Company Performance - Tilly's reported a quarterly loss of $0.43 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.32, and compared to a loss of $0.03 per share a year ago, indicating a significant decline in performance [1] - The company posted revenues of $143.44 million for the quarter ended October 2024, surpassing the Zacks Consensus Estimate by 1.85%, but down from $166.48 million in the same quarter last year [2] - Over the last four quarters, Tilly's has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Stock Performance - Tilly's shares have lost approximately 40.2% since the beginning of the year, contrasting with the S&P 500's gain of 27.6% [4] - 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 [7] Earnings Outlook - The current consensus EPS estimate for the coming quarter is -$0.13 on revenues of $170.92 million, and for the current fiscal year, it is -$0.92 on revenues of $590.52 million [8] - The estimate revisions trend for Tilly's is mixed, and future earnings expectations will depend on management's commentary during the earnings call [3][5] Industry Context - The Retail - Apparel and Shoes industry, to which Tilly's belongs, is currently in the top 31% of the Zacks industries, suggesting a favorable outlook compared to the bottom 50% [9]

Sales Performance - Total net sales for Q3 fiscal 2024 were $143.4 million, a decrease of 13.8% compared to the same period last year, primarily due to a calendar shift impacting back-to-school sales [6]. - Comparable net sales, including both physical stores and e-commerce, decreased by 3.4% relative to the comparable 13-week period ended November 4, 2023 [6]. - Net sales from physical stores were $111.3 million, a decrease of 16.0%, while e-commerce net sales were $32.2 million, a decrease of 5.4% [7][8]. - Year-to-date total net sales were $422.2 million, a decrease of 6.2%, with comparable net sales down by 6.8% [14]. - The company expects Q4 net sales to be in the range of approximately $149 million to $156 million, translating to an estimated comparable net sales decrease of approximately 9% to 5% [23]. - Net sales for the thirteen weeks ended November 2, 2024, were $143,442, a decrease of 13.8% compared to $166,475 for the same period last year [33]. Profitability - Gross profit was $37.2 million, or 25.9% of net sales, down from 29.3% last year, with product margins declining by 10 basis points [9]. - Gross profit for the thirteen weeks ended November 2, 2024, was $37,197, representing a gross margin of 25.9%, down from $48,719 and a gross margin of 29.2% in the prior year [33]. - The operating loss for Q3 was $14.1 million, or 9.8% of net sales, compared to a loss of $2.5 million, or 1.5% of net sales, last year [10]. - Operating loss for the thirteen weeks ended November 2, 2024, was $(14,054), compared to an operating loss of $(2,516) for the same period last year [33]. - Net loss for the thirty-nine weeks ended November 2, 2024, was $(32,565), compared to a net loss of $(13,940) for the same period last year [33]. Expenses - SG&A expenses were $51.3 million, or 35.7% of net sales, compared to 30.8% last year, largely due to increased e-commerce fulfillment costs [10]. Store Operations - The company plans to close 10 underperforming stores by the end of Q4, expecting to have 239 total stores open [24]. - The company opened 2 new stores during the quarter, bringing the total store count to 246 [38]. - The total gross square footage at the end of the quarter was 1,780,000 square feet [38]. Financial Position - As of November 2, 2024, the company had $51.7 million in cash and no debt, with total inventories increasing by 11.8% compared to the previous year [21]. - Total current assets decreased to $162,126 as of November 2, 2024, down from $176,059 in the previous quarter [31]. - Total liabilities decreased to $272,959 as of November 2, 2024, compared to $284,676 in the previous quarter [31]. - Cash and cash equivalents decreased to $26,407 as of November 2, 2024, from $47,027 in the previous quarter [31]. - The company reported a net cash used in operating activities of $(38,203) for the thirty-nine weeks ended November 2, 2024 [35].

