Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point for fast-moving stocks, which can lead to limited upside or downside risks [2] - A safer approach involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify these opportunities [3] Group 2: Tilly's (TLYS) Stock Analysis - Tilly's has shown a price increase of 9.9% over the past four weeks, indicating growing investor interest [4] - The stock has gained 22.1% over the past 12 weeks, demonstrating its ability to deliver positive returns over a longer timeframe [5] - TLYS has a Momentum Score of B, suggesting it is an opportune time to invest in the stock [6] - The stock has received a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which typically attract more investors [7] - TLYS is trading at a Price-to-Sales ratio of 0.11, indicating it is relatively undervalued, as investors pay only 11 cents for each dollar of sales [7] Group 3: Additional Investment Opportunities - Besides TLYS, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - The Zacks Premium Screens offer over 45 different strategies tailored to help investors find winning stock picks [9]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than the traditional "buying low and selling high" strategy, aiming for quicker profits [1] Group 1: Momentum Investing Characteristics - Momentum investing can be risky as stocks may lose momentum if their valuations exceed future growth potential, leading to potential losses for investors [2] - A safer approach involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify such opportunities [3] Group 2: Tilly's (TLYS) Stock Analysis - Tilly's (TLYS) has shown a significant price increase of 37.7% over the past four weeks, indicating growing investor interest [4] - The stock has gained 65.2% over the past 12 weeks, demonstrating its ability to deliver positive returns over a longer timeframe [5] - TLYS has a beta of 1.42, suggesting it moves 42% more than the market, indicating fast-paced momentum [5] - TLYS holds a Momentum Score of A, suggesting it is an opportune time to invest in the stock [6] - The stock has a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which typically attract more investor interest [7] - TLYS is trading at a Price-to-Sales ratio of 0.10, indicating it is undervalued at 10 cents for each dollar of sales, providing room for growth [7] Group 3: Additional Investment Opportunities - Besides TLYS, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - Investors can explore over 45 Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [9]

[Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section outlines forward-looking statements and key risks that may cause actual results to differ [Overview of Forward-Looking Statements](index=4&type=section&id=Overview%20of%20Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements regarding financial condition, operations, plans, and future performance, which are subject to various risks and uncertainties that could cause actual results to differ materially from expectations - Forward-looking statements relate to current expectations and projections concerning financial condition, results of operations, plans, objectives, strategies, future performance, and business[8](index=8&type=chunk) - Statements are identified by words such as 'anticipate', 'estimate', 'expect', 'project', 'plan', 'intend', 'believe', 'may', 'might', 'will', 'should', 'can have', 'likely'[8](index=8&type=chunk) - All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations[8](index=8&type=chunk) [Key Risks and Uncertainties](index=4&type=section&id=Key%20Risks%20and%20Uncertainties) The company identifies numerous risks that could impact its financial results, including operating losses, inflation, consumer spending declines, supply chain issues, intense competition, and the ability to adapt to changing fashion trends and economic conditions - Risks include recent operating losses and potential need for borrowing/additional liquidity[8](index=8&type=chunk) - Impacts of inflation on consumer spending, expense management, operating results, and financial condition are significant concerns[8](index=8&type=chunk) - Ability to adapt to declines in consumer confidence, manage inventory, and compete effectively in a highly competitive retail environment are critical[8](index=8&type=chunk) - Dependence on foreign-made merchandise makes the company susceptible to international trade conditions, including tariffs[8](index=8&type=chunk) - Other risks include ability to identify and respond to fashion trends, secure desirable lease arrangements, successfully open/operate/close stores, generate adequate cash flow, and manage information technology systems and data security[8](index=8&type=chunk) [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents unaudited financial statements, management's discussion, market risk, and controls [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited consolidated financial statements for Tilly's, Inc., including balance sheets, statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, financial instruments, and other relevant financial information for the reported interim periods [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) This section details the company's financial position, including assets, liabilities, and stockholders' equity Consolidated Balance Sheet Highlights (in thousands) | Metric | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :-------------------------------- | :------------- | :--------------- | :------------- | | Cash and cash equivalents | $50,680 | $21,056 | $36,749 | | Marketable securities | — | $25,653 | $39,947 | | Merchandise inventories | $81,229 | $69,178 | $95,011 | | Total current assets | $150,570 | $130,960 | $194,422 | | Total assets | $345,531 | $342,463 | $429,197 | | Total current liabilities | $132,687 | $99,383 | $143,028 | | Total liabilities | $263,031 | $241,592 | $302,424 | | Total stockholders' equity | $82,500 | $100,871 | $126,773 | - Cash and cash equivalents increased significantly to **$50.7 million** as of August 2, 2025, from **$21.1 million** at February 1, 2025, while marketable securities were depleted[15](index=15&type=chunk) - Total stockholders' equity decreased to **$82.5 million** as of August 2, 2025, from **$100.9 million** at February 1, 2025, and **$126.8 million** at August 3, 2024[15](index=15&type=chunk) [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) This section presents the company's revenues, expenses, and net income or loss for interim periods Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :--------------------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Net sales | $151,256 | $162,867 | $258,867 | $278,723 | | Gross profit | $49,102 | $49,920 | $70,387 | $74,233 | | Operating income (loss) | $2,678 | $(859) | $(20,011) | $(21,647) | | Net income (loss) | $3,165 | $(69) | $(18,987) | $(19,690) | | Basic net income (loss) per share | $0.11 | $(0.00) | $(0.63) | $(0.66) | | Diluted net income (loss) per share | $0.10 | $(0.00) | $(0.63) | $(0.66) | - For the thirteen weeks ended August 2, 2025, net sales decreased by **7.1%** YoY, but