and other macroeconomic factors on our young customer demographic remain a concern in the near term. In positive news, we hired our new chief merchandising officer, Laura Janney, who joined us on May 8th. Having previously been in senior merchandise positions at both Hudson's Bay and Nordstrom, we're excited to see what her tremendous experience will bring to our business, particularly as her influence on our merchandise assortment becomes apparent over time. We also just hired a new vice president of merchandise planning and allocation with extensive experience who started last week. We believe these two new leaders give us a meaningful opportunity to take a fresh look at how we do business and help us get back on track to delivering sales growth over time. Despite short-term challenges, we continue to invest in our business for the long term. We just relaunched our mobile app in early May with several customer-friendly features. We will continue adding features to this new app over the next couple of quarters. We also continue to make progress in developing a new warehouse management system to improve efficiencies of labor and inventory management across our two distribution facilities here in Irvine. We currently expect that this important upgrade will be completed in early fiscal 2024 and that it will better position us for future growth. In terms of store real estate, we now expect to have seven new store openings during fiscal 2023. One store opened in late March, four are expected to open during the third quarter, and two are expected to open in the fourth quarter. Three stores originally planned for this year have been pushed into 2024 due to delays in timing of spaces being made available to us. For existing stores, we are approximately 60% complete with our fiscal 2023 lease decisions. Given the current environment, we continue to approach all lease renewals with reasonable conservatism to manage lease costs as much as possible. At this time, we expect to close three stores during fiscal 2023, two of which have already closed. We remain open to additional store growth opportunities where economics makes sense. I now turn the call over to Mike to provide additional details on our fiscal 2023 first quarter operating performance and to introduce our second quarter outlook.