PART I [Business Overview](index=6&type=section&id=Item%201.%20Business) Tillys is a specialty retailer operating 248 stores and an e-commerce platform, offering diverse apparel and accessories with a dynamic merchandising and marketing approach - Tillys operated **248 stores** in 33 states as of February 3, 2024, in addition to its e-commerce platform[21](index=21&type=chunk) - E-commerce net sales represented approximately **22.1% of total net sales** in fiscal 2023, up from 21.0% in fiscal 2022[26](index=26&type=chunk) Merchandise Sales Mix (Fiscal Years 2021-2023) | Category | FY2023 | FY2022 | FY2021 | | :--------- | :----- | :----- | :----- | | Third-party | 68 % | 68 % | 70 % | | Proprietary | 32 % | 32 % | 30 % | | Total | 100 % | 100 % | 100 % | - The company plans to open **5 new stores** during fiscal 2024 within existing markets[29](index=29&type=chunk)[41](index=41&type=chunk) [Company Strengths](index=6&type=section&id=Our%20Strengths) Tillys is a destination retailer known for its broad and differentiated assortment of apparel, footwear, and accessories from various brands - Tillys is a destination retailer offering a broad and differentiated assortment of apparel, footwear, and accessories from iconic global, emerging, and proprietary brands[24](index=24&type=chunk) - The company employs a dynamic merchandise model, adjusting its mix based on store size, location, and evolving fashion trends, with multiple weekly product shipments[24](index=24&type=chunk) - Tillys utilizes a flexible real estate strategy, successfully operating stores in various retail centers across 33 states[24](index=24&type=chunk) [Growth Strategy](index=7&type=section&id=Growth%20Strategy) The company aims to enhance comparable store sales, expand operating margins, and grow its e-commerce platform through strategic investments and marketing - The company aims to drive comparable store sales improvement by offering new, on-trend merchandise, increasing brand awareness through multi-pronged marketing, and enhancing customer experience[26](index=26&type=chunk) - Operating margin expansion is targeted through net sales growth, store unit growth, improving product margins from fiscal 2023 lows, and continued process improvements[26](index=26&type=chunk) - Significant growth opportunities are identified in e-commerce, which represented **22.1% of total net sales** in fiscal 2023, with continued investment in customer-facing technologies and digital marketing[26](index=26&type=chunk) [Merchandising, Purchasing, and Planning and Allocation](index=8&type=section&id=Merchandising%2C%20Purchasing%2C%20and%20Planning%20and%20Allocation) Tillys manages its merchandise mix with a focus on third-party and proprietary brands, ensuring product relevance and quality through strong vendor relationships - Third-party brands constituted **68% of total net sales** in fiscal 2023, with no single brand exceeding **4% of total net sales**[29](index=29&type=chunk) - Proprietary brands accounted for **32% of total net sales** in fiscal 2023, with **RSQ** being the top-selling proprietary brand at **21%** and **Full Tilt** at **6%**[30](index=30&type=chunk) - The merchandising team focuses on product relevance, quality, fit, availability, cost, and speed of production, maintaining strong relationships with third-party vendors and utilizing proprietary brands to respond to trends[34](index=34&type=chunk)[36](index=36&type=chunk) [Stores](index=11&type=section&id=Stores) As of February 3, 2024, Tillys operated 248 stores across 33 states, with average sales per store and per square foot declining in fiscal 2023 - As of February 3, 2024, Tillys operated **248 stores** across 33 states, with an average size of approximately **7,300 square feet** per store[38](index=38&type=chunk) Store Operating Data (Fiscal Years 2021-2023) | Metric | FY2023 | FY2022 | FY2021 | | :-------------------------------------- | :------ | :------ | :------ | | Stores operating at end of period | 248 | 249 | 241 | | Average net sales per brick-and-mortar store (in thousands) | $1,944 | $2,171 | $2,511 | | Average net sales per square foot | $267 | $297 | $342 | - In fiscal 2023, the company opened **7 new stores** and closed **8**, resulting in a net decrease of **1 store**[41](index=41&type=chunk) [E-Commerce](index=13&type=section&id=E-Commerce) Tillys' e-commerce platform generated $137 million in net sales in fiscal 2023, serving as a key sales and marketing channel with recent omni-channel investments - Online net sales reached **$137 million** in fiscal 2023, accounting for **22.1% of total net sales**[47](index=47&type=chunk) - The e-commerce platform serves as both a sales channel and a marketing tool, reaching customers in all 50 states and D.C., despite physical stores being in only 33 