the company reported a net income of **$3.2 million**, a significant improvement from a net loss of **$69 thousand** in the prior year period[17](index=17&type=chunk) - For the twenty-six weeks ended August 2, 2025, net sales decreased by **7.1%** YoY, with a net loss of **$19.0 million**, an improvement from a net loss of **$19.7 million** in the prior year period[17](index=17&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This section details net income and other comprehensive income components for interim periods Consolidated Statements of Comprehensive Income (Loss) Highlights (in thousands) | Metric | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :---------------------------------------------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Net income (loss) | $3,165 | $(69) | $(18,987) | $(19,690) | | Net change in unrealized (loss) gain on available-for-sale securities, net of tax | $(159) | $98 | $(203) | $133 | | Comprehensive income (loss) | $3,006 | $29 | $(19,190) | $(19,557) | - Comprehensive income for the thirteen weeks ended August 2, 2025, was **$3.0 million**, a significant increase from **$29 thousand** in the prior year, despite an unrealized loss on available-for-sale securities[20](index=20&type=chunk) - For the twenty-six weeks ended August 2, 2025, comprehensive loss was **$19.2 million**, an improvement from **$19.6 million** in the prior year, also impacted by unrealized losses on securities[20](index=20&type=chunk) [Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section outlines changes in equity accounts, including net income and share-based compensation Changes in Stockholders' Equity (in thousands) | Metric | Balance at Feb 1, 2025 | Net Loss | Share-based Compensation Expense | Net Change in Unrealized Loss | Balance at Aug 2, 2025 | | :-------------------------------- | :--------------------- | :------- | :------------------------------- | :---------------------------- | :--------------------- | | Total Stockholders' Equity | $100,871 | $(18,987) | $819 | $(203) | $82,500 | - Total stockholders' equity decreased from **$100.9 million** at February 1, 2025, to **$82.5 million** at August 2, 2025, primarily due to the net loss of **$19.0 million** and unrealized losses on available-for-sale securities[25](index=25&type=chunk) - Share-based compensation expense contributed **$819 thousand** to additional paid-in capital for the twenty-six weeks ended August 2, 2025[25](index=25&type=chunk) [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section reports cash generated and used by operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :--------------------------------------- | :------------------------- | :------------------------- | | Net cash provided by (used in) operating activities | $5,850 | $(15,203) | | Net cash provided by investing activities | $23,774 | $4,631 | | Net cash provided by financing activities | — | $294 | | Increase (decrease) in cash and cash equivalents | $29,624 | $(10,278) | | Cash and cash equivalents, end of period | $50,680 | $36,749 | - Net cash provided by operating activities significantly improved to **$5.9 million** for the twenty-six weeks ended August 2, 2025, compared to net cash used of **$15.2 million** in the prior year, primarily due to efficient inventory management and timing of payments[28](index=28&type=chunk)[136](index=136&type=chunk) - Net cash provided by investing activities increased to **$23.8 million**, driven by maturities of marketable securities (**$25.8 million**) and lower capital expenditures (**$2.1 million**)[28](index=28&type=chunk)[138](index=138&type=chunk) [Notes to the Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed explanations and information supporting the financial statements [Note 1: Description of the Company and Basis of Presentation](index=13&type=section&id=Note%201%3A%20Description%20of%20the%20Company%20and%20Basis%20of%20Presentation) Tillys is a specialty retailer of casual apparel, footwear, and accessories, operating 232 stores in 33 states and an e-commerce website. The financial statements are unaudited and prepared in accordance with GAAP for interim reporting, with certain disclosures omitted as permitted by SEC rules - Tillys operates **232 stores** in **33 states** as of August 2, 2025, and an e-commerce website (www.tillys.com)[30](index=30&type=chunk) - The company offers an extensive assortment of iconic global, emerging, and proprietary brands rooted in an active, outdoor, and social lifestyle[30](index=30&type=chunk) - Unaudited consolidated financial statements are prepared in accordance with GAAP for interim reporting, with certain information and footnote disclosures omitted as permitted by SEC rules[33](index=33&type=chunk)[34](index=34&type=chunk) [Note 2: Summary of Significant Accounting Policies](index=13&type=section&id=Note%202%3A%20Summary%20of%20Significant%20Accounting%20Policies) This note details the company's significant accounting policies, including revenue recognition for store and e-commerce sales, gift cards, and loyalty programs. It also covers policies for property and equipment, leases, income taxes, and recently adopted and new accounting standards - Revenue from store sales is recognized when merchandise is received and paid for, while e-commerce revenue is recognized upon shipment[37](index=37&type=chunk) Net Sales by Channel (in thousands) | Channel | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :---------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Retail stores | $122,737 | $132,334 | $208,649 | $225,156 | | E-com | $28,519 | $30,533 | $50,218 | $53,567 | | Total net sales | $151,256 | $162,867 | $258,867 | $278,723 | Percentage of Net Sales by Brand Type | Brand Type | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :---------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Third-party | **63 %** | **66 %** | **63 %** | **66 %** | | Proprietary | **37 %** | **34 %** | **37 %** | **34 %** | - The company recognizes gift card breakage revenue over the redemption period based on historical patterns and accrues for estimated sales returns[39](index=39&type=chunk) - Leasehold improvements are the largest component of property and equipment, net, which is depreciated using the straight-line method[43](index=43&type=chunk) - The effective income tax rate for the twenty-six weeks ended August 2, 2025, was **0.9%** of pre-tax loss, impacted by a full deferred tax asset valuation allowance and refunds of certain income tax credit carryforwards[54](index=54&type=chunk) [Note 3: Marketable Securities](index=18&type=section&id=Note%203%3A%20Marketable%20Securities) The company held no marketable securities as of August 2, 2025, having previously invested in commercial paper and fixed income securities. Gains on maturities of commercial paper were recognized in other income - As of August 2, 2025, the company did not hold any marketable securities[60](index=60&type=chunk) Gains on Investments for Commercial Paper (in thousands) | Period | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Gains on investments | $184 | $338 | $399 | $928 | [Note 4: Asset-Backed Credit