Core Viewpoint - Tilly's reported 2Q24 results that met company guidance but showed significant challenges with an 8% decline in comparable sales, indicating ongoing issues with the business model and macroeconomic factors [1][2][4]. Financial Performance - Tilly's 2Q24 revenues increased by 2%, with a slight improvement in gross margins of 300 basis points, resulting in a break-even net income of a small loss of $70 thousand [4][5]. - The company has not experienced a positive comparable sales quarter since the 2021 fiscal year, with 2Q24 being the best comparable since then [4]. Future Outlook - The company anticipates more challenging results in 3Q24, expecting operating income losses of approximately $11 million due to the loss of an extra back-to-school week that contributed positively in 2Q24 [6]. - Comparable sales are projected to improve slightly, with a decline expected between 2% and 6%, as the company anniversaries a significant drop in sales from late 2022 and early 2023 [7]. Operational Challenges - Tilly's management has acknowledged issues with merchandising practices, which have hindered performance, and is working on addressing these problems [8]. - The company has launched a new brand campaign targeting micro-influencers to enhance brand awareness, although such efforts may take time to yield results [8]. Valuation Considerations - Tilly's current market capitalization is $145 million, with $75 million in cash and no debt, leading to an enterprise value of approximately $70 million [9]. - The company needs to achieve revenues of $675 million to break even, which represents an 8.5% increase from current levels, and $692 million to generate net profits of $7 million [11]. Business Model Viability - Tilly's is facing challenges beyond the macroeconomic environment, struggling to provide products that meet customer demands at acceptable price points, raising concerns about its long-term viability [10][12]. - The gap between a nonviable business model and a healthy return is minimal in terms of sales, suggesting potential speculative opportunities, but the lack of effective reforms and a challenging outlook make such speculation unattractive [12].

Financial Performance - Net sales for the thirteen weeks ended August 3, 2024, were $162.867 million, compared to $159.951 million for the same period in 2023[75] - Gross profit for the thirteen weeks ended August 3, 2024, was $49.920 million, representing 30.7% of net sales, up from 27.7% in the same period in 2023[75] - Operating loss for the thirteen weeks ended August 3, 2024, was $859,000, an improvement from the $2.685 million loss in the same period in 2023[75] - Net loss for the thirteen weeks ended August 3, 2024, was $69,000, compared to a net loss of $1.125 million in the same period in 2023[75] - Total cost of goods sold for the thirteen weeks ended August 3, 2024, was $112.947 million, representing 69.3% of net sales, down from 72.3% in the same period in 2023[75] - Selling, general and administrative expenses for the thirteen weeks ended August 3, 2024, were $50.779 million, representing 31.2% of net sales, up from 29.4% in the same period in 2023[75] - Total net sales for Q2 2024 were $162.9 million, a 1.8% increase compared to $160.0 million in Q2 2023, driven by a calendar shift impact[78] - Comparable store net sales decreased by 7.8% in Q2 2024, with physical store sales at $132.3 million (81.3% of total sales) and e-com sales at $30.5 million (18.7% of total sales)[78] - Gross profit for Q2 2024 was $49.9 million, or 30.7% of net sales, up from 27.7% in Q2 2023, due to improved product margins and lower markdowns[79] - SG&A expenses for Q2 2024 were $50.8 million, or 31.2% of net sales, up from 29.4% in Q2 2023, primarily due to increased store payroll and digital marketing expenses[80] - Operating loss for Q2 2024 was $0.9 million, or 0.5% of net sales, compared to $2.7 million, or 1.7% of net sales, in Q2 2023[81] - Total net sales for the first half of 2024 were $278.7 million, a 1.7% decrease compared to $283.6 million in the same period last year, with a comparable store net sales decline of 8.4%[81] - Gross profit for the first half of 2024 was $74.2 million, or 26.6% of net sales, up from 24.8% in the same period last year, driven by improved product margins[82] - SG&A expenses for the first half of 2024 were $95.9 million, or 34.4% of net sales, up from 31.8% in the same period last year, primarily due to increased store payroll and non-cash store asset impairment charges[83] - Net loss for the first half of 2024 was $19.7 million, or $0.66 per share, compared to a net loss of $13.1 million, or $0.44 per share, in the same period last year[85] Store Operations - The company operated 247 stores as of August 3, 2024, compared to 246 stores at the same time last year[65] - Store payroll and related expenses represented approximately 47% of total selling, general and administrative expenses in the first half of fiscal 2024[66] - The average hourly rate for store payroll in the first half of fiscal 2024 was 32% higher than in fiscal 2019 and 4% higher than in the first half of fiscal 2023[66] - Minimum wage increases are estimated to cost the company an additional $2 million during fiscal 2024 compared to fiscal 2023[66] Cash Flow and Capital - Working capital decreased by $20.1 million to $51.4 million at August 3, 2024, primarily due to lower cash and cash equivalents and an increase in accrued expenses[86][87] - Net cash provided by investing activities was $4.6 million this year compared to net cash used of $15.1 million last year[91] - Maturities of marketable securities in the first half of fiscal 2024 were $48.5 million, partially offset by purchases of $39.3 million and capital expenditures of $4.6 million[91] Credit Agreement - The company entered into a Credit Agreement with Wells Fargo Bank, providing a Revolving Facility of up to $65.0 million, with an uncommitted accordion feature allowing an increase of up to $12.5 million[91] - The Revolving Facility matures on April 27, 2026, and is secured by a lien on all company assets[91] - Borrowings under the Revolving Facility bear interest ranging from SOFR plus 1.50% to 2.00% or Base Rate plus 0.50% to 1.00%[91] - As of August 3, 2024, the company was eligible to borrow up to $63.0 million under the Credit Agreement with no outstanding borrowings[91] - The company utilized a $2.0 million irrevocable standby letter of credit under the Credit Agreement[91] Contractual Obligations and Market Risks - No material changes to contractual obligations as of August 3, 2024[92] - No material changes in market risks as of August 3, 2024[94]