states[47](index=47&type=chunk) - Recent investments include a new point-of-sale system, upgraded website platform, and order management system to enhance omni-channel capabilities, such as fulfilling online orders from stores and in-store pickup[26](index=26&type=chunk)[47](index=47&type=chunk) [Marketing and Advertising](index=13&type=section&id=Marketing%20and%20Advertising) Tillys employs an omni-channel marketing strategy, leveraging its loyalty program, social media, digital advertising, and community partnerships - Tillys employs an omni-channel marketing strategy, including a loyalty program ('Tillys Rewards'), social media engagement, digital advertising, brand partnerships, catalogs, and community outreach[48](index=48&type=chunk)[53](index=53&type=chunk) - The 'Tillys Rewards' loyalty program offers points for purchases, early access to products, events, and promotions, utilizing data for personalized customer experiences[48](index=48&type=chunk) - The company partners with vendors for exclusive events, co-op marketing, and community outreach through the Tilly's Life Center Foundation and 'We Care Program'[53](index=53&type=chunk) [Distribution](index=14&type=section&id=Distribution) Tillys operates two distribution facilities in Irvine, California, and is upgrading its warehouse management systems to improve efficiency - Tillys operates a **126,000 square foot** distribution facility and an **81,000 square foot** e-commerce fulfillment center, both located in Irvine, California[49](index=49&type=chunk)[50](index=50&type=chunk) - The company is upgrading its warehouse management systems in fiscal 2024 to improve efficiency and support future growth across both store and e-commerce operations[51](index=51&type=chunk)[53](index=53&type=chunk) [Information Technology](index=14&type=section&id=Information%20Technology) Tillys has invested in upgrading its e-commerce platform, mobile apps, and store POS systems, with further plans for warehouse and planning software optimization in fiscal 2024 - In fiscal 2023, Tillys upgraded its e-commerce platform and launched native mobile apps (Android and iOS) with loyalty integration, Apple Pay, and omni-channel functionality[53](index=53&type=chunk) - All store point-of-sale hardware was upgraded, internet data connectivity bolstered, and new delivery methods integrated for enhanced customer convenience[53](index=53&type=chunk) - Future plans for fiscal 2024 include optimizing warehouse management software and upgrading planning and allocation platforms to improve merchandising mix[53](index=53&type=chunk) [Competition](index=15&type=section&id=Competition) The retail apparel, accessories, and footwear industry is highly competitive, with Tillys facing numerous rivals, many of whom possess greater resources - The retail apparel, accessories, and footwear industry is highly competitive, with Tillys competing against specialty chains, department stores, off-price retailers, online marketplaces (e.g., Amazon, Shein), and direct marketers[54](index=54&type=chunk) - Many competitors possess greater financial, marketing, and other resources, potentially enabling more aggressive pricing or marketing strategies[55](index=55&type=chunk) [Environmental, Social, Governance (ESG) Matters](index=16&type=section&id=Environmental%2C%20Social%2C%20Governance%20%28ESG%29%20Matters) Tillys is committed to sustainability, community support, and strong corporate governance practices - Tillys maintains a sustainability program, offering products made with recycled materials and organic cotton, and is a member of the Better Cotton Initiative (BCI)[61](index=61&type=chunk)[62](index=62&type=chunk) - The company supports communities through the Tilly's Life Center Foundation, 'We Care' program, product donations, and provides employee health/wellness programs and diversity training[64](index=64&type=chunk)[66](index=66&type=chunk) - Governance includes a Board with a majority of independent directors, independent committees, a Code of Ethical Business Conduct, and policies for whistleblower reporting and insider trading[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk) [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from economic conditions, competition, IT vulnerabilities, concentrated ownership, and regulatory compliance - Consumer spending may be adversely impacted by economic conditions such as inflation, interest rates, and employment levels, as well as non-economic factors like geopolitical issues and unseasonable weather[72](index=72&type=chunk) - The retail industry is highly competitive, with many competitors possessing greater financial and marketing resources, and the company faces challenges in differentiating its offerings and maintaining competitive advantage[74](index=74&type=chunk)[75](index=75&type=chunk) - The