Agreement](index=18&type=section&id=Note%204%3A%20Asset-Backed%20Credit%20Agreement) Tilly's has a $65.0 million asset-backed revolving credit facility with Wells Fargo Bank, extended to June 25, 2027. As of August 2, 2025, the company was in compliance with all covenants, had $63.0 million available to borrow, and no outstanding borrowings, with only a $2.0 million standby letter of credit utilized - The company has a **$65.0 million** asset-based, senior secured revolving credit facility, extended to June 25, 2027[63](index=63&type=chunk) - As of August 2, 2025, the company was in compliance with all covenants and had no outstanding borrowings under the Credit Agreement[69](index=69&type=chunk) - The company had **$63.0 million** eligible to borrow and utilized a **$2.0 million** irrevocable standby letter of credit[69](index=69&type=chunk) [Note 5: Commitments and Contingencies](index=20&type=section&id=Note%205%3A%20Commitments%20and%20Contingencies) This note addresses the company's indemnifications, commitments, and guarantees made in the normal course of business, for which no liability has been recorded. It also states that there are no legal proceedings expected to have a material adverse effect on the company's financial condition or results of operations - The company has made indemnifications, commitments, and guarantees in the normal course of business, but no liability has been recorded for these as their maximum potential future payments are not limited and duration may be indefinite[70](index=70&type=chunk) - As of August 2, 2025, no legal proceedings are expected to have a material adverse effect on the company's consolidated results of operations or financial position[71](index=71&type=chunk) [Note 6: Fair Value Measurements](index=20&type=section&id=Note%206%3A%20Fair%20Value%20Measurements) The company measures financial assets at fair value using a three-level hierarchy, with most cash equivalents and marketable securities valued using Level 1 or Level 2 inputs. Non-recurring fair value measurements are applied to long-lived assets for impairment assessments, resulting in non-cash impairment charges for certain stores - Fair value is determined using a three-level hierarchy: **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than **Level 1**), and **Level 3** (unobservable inputs)[72](index=72&type=chunk)[73](index=73&type=chunk) - As of August 2, 2025, the company had no **Level 3** financial assets[76](index=76&type=chunk) Non-Recurring Non-Cash Impairment Charges (in thousands) | Metric | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :-------------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Impairment charges | $100 | $800 | $1,100 | $2,500 | | Number of stores with impairment | 6 | 6 | 14 | 17 | [Note 7: Share-Based Compensation](index=22&type=section&id=Note%207%3A%20Share-Based%20Compensation) Tilly's grants stock options and restricted stock awards (RSAs) under its 2012 Plan. Stock options vest over four years, while RSAs for Board members vest over two years and RSUs for employees vest over four years. Share-based compensation expense for the twenty-six weeks ended August 2, 2025, was $819 thousand - The 2012 Plan authorizes up to **8,613,900 shares** for issuance of options, shares, or rights to acquire Class A common stock, with **2,529,228 shares** available for future issuance as of August 2, 2025[80](index=80&type=chunk) - Stock options and RSUs generally vest over **four years**, while RSAs for Board members vest over **two years**[81](index=81&type=chunk)[87](index=87&type=chunk) Share-Based Compensation Expense (in thousands) | Expense Type | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :-------------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Cost of goods sold | $85 | $98 | $153 | $177 | | Selling, general, and administrative | $294 | $504 | $666 | $990 | | Total share-based compensation | $379 | $602 | $819 | $1,167 | - As of August 2, 2025, there was **$3.1 million** of total unrecognized share-based compensation expense with a weighted average remaining recognition period of **2.3 years**[88](index=88&type=chunk) [Note 8: Net Income (Loss) Per Share](index=23&type=section&id=Note%208%3A%20Net%20Income%20%28Loss%29%20Per%20Share) Basic and diluted net income (loss) per share are calculated based on weighted average shares outstanding. For the thirteen weeks ended August 2, 2025, diluted EPS was $0.10, while for the twenty-six weeks, it was a loss of $0.63 per share Net Income (Loss) Per Share (in thousands, except per share amounts) | Metric | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :------------------------------------------------ | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Net income (loss) | $3,165 | $(69) | $(18,987) | $(19,690) | | Basic net income (loss) per share | $0.11 | $(0.00) | $(0.63) | $(0.66) | | Diluted net income (loss) per share | $0.10 | $(0.00) | $(0.63) | $(0.66) | - Dilutive effect of in-the-money stock options and RSAs was **175 thousand shares** for the thirteen weeks ended August 2, 2025, but zero for the twenty-six week periods due to anti-dilutive effects[90](index=90&type=chunk)[91](index=91&type=chunk) [Note 9: Segment Information](index=24&type=section&id=Note%209%3A%20Segment%20Information) Tillys operates as a single, consolidated retail segment, with its Co-Founder, Executive Chairman, President, and CEO serving as the Chief Operating Decision Maker (CODM). Performance is primarily measured by operating income (loss) on a consolidated basis - Tillys operates in one consolidated operating and reportable segment: a retailer of casual apparel, footwear, and accessories[92](index=92&type=chunk) - The CODM reviews financial information on a consolidated basis and measures segment performance primarily based on operating income (loss)[92](index=92&type=chunk)[94](index=94&type=chunk) Segment Operating Income (Loss) (in thousands) | Metric | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :---------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Operating income (loss) | $2,678 | $(859) | $(20,011) | $(21,647) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of Tillys' business, discusses known trends impacting operations, details how performance is assessed, and analyzes the results of operations for the second quarter and first half of fiscal 2025 compared to the prior year. It also covers liquidity, capital resources, and critical accounting policies [Overview](index=25&type=section&id=Overview) This section describes Tillys' business as a specialty retailer of apparel, footwear, and accessories - Tillys is a specialty retailer of casual apparel, footwear, and accessories for young men, young women, boys, and girls[99](index=99&type=chunk) - As of August 2, 2025, the company operated **232 stores** in **33 states**, a decrease of **15 stores** compared to the prior year, and also sells products through its e-commerce website[99](index=99&type=chunk) [Known or Anticipated Trends](index=25&type=section&id=Known%20or%20Anticipated%20Trends) This section discusses key economic and operational trends influencing future financial performance - Persistent