Group 1 - Tilly's reported break-even quarterly earnings per share, surprising the market as the consensus estimate was a loss of $0.06, compared to a loss of $0.04 per share a year ago, indicating a 100% earnings surprise [1] - The company posted revenues of $162.87 million for the quarter ended July 2024, missing the Zacks Consensus Estimate by 0.57%, but showing an increase from $159.95 million year-over-year [2] - Tilly's shares have underperformed the market, losing about 34.5% since the beginning of the year, while the S&P 500 gained 15.7% [3] Group 2 - The current consensus EPS estimate for the coming quarter is -$0.17 on revenues of $146.69 million, and for the current fiscal year, it is -$0.83 on revenues of $597.25 million [7] - The Zacks Industry Rank for Retail - Apparel and Shoes is in the top 39% of over 250 Zacks industries, indicating that the industry outlook can significantly impact stock performance [8] Group 3 - Tilly's has surpassed consensus EPS estimates three times over the last four quarters and topped consensus revenue estimates two times in the same period [2] - The estimate revisions trend for Tilly's is currently mixed, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6]

Core Viewpoint - Tilly's continues to face significant operational challenges, with negative comparable sales and operating losses, leading to a Hold rating due to uncertainty in recovery to pre-pandemic profitability levels [1][8]. Financial Performance - In 1Q24, Tilly's reported a 9.4% decline in comparable sales year-over-year, with an operating loss of approximately $20.8 million and negative operating margins of nearly 18% [1][8]. - The company's revenue for the quarter was $115.86 million, reflecting a continued downward trend in sales performance [2][8]. - The gross margin improved by 130 basis points year-over-year, attributed to reduced markdowns and higher initial prices [8]. Management and Strategy - The new CEO has initiated operational changes, focusing on innovative marketing and improved order and warehouse management systems, while also reducing promotions and increasing prices [3][9]. - The company is attempting to shift its promotional strategy after previously offering merchandise at significantly reduced prices [8]. Valuation Considerations - With trailing twelve months (TTM) revenues of $615 million, even a further 5% decline in sales could yield an operating income of $12 million, resulting in an EV/NOPAT multiple of 10x against an enterprise value of $90 million [5]. - The current valuation may only be attractive if a recovery to pre-pandemic profitability can be forecasted, which remains uncertain [1][16]. Market Context - Tilly's has experienced a more than 30% decline in stock price since the last analysis, indicating market skepticism regarding its recovery potential [1][15]. - Comparatively, other retailers targeting similar demographics, such as Zumiez, have shown positive comparable sales, highlighting Tilly's struggles within the broader retail environment [14].