company is subject to risks related to data protection and privacy laws, cybersecurity threats, and potential infringement of intellectual property rights, which could lead to increased costs, enforcement actions, or reputational harm[108](index=108&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk)[114](index=114&type=chunk) - Founders Hezy Shaked and Tilly Levine control a substantial majority of the total voting power, which may prevent other stockholders from influencing corporate decisions and could adversely impact the trading value of Class A common stock[118](index=118&type=chunk) [Unresolved Staff Comments](index=28&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the SEC regarding the company's filings - No unresolved staff comments were reported[138](index=138&type=chunk) [Cybersecurity](index=28&type=section&id=Item%201C.%20Cyber%20Security) Tillys has implemented a NIST CSF-based cybersecurity risk management program, overseen by the Board, with no material risks identified - Tillys' cybersecurity risk management program is based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF) and is integrated into its overall enterprise risk management program[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) - The Board of Directors delegates cybersecurity risk oversight to the Nominating and Corporate Governance Committee, which receives quarterly reports and updates on material incidents from management[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - The Chief Information Officer is responsible for assessing and managing material cybersecurity risks, overseeing internal personnel and external consultants, and efforts to prevent, detect, mitigate, and remediate incidents[145](index=145&type=chunk) - No risks from known cybersecurity threats that have materially affected or are reasonably likely to materially affect the company's operations, business strategy, results of operations, or financial condition have been identified[141](index=141&type=chunk) [Properties](index=29&type=section&id=Item%202.%20Properties) Tillys leases all its operational facilities, including corporate headquarters, distribution centers, and 248 retail stores, primarily in Irvine, California - The company leases approximately **172,000 square feet** for its corporate headquarters and retail support/distribution center in Irvine, California, with a lease terminating on December 31, 2027[146](index=146&type=chunk) - An **81,000 square foot** e-commerce fulfillment center is also leased in Irvine, California, with its lease expiring on October 31, 2031[147](index=147&type=chunk) - All **248 stores**, encompassing about **1.8 million square feet**, are under operating leases, typically with **10-year terms** and renewal options[148](index=148&type=chunk) [Legal Proceedings](index=30&type=section&id=Item%203.%20Legal%20Proceedings) Tillys is not currently involved in any legal proceedings expected to have a material adverse effect on its financial condition or operations - Information on legal proceedings is incorporated by reference from Note 10 to the consolidated financial statements[149](index=149&type=chunk) - As of the date of the consolidated financial statements, no legal proceedings are expected to have a material adverse effect on the company's financial condition, results of operations, or cash flows[327](index=327&type=chunk) [Mine Safety Disclosures](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Tillys, Inc - This item is not applicable[150](index=150&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=31&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Tillys' Class A common stock trades on the NYSE, with no special cash dividends paid in fiscal 2023 or 2022, and no unregistered equity securities sold - Tillys' Class A common stock is traded on the NYSE under the symbol '**TLYS**'[153](index=153&type=chunk) - No special cash dividends were paid in fiscal years 2023 and 2022; the company paid **$1.00 per share** in special cash dividends in July and December 2021[154](index=154&type=chunk) - The company is prohibited from declaring or paying any cash dividends to stockholders prior to **April 27, 2024**, as per the Asset-Backed Credit Agreement[154](index=154&type=chunk)[200](index=200&type=chunk) - No unregistered equity securities were sold or repurchased during the fiscal year ended February 3, 2024[158](index=158&type=chunk) [Reserved.](index=32&type=section&id=Item%206.%20%5BReserved.