inflation, tariffs, and economic recession concerns are expected to negatively impact consumer spending and the company's operating results[100](index=100&type=chunk) - Increased costs for products, labor (store payroll **36%** higher than pre-pandemic fiscal 2019), shipping, and digital marketing are impacting expenses[101](index=101&type=chunk) - The effective income tax rate is expected to remain near zero due to a full valuation allowance on deferred tax assets, given recent operating losses[102](index=102&type=chunk) - The company expects to close **16 stores** during fiscal 2025, with **11** already closed by August 2025[103](index=103&type=chunk) [How We Assess the Performance of Our Business](index=25&type=section&id=How%20We%20Assess%20the%20Performance%20of%20Our%20Business) This section explains key financial and operational metrics used to evaluate business performance - Key performance indicators include net sales, comparable store sales, gross profit, selling, general and administrative (SG&A) expenses, and operating income (loss)[104](index=104&type=chunk) - Comparable store net sales include both physical stores and e-commerce, managed on an omni-channel basis, and exclude gift card breakage income and e-com shipping fees[107](index=107&type=chunk) - Gross profit is affected by initial markups, markdowns, shrinkage, buying, distribution, and occupancy costs, as well as shifts in product mix (proprietary vs. third-party brands)[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) - SG&A expenses comprise store selling expenses and corporate general and administrative expenses, with store selling expenses generally varying with net sales and store growth, while G&A expenses are less directly proportional[111](index=111&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section analyzes financial performance, including sales, gross profit, and operating income [Second Quarter (13 Weeks) Ended August 2, 2025 Compared to Second Quarter (13 Weeks) Ended August 3, 2024](index=28&type=section&id=Second%20Quarter%20%2813%20Weeks%29%20Ended%20August%202%2C%202025%20Compared%20to%20Second%20Quarter%20%2813%20Weeks%29%20Ended%20August%203%2C%202024) For the second quarter, total net sales decreased by 7.1%, but the company achieved an operating income of $2.7 million (1.8% of net sales) compared to an operating loss of $0.9 million (0.5% of net sales) in the prior year. This improvement was driven by a 210 basis point increase in product margins due to higher initial markups and lower markdowns, despite deleveraging in buying, distribution, and occupancy costs Second Quarter Financial Performance (13 Weeks, in thousands, except percentages) | Metric | Aug 2, 2025 | Aug 3, 2024 | Change (%) | | :--------------------------------------- | :---------- | :---------- | :--------- | | Net Sales | $151,256 | $162,867 | (7.1)% | | Comparable store net sales change | (4.5)% | (7.8)% | **3.3 pp** | | Gross Profit | $49,102 | $49,920 | (1.6)% | | Gross Profit % of Net Sales | **32.5%** | **30.7%** | **1.8 pp** | | SG&A Expenses | $46,424 | $50,779 | (8.6)% | | SG&A Expenses % of Net Sales | **30.7%** | **31.2%** | (**0.5 pp**) | | Operating Income (Loss) | $2,678 | $(859) | N/A | | Operating Income (Loss) % of Net Sales | **1.8%** | (**0.5%**) | **2.3 pp** | | Net Income (Loss) | $3,165 | $(69) | N/A | | Diluted EPS | $0.10 | $(0.00) | N/A | - Product margins improved by **210 basis points** due to higher initial markups and lower markdowns, reflecting reduced and more current inventory[118](index=118&type=chunk) - SG&A expenses decreased by **$4.4 million**, primarily due to decreases in store payroll, non-cash impairment charges, e-com fulfillment temporary labor, and corporate payroll[119](index=119&type=chunk) [First Half (26 Weeks) Ended August 2, 2025 Compared to First Half (26 Weeks) Ended August 3, 2024](index=29&type=section&id=First%20Half%20%2826%20Weeks%29%20Ended%20August%202%2C%202025%20Compared%20to%20First%20Half%20%2826%20Weeks%29%20Ended%20August%203%2C%202024) For the first half of fiscal 2025, total net sales decreased by 7.1%, resulting in an operating loss of $20.0 million (7.7% of net sales), an improvement from $21.6 million (7.8% of net sales) in the prior year. Product margins improved by 140 basis points, but buying, distribution, and occupancy costs deleveraged due to lower sales First Half Financial Performance (26 Weeks, in thousands, except percentages) | Metric | Aug 2, 2025 | Aug 3, 2024 | Change (%) | | :--------------------------------------- | :---------- | :---------- | :--------- | | Net Sales | $258,867 | $278,723 | (7.1)% | | Comparable store net sales change | (5.5)% | (8.4)% | **2.9 pp** | | Gross Profit | $70,387 | $74,233 | (5.2)% | | Gross Profit % of Net Sales | **27.2%** | **26.6%** | **0.6 pp** | | SG&A Expenses | $90,398 | $95,880 | (5.7)% | | SG&A Expenses % of Net Sales | **34.9%** | **34.4%** | **0.5 pp** | | Operating Loss | $(20,011) | $(21,647) | (7.6)% | | Operating Loss % of Net Sales | (**7.7%**) | (**7.8%**) | **0.1 pp** | | Net Loss | $(18,987) | $(19,690) | (3.6)% | | Diluted EPS | $(0.63) | $(0.66) | N/A | - Product margins improved by **140 basis points** due to higher initial markups and lower markdowns, reflecting reduced and more current inventory[125](index=125&type=chunk) - SG&A expenses decreased by **$5.5 million**, primarily due to decreases in store payroll, non-cash impairment charges, and corporate payroll[126](index=126&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to generate and manage cash, including sources and capital plans - The company relies on cash flows from operating activities, cash on hand, cash equivalents, and marketable securities as primary sources of liquidity[131](index=131&type=chunk) - Working capital decreased by **$13.7 million** to **$17.9 million** at August 2, 2025, from **$31.6 million** at February 1, 2025, primarily due to an increase in accounts payable and accrued expenses, net of merchandise inventories[133](index=133&type=chunk) Cash Flow Summary (26 Weeks, in thousands) | Activity | Aug 2, 2025 | Aug 3, 2024 | | :--------------------------------------- | :---------- | :---------- | | Net cash provided by (used in) operating activities | $5,850 | $(15,203) | | Net cash provided by investing activities | $23,774 | $4,631 | | Net cash provided by financing activities | — | $294 | | Net increase (decrease) in cash and cash equivalents | $29,624 | $(10,278) | - The company does not anticipate needing to borrow under its **$65.0 million** asset-backed credit facility during fiscal 2025, having **$63.0 million** available as of August 2, 2025[131](index=131&type=chunk)[146](index=146&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As of August 2, 2025, there were no material changes to the market risks previously described in the company's Annual Report on Form 10-K for the fiscal year ended February 1, 2025 - No material changes in market risks were identified as of August 2, 2025, compared to the previous Annual Report on Form 10-K[149](index=149&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of August 2, 2025. No material changes in internal control over