Tilly's, Inc.

Greetings and welcome to Tilly's first quarter 2026 earnings conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. And if anyone should require operator assistance during the conference, please press star zero or your telephone keypad. Please note that this conference is being recorded. I will now turn the call over to Gar Jackson with Investor Relations. Thank you, Gar. You may begin.

Good afternoon, and welcome to the TILES fiscal 2026 first quarter earnings call. Nate Smith, President and Chief Executive Officer, and Mike Henry, Executive Vice President and Chief Financial Officer, will discuss the company's business and operating results, followed by a Q&A session with analysts. For a copy of the TILES press release, please visit the investor relations section of the company's website at TILES.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 3rd, 2026, 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 2026 first 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 I will include a Q&A session after our prepared remarks. I now turn the call over to Nate.

Thanks, Gar, and to all for joining us today. The turnaround momentum that we began building in fiscal 2025 has carried meaningfully into the new year, and we are pleased with how we have started fiscal 2026. For the third consecutive quarter and ninth consecutive month, we delivered comparable net sales growth, with total sales landing at the top of our outlook range for the first quarter. We posted a robust 22.9% comparable net sales increase for the first quarter, with both stores and e-comm comping in excess of 20%. In what is historically our smallest sales quarter of the fiscal year, we narrowed our net loss to just under $8 million from last year's first quarter net loss of over 22 million, delivering our fourth consecutive quarter of year-over-year profit improvement and coming in one penny ahead of the upper end of our earnings per share outlook range. The trend of our business has been moving in the right direction, and it is doing so with increasing consistency. Returning to profitability in fiscal 2026 is our foremost priority. While there is still work ahead of us, the sales trends we have been seeing, assuming they continue, Give us genuine confidence that we're on the right path to potentially get there. Comparable net sales in fiscal May increased by 8.3% to start the second quarter, extending our streak of monthly comparable net sales growth to 10 straight fiscal months. That consistency is not something we take lightly. It reflects real progress in the business. We aim to continue building on this momentum as the year progresses. In terms of first quarter merchandise performance compared to last year's first quarter, all departments posted double digit comp sales gains. Performance was strong across both proprietary and third party brands with very few exceptions. Product margins improved by 400 basis points with improved full price selling from inventories that were more current in terms of aging versus a year ago. This was our sixth consecutive quarter delivering product margin rate improvement relative to the corresponding period of the prior year. We believe the work we have put in to more clearly understand and define our key customer profiles has helped us build and merchandise assortments both in-store and online with clearer strategy and focus than in the past. This in turn has resulted in greater and more consistent customer engagement for us as evidenced by both store and online traffic growth compared to last year's first quarter. and customer loyalty program growth of 10% in terms of customers with activity within the last year, and a doubling of our TikTok following since launching our TikTok shop last March to meet our customers where they spend much of their commercial lives. We believe the dual impact of improved product assortments that are merchandised well, blended with impactful marketing strategies has led to these results. And these results speak for themselves. Customers are coming back. We believe that our efforts are moving the needle in a real and measurable way. In terms of stores, all geographic markets posted double-digit comp sales gains relative to last year's first quarter. As planned, we opened one store and closed four during the first quarter. We currently expect to open two new stores in late July and one more in late October and to close one existing store in mid-July and another at the end of the fiscal year. The improvement in our business has us looking forward with optimism, including the possibility of expanding our net store footprint in fiscal 2027. We are not ready to commit to specific numbers or locations just yet, but we are having those conversations, and that alone marks a meaningful shift in how we are thinking about future opportunities of this business. We continue to invest in our infrastructure to improve operating efficiencies. Over the last several months, we have been reviewing and making changes to various strategic and tactical elements relating to our online business and digital marketing efforts, which we believe are beginning to generate improved site performance and efficiency. In addition, we expect to launch an AI-driven merchandise allocation tool before the holiday season to help us improve initial allocation accuracy across our stores and online. These are just a couple of examples among many others. that are underway with the overarching goal of improving our execution quality and operating efficiency. In closing, I want to take a moment to recognize what this team has accomplished. Turning a business around is hard work. It requires discipline, focus, and a willingness to make difficult decisions day after day. Our stores, field management, distribution centers, and home office have all risen to that challenge, and the results we are seeing are a direct reflection of their effort and commitment. I am genuinely proud of what we have built together over these past several quarters. That said, we are not done. Returning to historical levels of store sales, productivity, and the operating performance this business is capable of is the goal we're driving toward, and we know there is meaningful work still ahead of us to get to that point. We are also clear-eyed about the external environment. There are headwinds out there, but we have demonstrated that we can execute, and we enter the balance of fiscal 2026 with confidence in our plan and in the people carrying it out. The progress and momentum is real, and we look forward to continuing to share it with you. I'll now turn the call over to Mike to walk through the details of our fiscal 2026 first quarter operating performance and to introduce our second quarter outlook.