%5D) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Tillys reported a significant financial decline in fiscal 2023, with decreased sales, an operating loss, and a net loss Key Financial Highlights (FY2023 vs. FY2022) | Metric | FY2023 ($ thousands) | FY2022 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------- | :------------------- | :------------------- | :------------------- | :--------- | | Net sales | $623,083 | $672,280 | $(49,197) | -7.3% | | Gross profit | $165,657 | $202,748 | $(37,091) | -18.3% | | Operating (loss) income | $(30,982) | $11,187 | $(42,169) | -376.9% | | Net (loss) income | $(34,492) | $9,677 | $(44,169) | -456.4% | | Basic (loss) earnings per share | $(1.16) | $0.32 | $(1.48) | -462.5% | Sales Performance (FY2023 vs. FY2022) | Metric | FY2023 ($ thousands) | FY2022 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------- | :------------------- | :------------------- | :------------------- | :--------- | | Total net sales | $623,083 | $672,280 | $(49,197) | -7.3% | | Comparable store sales change | (10.6)% | (14.6)% | 4.0 pp | N/A | | Net sales from physical stores | $485,630 | $531,150 | $(45,520) | -8.6% | | Net sales from e-commerce | $137,453 | $141,130 | $(3,677) | -2.6% | | E-commerce as % of net sales | 22.1% | 21.0% | 1.1 pp | N/A | - Gross profit margin declined by **360 basis points to 26.6%** in fiscal 2023, primarily due to a **150 basis point decline** in product margins from increased markdowns to manage inventory levels[179](index=179&type=chunk) - Selling, General and Administrative (SG&A) expenses increased by **$5.1 million to $196.6 million**, representing **31.6% of net sales**, primarily due to higher non-cash store asset impairment charges and the impact of the 53rd week[180](index=180&type=chunk) - The company expects to open **five new stores** and incur capital expenditures not exceeding **$15 million** in fiscal 2024, focusing on infrastructure upgrades[165](index=165&type=chunk) [Overview](index=33&type=section&id=Overview) Tillys is a specialty retailer of casual apparel, footwear, accessories, and hardgoods, operating 248 stores and an e-commerce platform - Tillys is a specialty retailer of casual apparel, footwear, accessories, and hardgoods for young men, young women, boys, and girls, operating **248 stores** in 33 states and an e-commerce website[163](index=163&type=chunk) [Known or Anticipated Trends](index=33&type=section&id=Known%20or%20Anticipated%20Trends) The company anticipates continued adverse impacts on consumer spending and operating results due to an uncertain economic environment, inflation, and shifting consumer preferences - The uncertain and inflationary economic environment, high credit card debt, and a shift in consumer preferences towards experiences are expected to continue to adversely impact consumer spending and operating results[164](index=164&type=chunk) - Persistent inflation has led to increased costs for products, labor, shipping, and digital marketing, with minimum wage increases estimated to cost an additional **$2 million** in fiscal 2024[164](index=164&type=chunk) [Preliminary Fiscal 2024 New Store Openings and Capital Expenditure Plans](index=33&type=section&id=Preliminary%20Fiscal%202024%20New%20Store%20Openings%20and%20Capital%20Expenditure%20Plans) Tillys plans to open 5 new stores and limit capital expenditures to $15 million in fiscal 2024, focusing on infrastructure upgrades - Tillys plans to open **5 new stores** during fiscal 2024[165](index=165&type=chunk) - Total capital expenditures for fiscal 2024 are projected not to exceed **$15 million**, including new store plans and upgrades to distribution and IT infrastructure systems[165](index=165&type=chunk) [How We Assess the Performance of Our Business](index=33&type=section&id=How%20We%20Assess%20the%20Performance%20of%20Our%20Business) Tillys evaluates its business performance using key financial indicators such as net sales, comparable store sales, gross profit, and operating income - Key performance indicators include net sales, comparable store sales, gross profit, selling, general and administrative expenses, and operating (loss) income[166](index=166&type=chunk) - Comparable store sales include e-commerce platform sales and sales from stores open on a daily basis year-over-year, excluding gift card breakage and shipping fees[170](index=170&type=chunk) - Gross profit is affected by initial markups, markdowns, shrinkage, buying, distribution, and occupancy costs, as well as shifts in the sales mix between proprietary and third-party brands[172](index=172&type=chunk)[173](index=173&type=chunk) [Results of Operations (Fiscal Year 2023 Compared to Fiscal Year 2022)](index=36&type=section&id=Results%20of%20Operations%20%28Fiscal%20Year%202023%20Compared%20to%20Fiscal%20Year%202022%29) Tillys experienced a significant decline in net sales and profitability in fiscal 2023, shifting from operating income to a substantial net loss Net Sales Breakdown (FY2023 vs. FY2022) | Category | FY2023 ($ thousands) | FY2022 ($ thousands) | Change ($ thousands) | Change (%) | | :------------------------ | :------------------- | :------------------- | :------------------- | :--------- | | Total Net Sales | $623,083 | $672,280 | $(49,197) | -7.3% | | Comparable Net Sales Change | (10.6)% | (14.6)% | 4.0 pp | N/A | | Physical Store Net Sales | $485,630 | $531,150 | $(45,520) | -8.6% | | E-commerce Net Sales | $137,453 | $141,130 | $(3,677) | -2.6% | - Gross profit decreased by **$37.1 million to $165.7 million**, with the gross profit margin declining from **30.2% to 26.6%** due to increased occupancy costs and markdowns[179](index=179&type=chunk) - Operating results shifted from an income of **$11.2 million** in fiscal 2022 to a loss of **$(31.0) million** in fiscal 2023, reflecting the decline in net sales and gross profit, alongside increased SG&A expenses[181](index=181&type=chunk) - Net loss for fiscal 2023 was **$(34.5) million**, or **$(1.16) per share**, a significant decline from net income of **$9.7 million**, or **$0.32 per diluted share**, in fiscal 2022[185](index=185&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) Tillys' working capital decreased in fiscal 2023, with net cash used in operating activities, while maintaining liquidity through a new $65.0 million revolving credit facility - Working capital decreased by **$22.6 million to $71.5 million** at February 3, 2024, primarily due to a decrease in cash, cash equivalents, and marketable securities[188](index=188&type=chunk) Cash Flow Summary (FY2023 vs. FY2022) | Activity | FY2023 ($ thousands) | FY2022 ($ thousands) | Change ($ thousands) | | :---------------------------- | :------------------- | :------------------- | :------------------- | | Net cash (used in) provided by operating activities | $(6,733) | $(1,415) | $(5,318) | | Net cash (used in) provided by investing activities | $(19,993) | $42,805 | $(62,798) | | Net cash provided by (used in) financing activities | $227 | $(10,065) | $10,292 | - The company entered into a new asset-backed credit agreement in April 2023, providing a **$65.0 million** revolving credit facility maturing April 27, 2026, with no outstanding borrowings and **$42.4 million** available as of February 3, 2024[197](index=197&type=chunk)[202](index=202&type=chunk) [Critical Accounting Policies and Estimates](index=40&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Tillys' financial statements rely on significant management judgments for areas such as inventory, long-lived asset impairment, and income taxes - Key accounting policies requiring significant management judgment include reserves for sales returns, gift cards, loyalty programs, inventory reserves, impairment of long-lived assets, and accounting for income taxes[211](index=211&type=chunk) - Inventory reserves are determined using the retail inventory method, with adjustments for markdowns of slow-moving items and estimated shrinkage, based on historical trends and sell-through rates[215](index=215&type=chunk)[217](index=217&type=chunk) - Impairment of long-lived assets is evaluated based on estimated undiscounted future cash flows, with impairment losses recognized when carrying value exceeds fair value, requiring significant estimates of future sales and gross margin[218](index=218&type=chunk)[219](index=219&type=chunk) - Accounting for income taxes involves recognizing deferred tax assets and liabilities, with a valuation allowance recorded if the realization of deferred tax assets is not considered more likely than not[220](index=220&type=chunk)[221](index=221&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Tillys faces interest rate risk on variable-rate borrowings, potential impacts from inflation on consumer behavior, and immaterial foreign exchange rate risk - The company is subject to interest rate risk on variable-rate borrowings under its credit facility, but had no outstanding borrowings as of February 3, 2024[224](index=224&type=chunk) - While historically immaterial, inflationary cost pressures on gasoline, food, and other consumables could materially impact consumer behavior and, by extension, the company's results of operations and financial condition[225](index=225&type=chunk) - Foreign exchange rate risk is considered immaterial as all merchandise is sourced through domestic vendors and all purchases are denominated in U.S. dollars[226](index=226&type=chunk) [Financial Statements and Supplementary Data](index=43&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Tillys' audited consolidated financial statements, with an unqualified opinion and critical audit matters noted - The consolidated financial statements include the balance sheets, statements of operations, comprehensive (loss) income, stockholders' equity, and cash flows for the fiscal years ended February 3, 2024, January 28, 2023, and January 29, 