financial reporting were identified during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective at the reasonable assurance level as of August 2, 2025[150](index=150&type=chunk) - No material changes in internal control over financial reporting occurred during the thirteen weeks ended August 2, 2025[151](index=151&type=chunk) - Management acknowledges the inherent limitations of control systems, which can only provide reasonable, not absolute, assurance against errors and fraud[152](index=152&type=chunk)[153](index=153&type=chunk) [PART II. OTHER INFORMATION](index=32&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part includes legal proceedings, risk factors, equity sales, other disclosures, and exhibits [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference the information on legal proceedings from Note 5 to the consolidated financial statements, indicating no material adverse effects are expected from current legal matters - Information on legal proceedings is incorporated by reference from Note 5, which states no current legal proceedings are expected to have a material adverse effect[155](index=155&type=chunk)[71](index=71&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) This item refers readers to the detailed discussion of risks affecting the business in the 'Risk Factors' section of the company's most recent Annual Report on Form 10-K - Readers are directed to the 'Risk Factors' section in the Annual Report on Form 10-K for a detailed discussion of risks affecting the business[156](index=156&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is marked as 'Not applicable,' indicating no unregistered sales of equity securities or use of proceeds occurred during the reporting period - This item is not applicable for the reporting period[157](index=157&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) During the quarterly period ended August 2, 2025, no officers or directors adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No officers or directors adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter[158](index=158&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the company's equity and incentive plan, an offer letter, CEO and CFO certifications, and interactive data files in iXBRL format - Exhibits include the Tilly's, Inc. Third Amended and Restated 2012 Equity and Incentive Award Plan and an Offer Letter for Nathan Smith[159](index=159&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer are included pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350[159](index=159&type=chunk) - Interactive data files (iXBRL) for the financial statements are provided as Exhibit 101[159](index=159&type=chunk)

Company Performance - Tilly's reported quarterly earnings of $0.1 per share, exceeding the Zacks Consensus Estimate of a loss of $0.04 per share, compared to break-even earnings per share a year ago, representing an earnings surprise of +350.00% [1] - The company posted revenues of $151.26 million for the quarter ended July 2025, missing the Zacks Consensus Estimate by 1.78%, and down from $162.87 million year-over-year [2] - Over the last four quarters, Tilly's has surpassed consensus EPS estimates just once and topped consensus revenue estimates only once [2] Stock Performance - Tilly's shares have declined approximately 57.9% since the beginning of the year, while the S&P 500 has gained 9.1% [3] - The current Zacks Rank for Tilly's is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the coming quarter is -$0.37 on revenues of $141.1 million, and for the current fiscal year, it is -$1.48 on revenues of $550.3 million [7] - The outlook for the Retail - Apparel and Shoes industry, where Tilly's operates, is currently in the bottom 37% of over 250 Zacks industries, which may impact the stock's performance [8]

Financial Data and Key Metrics Changes - The company reported a comparable net sales decrease of 4.5%, which was within the outlook range and represented a second consecutive quarter of sequential trend improvement from 2024 [9] - Total net sales were $151.3 million, a decrease of 7.1% compared to the previous year [12] - Earnings per share were $0.10, beating the earnings outlook range and marking the first profitable quarter since 2022 [10][15] - The company ended the quarter with total liquidity of $114 million and no borrowings [16] Business Line Data and Key Metrics Changes - Net sales from physical stores decreased by 7.3%, representing 81.1% of total net sales, while e-commerce net sales decreased by 6.6%, accounting for 18.9% of total net sales [13] - Gross margin improved by 180 basis points to 32.5% of net sales compared to 30.7% last year [13] - Total SG&A expenses were $46.4 million, a decrease of $4.4 million and 50 basis points as a percentage of net sales compared to last year's second quarter [14] Market Data and Key Metrics Changes - Total comparable net sales for fiscal August increased by 0.9% compared to last year, with comparable net sales from stores increasing by 4.5% [17] - E-commerce net sales decreased by 12.1% during fiscal August, primarily due to a distribution decision by a third-party brand [17] Company Strategy and Development Direction - The company aims to stabilize its business and improve product assortment while enhancing marketing efforts to build customer awareness [10][20] - Management is focused on reducing inventory levels and improving inventory aging, with a 14.5% reduction in total balance sheet inventory compared to last year [17] - The company plans to remain debt-free throughout fiscal 2025 and expects to close additional stores as part of its strategy [19] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about continued improvement in performance under new leadership [20] - The company anticipates a modest impact from tariffs on product costs for the remainder of fiscal 2025, with potential larger impacts in fiscal 2026 [12] - Management noted historical trends of sales slowdown after the back-to-school season, which informs their conservative outlook for the upcoming months [34] Other Important Information - The company ended the second quarter with 232 total stores, a net decrease of 15 stores or 6.1% compared to a year ago [13] - The company has 45 lease decisions remaining to be made by the end of the fiscal year, which may result in additional store closures [19] Q&A Session Summary Question: Broader opportunity and early priorities at Tilly's - The new CEO emphasized the importance of focusing on successful strategies while identifying areas for improvement [22][24] Question: Progression of comparable sales during the second quarter - Management noted a sequential improvement in sales, with fiscal May at -2%, June at -7.6%, and July at -3% [28] Question: Drivers of the positive comp in August - All apparel departments showed positive movement in August, contributing to overall sales improvement [28] Question: Outlook for the third quarter and potential sales erosion - Management indicated that historical patterns suggest a slowdown post-back-to-school, which informed their conservative sales outlook [34] Question: Gross margin and product margin improvements - The company reported improved product margins due to better inventory management and reduced markdowns [36][38] Question: Impact of tariffs and vendor pricing - Management noted that some vendors are adjusting prices in response to tariffs, but the net impact on costs has been limited [39][40] Question: Opportunities for further cost containment in SG&A - Management expects to see continued savings in store labor and other expenses in the upcoming quarters [42][43]

