Tilly's, Inc.

Hello and welcome to TILI's second quarter 2023 results earning conference, earnings 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 from the question queue, you may 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 Second Quarter Earnings Call. Ed Thomas, President and CEO, and Michael Henry, Executive Vice President and CFO, will discuss the company's results and then host a Q&A session. For a copy of Tilly's earnings release, please visit the investor relations section of the company's website at tillys.com. From this 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, August 31, 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 that is included in our fiscal 2023 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 I 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. Our second quarter results exceeded our previously announced estimated outlook ranges for both net sales and earnings per share. The trend of our comp sales results improved to negative high single digits for each of June and July, following a negative 11.3% start in fiscal May. This improved sequential sales performance, coupled with diligent expense management, produced better bottom line results than we anticipated for the quarter. Our spring-summer product categories performed better during the second quarter than in the first quarter of this fiscal year, resulting in improved relative performance across all geographic markets, with the most significant improvement coming from our home state of California, where 40% of our stores reside. For the quarter, on a percentage basis, comps were positive in the Northwest, single-digit negative in eight of our geographic markets, including both Southern and Northern California, and double-digit negative in the remaining five markets. In terms of store transaction metrics, On a percentage basis, total transactions were down low double digits, while the average transaction value increased by low single digits compared to last year. From a merchandising perspective, for the second quarter, girls and footwear comped positive. Women's and boys were single digit negative, while men's and accessories were each double digit negative on a percentage basis. All departments improve sequentially from their first quarter performance and most have then improved further from the second quarter performance during August. We are optimistic that our new Chief Merchandising Officer and new Vice President of Merchandise Planning, both of who joined us in May, will help us continue to improve our performance going forward. In terms of store real estate, We expect to open three new stores in each of the third and fourth quarters, bringing our total new store count to seven for the year. We closed two stores during the second quarter. We continue to believe that we have ample opportunities to grow our total store count over the next several years. However, as we've said in the past, we will be very selective in our approach to new store openings. and we'll only open new stores that reflect what we believe to be appropriate lease economics to drive acceptable profitability relative to the sales environment we expect. Turning to the third quarter of fiscal 2023, which includes the peak of the back-to-school season, total comparable net sales through August 29th including both physical stores and ecom, decreased by 3.9% versus the comparable period of last year, continuing the sequential improvement in our comp sales trends in recent months. We have seen back-to-school shopping patterns this year that seem to indicate that our customers have been shopping later than in prior years, even seeing stronger results following what we anticipated to be the peak back-to-school shopping weeks for certain stores before them seeing results start to soften in the post-back-to-school period. Given this backdrop amid the broader economic environment, we are anticipating that our comp sales results may likely revert to pre-back to school levels following what was a need-based purchasing period during August. Overall, we feel good about our back-to-school and holiday merchandise assortment, and despite ongoing macroeconomic challenges, we are cautiously optimistic that we can produce a better comp store sales trend over the back half of the year than what we produced in the first half. We will continue to manage our business diligently relative to the environment with the goal of improving performance over time. I will now turn the call over to Mike to discuss our second quarter operating results in more detail and to introduce our third quarter outlook. Mike?