2022[228](index=228&type=chunk) - BDO USA, P.C. issued an unqualified opinion on the consolidated financial statements and the effectiveness of the company's internal control over financial reporting as of February 3, 2024[229](index=229&type=chunk)[230](index=230&type=chunk) - Critical audit matters identified were the realizability of deferred tax assets and the impairment of long-lived assets related to individual stores, both involving significant management and auditor judgment[234](index=234&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk)[239](index=239&type=chunk) [Report of Independent Registered Public Accounting Firm](index=44&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) BDO USA, P.C. issued an unqualified opinion on Tillys' consolidated financial statements and identified two critical audit matters - BDO USA, P.C. provided an unqualified opinion on the consolidated financial statements for the three years ended February 3, 2024[229](index=229&type=chunk) - Two critical audit matters were identified: the realizability of deferred tax assets and the impairment of long-lived assets related to individual stores, both requiring significant management and auditor judgment[234](index=234&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk)[239](index=239&type=chunk) [Consolidated Balance Sheets](index=46&type=section&id=Consolidated%20Balance%20Sheets) Tillys' consolidated balance sheet shows a decrease in total assets and stockholders' equity in fiscal 2023, with a significant valuation allowance on deferred tax assets Consolidated Balance Sheet Highlights (FY2023 vs. FY2022) | Item | Feb 3, 2024 ($ thousands) | Jan 28, 2023 ($ thousands) | Change ($ thousands) | | :------------------------ | :------------------------ | :------------------------- | :------------------- | | Total current assets | $176,059 | $202,398 | $(26,339) | | Total assets | $429,545 | $475,752 | $(46,207) | | Total current liabilities | $104,557 | $108,304 | $(3,747) | | Total liabilities | $284,676 | $298,954 | $(14,278) | | Total stockholders' equity| $144,869 | $176,798 | $(31,929) | - Cash and cash equivalents decreased from **$73.5 million** in FY2022 to **$47.0 million** in FY2023[245](index=245&type=chunk) - Deferred tax assets, net, decreased from **$8.5 million** in FY2022 to **$0** in FY2023, due to a **$15.4 million** valuation allowance[245](index=245&type=chunk)[352](index=352&type=chunk) [Consolidated Statements of Operations](index=47&type=section&id=Consolidated%20Statements%20of%20Operations) Tillys' consolidated statements of operations show a decline in net sales and gross profit, resulting in an operating loss and net loss for fiscal 2023 Consolidated Statements of Operations (FY2023 vs. FY2022 vs. FY2021) | Item | FY2023 ($ thousands) | FY2022 ($ thousands) | FY2021 ($ thousands) | | :------------------------ | :------------------- | :------------------- | :------------------- | | Net sales | $623,083 | $672,280 | $775,694 | | Gross profit | $165,657 | $202,748 | $276,663 | | Operating (loss) income | $(30,982) | $11,187 | $87,595 | | (Loss) income before income taxes | $(25,783) | $13,167 | $87,001 | | Net (loss) income | $(34,492) | $9,677 | $64,249 | | Basic (loss) earnings per share | $(1.16) | $0.32 | $2.10 | | Diluted (loss) earnings per share | $(1.16) | $0.32 | $2.06 | - Net sales decreased by **7.3%** in fiscal 2023 compared to fiscal 2022, while gross profit decreased by **18.3%**[247](index=247&type=chunk) - The company reported an operating loss of **$(30.98) million** in fiscal 2023, a significant decline from an operating income of **$11.19 million** in fiscal 2022[247](index=247&type=chunk) [Consolidated Statements of Cash Flows](index=50&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Tillys' consolidated statements of cash flows show increased cash used in operating activities and a shift from cash provided to cash used in investing activities in fiscal 2023 Consolidated Statements of Cash Flows (FY2023 vs. FY2022 vs. FY2021) | Activity | FY2023 ($ thousands) | FY2022 ($ thousands) | FY2021 ($ thousands) | | :-------------------------------------- | :------------------- | :------------------- | :------------------- | | Net cash (used in) provided by operating activities | $(6,733) | $(1,415) | $63,402 | | Net cash (used in) provided by investing activities | $(19,993) | $42,805 | $(45,328) | | Net cash provided by (used in) financing activities | $227 | $(10,065) | $(52,057) | | Net change in cash and cash equivalents | $(26,499) | $31,325 | $(33,983) | - Net cash used in operating activities increased to **$6.7 million** in fiscal 2023 from **$1.4 million** in fiscal 2022, primarily due to lower net sales[191](index=191&type=chunk)[255](index=255&type=chunk) - Investing activities shifted from