Executive Summary and Business Highlights [Executive Summary and Business Highlights](index=1&type=section&id=Executive%20Summary%20and%20Business%20Highlights) Tilly's highlights improved Q2 FY25 operating results from stabilization efforts and announces a new Chief Executive Officer [Management Commentary and Strategic Direction](index=1&type=section&id=Management%20Commentary%20and%20Strategic%20Direction) Tilly's reported improved Q2 FY25 comparable net sales trends from stabilization efforts and appointed Nate Smith as the new CEO - Comparable net sales trend has **improved each quarter** since the end of fiscal 2024, including through fiscal August to begin the third quarter[2](index=2&type=chunk) - **Nate Smith** has been welcomed as the **new Chief Executive Officer**[2](index=2&type=chunk) Fiscal 2025 Second Quarter Financial Review [Q2 FY25 Operating Results Overview](index=1&type=section&id=Q2%20FY25%20Operating%20Results%20Overview) Tilly's reported a **7.1% decrease** in total net sales for Q2 FY25, achieving an operating income of **$2.7 million** and net income of **$3.2 million** | Metric | Q2 FY25 (Millions) | Q2 FY24 (Millions) | Change (%) | | :----- | :----------------- | :----------------- | :--------- | | Total Net Sales | $151.3 | $162.9 | -7.1% | | Operating Income (Loss) | $2.7 | $(0.9) | N/A | | Net Income (Loss) | $3.2 | $(0.1) | N/A | | Diluted EPS | $0.10 | $(0.00) | N/A | [Q2 FY25 Sales Performance](index=1&type=section&id=Q2%20FY25%20Sales%20Performance) Total net sales for Q2 FY25 **decreased by 7.1%** to **$151.3 million**, with comparable net sales declining by **4.5%** across physical stores and e-commerce | Sales Metric | Q2 FY25 | Q2 FY24 | Change (%) | | :----------- | :------ | :------ | :--------- | | Total Net Sales | $151.3 million | $162.9 million | -7.1% | | Total Comparable Net Sales | -4.5% | N/A | N/A | | Physical Store Net Sales | $122.7 million | N/A | -7.3% | | E-com Net Sales | $28.5 million | N/A | -6.6% | - Company ended Q2 FY25 with **232 total stores**, a **decrease of 15 stores** or 6.1%, compared to **247 total stores** at the end of Q2 FY24[3](index=3&type=chunk) [Q2 FY25 Profitability Analysis](index=1&type=section&id=Q2%20FY25%20Profitability%20Analysis) Gross profit percentage **improved to 32.5%** due to better product margins, and reduced SG&A expenses led to a **$2.7 million** operating income | Profitability Metric | Q2 FY25 | Q2 FY24 | Change | | :------------------- | :------ | :------ | :----- | | Gross Profit | $49.1 million | $49.9 million | -1.6% | | Gross Profit % of Net Sales | 32.5% | 30.7% | +180 bps | | SG&A Expenses | $46.4 million | $50.8 million | -8.7% | | SG&A % of Net Sales | 30.7% | 31.2% | -50 bps | | Operating Income (Loss) | $2.7 million | $(0.9) million | N/A | - Product margins **improved by 210 basis points** primarily due to higher initial markups and lower markdowns as a result of operating with reduced, more current inventory[3](index=3&type=chunk) - Occupancy costs **decreased by $1.7 million**, primarily due to operating **15 fewer net stores** compared to last year[3](index=3&type=chunk) Fiscal 2025 First Half Financial Review [H1 FY25 Operating Results Overview](index=2&type=section&id=H1%20FY25%20Operating%20Results%20Overview) For H1 FY25, Tilly's reported a **7.1% decrease** in total net sales, with a narrowed operating loss of **$20.0 million** and a net loss of **$19.0 million** | Metric | H1 FY25 (Millions) | H1 FY24 (Millions) | Change (%) | | :----- | :----------------- | :----------------- | :--------- | | Total Net Sales | $258.9 | $278.7 | -7.1% | | Operating Loss | $(20.0) | $(21.6) | -7.4% | | Net Loss | $(19.0) | $(19.7) | -3.6% | | Diluted EPS | $(0.63) | $(0.66) | -4.5% | [H1 FY25 Sales Performance](index=2&type=section&id=H1%20FY25%20Sales%20Performance) Total net sales for H1 FY25 **decreased by 7.1%** to **$258.9 million**, with comparable net sales down **5.5%** across all channels | Sales Metric | H1 FY25 | H1 FY24 | Change (%) | | :----------- | :------ | :------ | :--------- | | Total Net Sales | $258.9 million | $278.7 million | -7.1% | | Total Comparable Net Sales | -5.5% | N/A | N/A | | Physical Store Net Sales | $208.6 million | N/A | -7.3% | | E-com Net Sales | $50.2 million | N/A | -6.3% | [H1 FY25 Profitability Analysis](index=2&type=section&id=H1%20FY25%20Profitability%20Analysis) Gross profit percentage for H1 **improved to 27.2%** from better product margins, and reduced SG&A expenses narrowed the operating loss to **$20.0 million** | Profitability Metric | H1 FY25 | H1 FY24 | Change | | :------------------- | :------ | :------ | :----- | | Gross Profit | $70.4 million | $74.2 million | -5.1% | | Gross Profit % of Net Sales | 27.2% | 26.6% | +60 bps | | SG&A Expenses | $90.4 million | $95.9 million | -5.7% | | SG&A % of Net Sales | 34.9% | 34.4% | +50 bps | | Operating Loss | $(20.0) million | $(21.6) million | -7.4% | - Product margins **improved by 140 basis points** primarily due to higher initial markups and lower markdowns as a result of operating with reduced, more current inventory[8](index=8&type=chunk) Balance Sheet and Liquidity [Financial Position and Capital Expenditures](index=2&type=section&id=Financial%20Position%20and%20Capital%20Expenditures) Tilly's maintained strong liquidity of **$113.7 million**, with **increased cash**, reduced inventories, and significantly lower capital expenditures | Metric | As of Aug 2, 2025 (Millions) | As of Aug 3, 2024 (Millions) | Change (%) | | :----- | :--------------------------- | :--------------------------- | :--------- | | Total Available Liquidity | $113.7 | N/A | N/A | | Cash and Cash Equivalents | $50.7 | $36.7 | +37.9% | | Undrawn Borrowing Capacity | $63.0 | N/A | N/A | | Total Inventories | N/A | N/A | -14.5% | | Year-to-Date Capital Expenditures | $2.1 | $4.6 | -54.3% | Fiscal 2025 Third Quarter Outlook [Q3 FY25 Financial Guidance](index=3&type=section&id=Q3%20FY25%20Financial%20Guidance) Tilly's projects Q3 FY25 net sales between **$134 million** and **$140 million**, anticipating a net loss of **$10.5 million to $7 million** | Metric | Q3 FY25 Outlook | Q3 FY24 Actual | | :----- | :-------------- | :------------- | | Net Sales | $134M - $140M | N/A | | Comparable Net Sales | -2% to +2% | N/A | | SG&A Expenses | ~$47M | N/A | | Net Loss | $10.5M - $7M | N/A | | Diluted EPS | $(0.35) - $(0.23) | $(0.43) | - Comparable net sales for fiscal August ended August 30, 2025, **increased by 0.9%** relative to the comparable period of last year[9](index=9&type=chunk) [Q3 FY25 Store Operations and Liquidity Projections](index=3&type=section&id=Q3%20FY25%20Store%20Operations%20and%20Liquidity%20Projections) The company expects to