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 4, 2024 OR Table of Contents ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Commission file number: 001-35535 __________________________________________________ Washington, DC 20549 __________________________________________________ FORM 10-Q __________________________________________________ ...

Financial Data and Key Metrics Changes - Total net sales for Q1 2024 were $115.9 million, a decrease of 6.3% compared to the previous year [5] - Total comparable net sales decreased by 9.4%, with physical stores down 8.6% and e-commerce down 10.8% [5] - Pretax loss was $19.6 million or 16.9% of net sales, compared to a loss of $16.2 million or 13.1% of net sales last year [19] - Net loss was $19.6 million or $0.65 per share, compared to a net loss of $12 million or $0.40 per share last year [38] Business Line Data and Key Metrics Changes - Physical store sales represented 80.1% of total net sales, up from 79.1% last year, while e-commerce sales represented 19.9%, down from 20.9% [5] - Gross margin remained flat at 21% of net sales, with product margins improving by 130 basis points due to lower markdown rates and improved initial markups [18] Market Data and Key Metrics Changes - Total comparable net sales for May 2024 decreased by 8.4% compared to the same period last year [21] - Total inventories were up 1.8% year-over-year, but down 3% compared to the same week last year [20] Company Strategy and Development Direction - The company is focusing on long-term improvements despite short-term challenges, including implementing new merchandise planning and warehouse management systems [34][35] - Plans to enhance marketing efforts to attract new customers and re-engage lapsed shoppers are underway, with expectations for results to be seen in the third and fourth quarters [30][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing challenges in the consumer environment but expressed cautious optimism about potential improvements in sales and inventory management [35][66] - The company expects total net sales for Q2 2024 to be in the range of $160 million to $165 million, with a comparable net sales decline of approximately 10% to 7% [21] Other Important Information - The company ended Q1 2024 with total cash and marketable securities of $68 million, down from $93 million the previous year [20] - The company plans to have 247 total stores by the end of Q2 2024, compared to 246 at the end of the previous year's second quarter [23] Q&A Session Summary Question: Are there any signs of improvement in sales despite challenges? - Management noted positive signs from recent initiatives but cautioned against getting ahead of themselves [29] Question: How is the company planning to attract younger shoppers? - A new marketing campaign has been initiated, with results expected in the third and fourth quarters [31] Question: What is the balance between men's and women's merchandise performance? - Management indicated a focus on men's merchandise while maintaining a balance with women's offerings [45] Question: Any updates on the CEO search and merchant team changes? - No changes in plans for either position were reported [47] Question: What is the status of lease negotiations and store closures? - Management indicated ongoing negotiations with no specific updates on closures [48] Question: How will the sales shift impact earnings in Q3? - An estimated $18.4 million decline in sales for Q3 was noted, with potential earnings impacts [52][63] Question: What is the outlook for gross margins in Q2? - Management expects gross margin improvement but could not provide specific estimates [86]

This quarterly report represents an earnings surprise of -4.35%. A quarter ago, it was expected that this clothing and accessories retailer would post a loss of $0.22 per share when it actually produced a loss of $0.17, delivering a surprise of 22.73%. Tilly's shares have lost about 24.1% since the beginning of the year versus the S&P 500's gain of 12.3%. Tilly's (TLYS) came out with a quarterly loss of $0.48 per share versus the Zacks Consensus Estimate of a loss of $0.46. This compares to loss of $0.40 pe ...

Exhibit 99.1 Tilly's, Inc. Reports Fiscal 2024 First Quarter Operating Results GAAP Net Loss Per Share of $(0.65); Non-GAAP Net Loss Per Share of $(0.48) Non-GAAP Net Loss Per Share in Middle of Outlook Range Irvine, CA – June 6, 2024 – Tilly's, Inc. (NYSE: TLYS, the "Company") today announced financial results for the first quarter of fiscal 2024 ended May 4, 2024. Fiscal 2024 First Quarter Operating Results Overview The following comparisons refer to the Company's operating results for the first quarter o ...