Tilly's, Inc.

Good afternoon and welcome to TILI's third quarter 2025 earnings conference call. All participants will be in a 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 a touch-tone phone. 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.

Thank you, Operator. Good afternoon and welcome to the Tilly's Fiscal 2025 Third Quarter Earnings Call. Nate Smith, President and Chief Executive Officer, and Michael Henry, Executive Vice President and Chief Financial Officer, will discuss the company's business and operating 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'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 Tilly's judgment and analysis only as of today, December 3rd, 2025, 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 2025 third quarter earnings release, which is furnished to the SEC today on Form 8K, as well as our other filings of 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 Nate.

Thank you, Gar, and good afternoon to everyone joining us today. I have now been with Tilly's for three and a half months. Having spent a good portion of my career on the brand side of the industry, I have always viewed Tilly's as a powerful retailer with a lot of opportunity, which is what attracted me to join the company. I've had the opportunity to get to know our team, familiarize myself with our processes, and participate in fiscal 2026 departmental budget meetings. We have a highly experienced and talented team that is incredibly passionate about this business. and is hyper-focused on efforts to get Tilly's back to a profitable and sustainable growth model. I've been impressed by the level of effort and commitment I've seen from our team, not only since I've arrived, but also by how hard they've worked to try to turn this business around prior to my arrival. We believe we are now seeing green shoots of progress from those collective efforts. I'm very excited to announce that the third quarter of fiscal 2025 produced our first positive quarterly comparable net sales result since the fourth quarter of fiscal 2021 with positive comps in each month of the quarter and positive comps in stores for each week of the quarter. Coming on the heels of a profitable second quarter, our third quarter performance gives us confidence that we have started to stabilize our business and are moving in the right direction. It is also worth mentioning that the positive sales trend in the third quarter has continued into the fourth quarter with double digit store comps and an accelerating sales trend overall in October and November compared to August and September. We believe that these results are a direct byproduct of our strategic initiatives around merchandise assortment, inventory planning, marketing, and expense management, and our team's ability to execute them. We are very encouraged by our progress, yet still have a lot to accomplish to reach our goal of producing profitability on a consistent basis. First and foremost, we must continue to grow sales in healthy ways. We plan to increase the sales penetration of our proprietary brands to approximately 40% on an annualized basis. An increase of approximately three points from our current year-to-date penetration to seek to improve product exclusivity and control over logistics, pricing, and product margins. Our customers have been choosing our proprietary brands to a greater extent this year than in the past, and we believe more opportunities exist. We must consistently remain on trend and produce a high-quality assortment to accomplish our goal. While doing that, we will continue to source and support lifestyle-relevant third-party brands, which has always been at the core of our multi-brand business and what our customers love about us. This is not expected to change. We do not plan to over-index on proprietary brands to the detriment of our important third-party brand partners, but we believe there is a better balance to be found that can generate greater sales and product margins for us overall. Additionally, we are leaning heavily into social commerce, and we've already seen rapid growth in sales this year from our TikTok shop launched back in March. As we aim to build stronger connections and consideration for Tilly's, it's important that we clearly understand who our customers are and how we think about building our merchandise assortments for them. To that end, we recently completed an extensive consumer segmentation survey that defines six primary consumer profiles that currently exist in our customer demographics and drive a substantial majority of our business. We serve a variety of consumer types, not just one, and we must carefully plan how our assortment choices speak to these consumer profiles to help them define their look and build greater following portilies over longer periods of time. We must now work to operationalize our understanding of these consumer profiles into our assortment building and marketing processes, to help us to continue to make progress towards improving our business. We will continue to invest in exclusive opportunities to build awareness, consideration, and following for Tilly's. We have been very active in this regard recently and plan to continue to be going forward. For example, in late October, we launched a Grand Ambassador campaign featuring one of the original and most followed TikTok content creators, Lauren Gray, who has over 50 million TikTok followers, in addition to being an actor, singer, and Tilly's customer while growing up. We will be hosting a VIP customer experience with Lauren in our Irvine Spectrum store this Saturday on December 6th. We believe she is a great representation of our brand ethos of fostering self-confidence and mental wellness through expression of personal style. We also held an exclusive pop-up event in our Irvine Spectrum store in late October with Malibu Sky brand founder and CEO Tia McKenzie, which was live streamed via TikTok. We believe these impressive and successful young women align with our brand very well, and we're looking forward to seeing the impact that these kinds of engagements can have for us as we continue to evolve how we think about utilizing our marketing resources. On the operational side of things, we are in the process of both implementing and evaluating various technological upgrades that we believe will improve our performance going forward. In September, we launched an AI-driven price optimization tool. Early indications are that this tool is leading to improved average unit retail selling prices with sharper, more surgical pricing decisions, leading to improved product margins and sell-through rates. In the second half of fiscal 2026, we plan to launch an AI-driven merchandise replenishment and allocation tool to improve inventory efficiency in our stores and online. We also plan to launch RFID in our stores to improve inventory accuracy customer experience, and in-store efficiency. Finally, we are exploring the use of agentic AI in our business and believe there are some exciting opportunities to improve operational efficiencies through automation and certain aspects of merchandise planning and allocation, distribution, store labor planning, and marketing campaign development. In closing, it's an exciting time to be here at Tilly's with ample opportunities to continue improving the business. As I said before, the team has worked very hard to get to this point. yet we have so much more in front of us that can be accomplished to continue building upon the momentum we are currently seeing and the progress made thus far. I'm excited to be here. The team is enthusiastic, and I look forward to discussing our progress with you as time goes on. I will now turn the call over to Mike to share the details about our third quarter operating results and our fourth quarter outlook.