end Q3 FY25 with **230 stores** and projects total liquidity of **$83 million to $86 million** without credit facility borrowings | Metric | Q3 FY25 Outlook | Q3 FY24 Actual | | :----- | :-------------- | :------------- | | Quarter-Ending Store Count | 230 | 246 | | Total Liquidity | $83M - $86M | N/A | | Cash & Cash Equivalents | $20M - $25M | N/A | | Undrawn Borrowing Capacity | $61M - $63M | N/A | - The Company expects to close two additional stores in the fourth quarter, although more are possible at the end of the fiscal year depending upon the outcome of lease renewal negotiations[11](index=11&type=chunk) - The Company does not anticipate needing to initiate borrowings under its credit facility at any time during fiscal 2025[11](index=11&type=chunk) Consolidated Financial Statements [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets detail Tilly's financial position, including assets, liabilities, and equity as of August 2, 2025, and prior periods | ASSETS (in thousands) | Aug 2, 2025 | Feb 1, 2025 | Aug 3, 2024 | | :-------------------- | :---------- | :---------- | :---------- | | Cash and cash equivalents | $50,680 | $21,056 | $36,749 | | Merchandise inventories | $81,229 | $69,178 | $95,011 | | Total current assets | $150,570 | $130,960 | $194,422 | | TOTAL ASSETS | $345,531 | $342,463 | $429,197 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | | | | | Total current liabilities | $132,687 | $99,383 | $143,028 | | Total long-term liabilities | $130,344 | $142,209 | $159,396 | | Total liabilities | $263,031 | $241,592 | $302,424 | | Total stockholders' equity | $82,500 | $100,871 | $126,773 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $345,531 | $342,463 | $429,197 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) The statements of operations detail Tilly's revenues, expenses, and net income (loss) for Q2 and H1 FY25, showing a shift to net income in Q2 | (In thousands, except per share data) | Thirteen Weeks Ended Aug 2, 2025 | Thirteen Weeks Ended Aug 3, 2024 | Twenty-Six Weeks Ended Aug 2, 2025 | Twenty-Six Weeks Ended Aug 3, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :--------------------------------- | :------------------------------- | | Net sales | $151,256 | $162,867 | $258,867 | $278,723 | | Gross profit | $49,102 | $49,920 | $70,387 | $74,233 | | Selling, general and administrative expenses | $46,424 | $50,779 | $90,398 | $95,880 | | Operating income (loss) | $2,678 | $(859) | $(20,011) | $(21,647) | | Net income (loss) | $3,165 | $(69) | $(18,987) | $(19,690) | | Diluted net income (loss) per share | $0.10 | $(0.00) | $(0.63) | $(0.66) | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The statements of cash flows break down cash from operating, investing, and financing activities for H1 FY25, showing increased cash from operations | (In thousands) | Twenty-Six Weeks Ended Aug 2, 2025 | Twenty-Six Weeks Ended Aug 3, 2024 | | :------------- | :--------------------------------- | :--------------------------------- | | Net cash provided by (used in) operating activities | $5,850 | $(15,203) | | Net cash provided by investing activities | $23,774 | $4,631 | | Net cash provided by financing activities | $0 | $294 | | Change in cash and cash equivalents | $29,624 | $(10,278) | | Cash and cash equivalents, end of period | $50,680 | $36,749 | Operational Metrics and Corporate Information [Store Count and Square Footage](index=8&type=section&id=Store%20Count%20and%20Square%20Footage) This section provides a quarterly breakdown of Tilly's store count changes and total gross square footage from Q1 2024 to Q2 2025 | Quarter | Store Count at Beginning | New Stores Opened | Stores Permanently Closed | Store Count at End | Total Gross Square Footage (in thousands) | | :------ | :----------------------- | :---------------- | :------------------------ | :----------------- | :---------------------------------------- | | 2024 Q1 | 248 | 2 | 4 | 246 | 1,784 | | 2024 Q2 | 246 | 1 | 0 | 247 | 1,791 | | 2024 Q3 | 247 | 0 | 1 | 246 | 1,780 | | 2024 Q4 | 246 | 4 | 10 | 240 | 1,730 | | 2025 Q1 | 240 | 1 | 3 | 238 | 1,707 | | 2025 Q2 | 238 | 1 | 7 | 232 | 1,657 | [About Tillys](index=3&type=section&id=About%20Tillys) Tillys is a destination specialty retailer offering casual apparel, footwear, and accessories for young demographics, operating **231 stores** and an e-commerce site - Tillys is a destination specialty retailer of casual apparel, footwear, and accessories for young men, young women, boys and girls[10](index=10&type=chunk) - Headquartered in Irvine, California, Tillys currently operates **231 total stores** across 33 states, as well as its website, www.tillys.com[10](index=10&type=chunk) [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) Details for the conference call with analysts to discuss financial results are provided, including date, time, dial-in numbers, and webcast access - A conference call with analysts to discuss these financial results is scheduled for September 3, 2025, at 4:30 p.m. ET (1:30 p.m. PT)[9](index=9&type=chunk) - Analysts can dial (877) 300-8521 (domestic) or (412) 317-6026 (international) or access a live webcast at www.tillys.com under 'Investor Relations'[9](index=9&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section cautions readers about forward-looking statements, highlighting inherent risks and uncertainties that could impact actual results - Statements regarding current operating expectations, comparable net sales trends, impacts of inflation, tariffs, potential recession, and future financial condition are forward-looking statements[12](index=12&type=chunk) - These statements involve risks and uncertainties such as supply chain difficulties, ability to respond to changing customer preferences, and competition, detailed in the Annual Report on Form 10-K[12](index=12&type=chunk) - Readers are urged not to place undue reliance on these forward-looking statements, and the company does not undertake any obligation to update or alter them[12](index=12&type=chunk)

Core Insights - Impact Analytics has partnered with Tilly's, Inc. to enhance inventory optimization and business intelligence across Tilly's operations [1][4] - Tilly's will implement InventorySmart® and MondaySmart®, AI-native solutions designed to optimize allocation, replenishment, and enterprise reporting [2][3] Company Overview - Tilly's is a specialty retailer offering casual apparel, footwear, and accessories, operating 234 stores across 33 states and an online platform [5] - Impact Analytics provides AI-native SaaS solutions aimed at maximizing profitability and customer satisfaction through advanced data insights and predictive analytics [6] Technology and Solutions - InventorySmart® will improve inventory productivity, in-stock rates, and reduce excess inventory by ensuring optimal product placement [3] - MondaySmart® will provide real-time, AI-driven business insights, facilitating faster decision-making for Tilly's leadership [3][4] Strategic Importance - The partnership is expected to drive agility, profitability, and customer impact for Tilly's, aligning with the trend of retailers modernizing their inventory and merchandising strategies [4]

Financial Performance - Total net sales for the first quarter of fiscal 2025 were $107.6 million, a decrease of 7.1% compared to $115.9 million in the same period last year[111]. - Comparable store net sales decreased by 7.0% relative to the comparable 13-week period ended May 4, 2024[114]. - Gross profit was $21.3 million, or 19.8% of net sales, down from $24.3 million, or 21.0% of net sales, last year[115]. - Net sales from physical stores were $85.9 million, a decrease of 7.4%, while e-commerce net sales were $21.7 million, a decrease of 5.8%[117]. - Operating loss was $22.7 million, or 21.1% of net sales, compared to $20.8 million, or 17.9% of net sales last year[118]. - Net loss was $22.2 million, or $0.74 net loss per share, compared to $19.6 million, or $0.65 net loss per share last year[120]. Store Operations - The company expects to close 12 stores during fiscal 2025, with seven already closed by May 2025[98]. - The company operated 238 stores as of May 3, 2025, down from 246 stores at the same time last year[93]. - Average net sales per physical store decreased to $353, down from $373 in the prior year[112]. Expenses - Store payroll and payroll-related expenses represented approximately 45% of total selling, general and administrative expenses in the first quarter of fiscal 2025[95]. - SG&A expenses were $44.0 million, or 40.9% of net sales, compared to $45.1 million, or 38.9% of net sales last year[116]. Cash Flow and Financing - Net cash used in operating activities was $8.1 million this year, a decrease of $17.6 million compared to $25.7 million last year[126]. - Net cash provided by investing activities was $14.3 million this year, compared to net cash used of $1.6 million last year[129]. - As of May 3, 2025, the company had no outstanding borrowings under the Credit Agreement and was eligible to borrow up to $55.4 million[135]. - The company expects to finance operations and capital expenditures with existing cash on hand and cash flows from operations[121]. Taxation - The effective income tax rate is expected to be near zero until the company can return to generating consistent operating profits[97]. - The income tax benefit was $0.1 million, or 0.6% of pre-tax loss, compared to $13 thousand, or 0.1% of pre-tax loss last year[119]. Future Outlook - The company anticipates that a consistent comparable net sales decrease of approximately 10% or more would necessitate borrowing under its credit facility[96]. - Working capital decreased to $10.5 million from $31.6 million, a decrease of $21.1 million[123].

Financial Performance - Tilly's reported a quarterly loss of $0.74 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.66, and compared to a loss of $0.48 per share a year ago, indicating a significant decline in performance [1] - The company posted revenues of $107.61 million for the quarter ended April 2025, missing the Zacks Consensus Estimate by 0.54%, and down from $115.86 million in the same quarter last year [2] - Over the last four quarters, Tilly's has surpassed consensus EPS estimates only once and has topped consensus revenue estimates just once [2] Stock Performance - Tilly's shares have declined approximately 68.5% since the beginning of the year, contrasting sharply with the S&P 500's gain of 1.5% [3] - The current Zacks Rank for Tilly's is 3 (Hold), suggesting that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.06 on revenues of $147.22 million, and for the current fiscal year, it is -$1.24 on revenues of $549.87 million [7] - The trend of estimate revisions for Tilly's is mixed, and future changes in estimates will be closely monitored following the recent earnings report [6][7] Industry Context - The Retail - Apparel and Shoes industry, to which Tilly's belongs, is currently ranked in the bottom 35% of over 250 Zacks industries, indicating a challenging environment [8] - Empirical research suggests that the performance of stocks can be significantly influenced by the outlook for the industry [8]

Financial Data and Key Metrics Changes - The company's first quarter net sales were $107.6 million, a decrease of 7.1% compared to the previous year [8] - Comparable net sales decreased by 7%, an improvement from an 11.2% decrease in the previous quarter [4] - Gross margin was 19.8% of net sales, down from 21% last year, while product margins improved by 40 basis points [9] - The net loss was $22.2 million or $0.74 per share, compared to a net loss of $19.6 million or $0.65 per share last year [11] Business Line Data and Key Metrics Changes - Net sales from physical stores decreased by 7.4%, while e-commerce net sales decreased by 5.8% [8] - Physical stores represented 79.8% of total net sales, while e-commerce represented 20.2% [8] Market Data and Key Metrics Changes - The company ended the first quarter with 238 total stores, a net decrease of eight stores compared to a year ago [9] - Total balance sheet inventory was 3.8% lower than at the end of last year's first quarter [11] Company Strategy and Development Direction - The company is actively pursuing marketing opportunities to build mindshare with current and prospective customers, including launching a TikTok shop [5][6] - The focus is on solidifying the company's position at the intersection of youth culture, fashion, and music to improve customer affinity [8] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the potential stabilization of the business, noting improvements in merchandise assortment and customer engagement [15] - The company expects to end the second quarter with total liquidity of approximately $106 million to $111 million, remaining debt-free [13] Other Important Information - The company anticipates a comparable net sales range of a decrease of 5% to flat for the second quarter [12] - There are plans to close two additional stores in the third quarter, with up to 15 more closures possible depending on lease negotiations [13] Q&A Session Summary Question: Can you unpack the cadence of the first quarter and provide transaction versus ticket breakdown? - February was down 5.7%, March down 13.8%, and April was up 1.5%. Traffic was down low single digits, but average sale was up 1% in May [18] Question: Any impact from last year's calendar shift in June and July? - The bulk of sales volume occurs at the end of the quarter, with May typically representing only about 25% of the second quarter [20] Question: What is the outlook on merchandise assortments? - Merchandise is selling better, particularly in the junior category, and traffic has been consistently improving [22][31] Question: What is the expected impact of tariffs on margins? - No material impact is expected from tariffs for the remainder of the year, with product margins anticipated to be consistent with last year [25][26] Question: Have there been discussions with activist investors? - No discussions have occurred with new investors, and no requests for board seats have been made [38] Question: What is the outlook on occupancy costs? - Occupancy costs will continue to be lower due to store closures, but leveraging will depend on achieving flat or positive comparable sales [40][41]