providing **$42.8 million** in cash in fiscal 2022 to using **$20.0 million** in fiscal 2023, driven by changes in marketable securities purchases and maturities[193](index=193&type=chunk)[194](index=194&type=chunk)[255](index=255&type=chunk) [Note 2: Summary of Significant Accounting Policies](index=51&type=section&id=Note%202%3A%20Summary%20of%20Significant%20Accounting%20Policies) This note details Tillys' significant accounting policies, including inventory valuation, revenue recognition for gift cards, and the adoption of new accounting standards - The company adopted ASU 2019-11 (Credit Losses) in the first quarter of fiscal 2023, which did not have a material effect on its consolidated financial statements[294](index=294&type=chunk) - Merchandise inventories are valued at the lower of cost or net realizable value using the retail inventory method, with markdowns and shrinkage reserves recorded[264](index=264&type=chunk)[265](index=265&type=chunk)[267](index=267&type=chunk) - Revenue from gift cards is recognized upon redemption, with breakage revenue recognized over the redemption period based on historical patterns[278](index=278&type=chunk) Net Sales by Department (FY2024-FY2022) | Department | FY2024 | FY2023 | FY2022 | | :---------- | :----- | :----- | :----- | | Mens | 38 % | 38 % | 38 % | | Womens | 27 % | 26 % | 26 % | | Accessories | 15 % | 16 % | 16 % | | Footwear | 12 % | 12 % | 11 % | | Boys | 4 % | 4 % | 5 % | | Girls | 4 % | 4 % | 4 % | | Total | 100 % | 100 % | 100 % | [Note 8: Asset-Backed Credit Agreement](index=59&type=section&id=Note%208%3A%20Asset-Backed%20Credit%20Agreement) Tillys entered into a new $65.0 million asset-backed revolving credit facility in April 2023, with no outstanding borrowings as of February 3, 2024 - On April 27, 2023, Tillys entered into a new asset-backed credit agreement providing a **$65.0 million** revolving credit facility, replacing a previous unsecured agreement[197](index=197&type=chunk)[306](index=306&type=chunk) - The Revolving Facility matures on **April 27, 2026**, and is secured by a lien on all of the company's assets[197](index=197&type=chunk)[306](index=306&type=chunk) - As of February 3, 2024, the company was in compliance with all covenants, had no outstanding borrowings, and was eligible to borrow up to **$42.4 million**[202](index=202&type=chunk)[311](index=311&type=chunk) [Note 9: Leases](index=60&type=section&id=Note%209%3A%20Leases) Tillys leases all its retail and corporate facilities, including related-party leases for its headquarters and distribution centers - Tillys leases all its retail and corporate facilities, with store lease terms generally up to **ten years** and providing for rent escalations[271](index=271&type=chunk)[314](index=314&type=chunk) - The company leases corporate headquarters, distribution, and e-commerce fulfillment centers from companies owned by its co-founders, incurring related-party rent expenses[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk)[319](index=319&type=chunk) Total Lease Expense (FY2023 vs. FY2022 vs. FY2021) | Lease Type | FY2023 ($ thousands) | FY2022 ($ thousands) | FY2021 ($ thousands) | | :------------------ | :------------------- | :------------------- | :------------------- | | Fixed operating lease expense | $66,271 | $64,569 | $62,003 | | Variable lease expense| $19,341 | $16,649 | $18,106 | | Total lease expense | $85,612 | $81,218 | $80,109 | [Note 14: Income Taxes](index=67&type=section&id=Note%2014%3A%20Income%20Taxes) Tillys reported increased income tax expense in fiscal 2023 due to a deferred tax asset valuation allowance, and holds federal and state net operating loss carryforwards Income Tax Expense (FY2023 vs. FY2022 vs. FY2021) | Category | FY2023 ($ thousands) | FY2022 ($ thousands) | FY2021 ($ thousands) | | :------- | :------------------- | :------------------- | :------------------- | | Current | $328 | $614 | $22,241 | | Deferred | $8,381 | $2,876 | $511 | | Total | $8,709 | $3,490 | $22,752 | - Income tax expense increased to **$8.7 million** in fiscal 2023 from **$3.5 million** in fiscal 2022, primarily due to a **$15.4 million** non-cash deferred tax asset valuation allowance[183](index=183&type=chunk)[348](index=348&type=chunk)[352](index=352&type=chunk) - As of February 3, 2024, the company had federal and state net operating loss (NOL) carryforwards of **$20.6 million** and **$16.1 million**, respectively, with federal NOLs generated after 2017 carrying forward indefinitely[353](index=353&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=71&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) Tillys, Inc. reported no changes in or disagreements with its accountants on accounting and financial disclosure matters - No changes in or disagreements with accountants on accounting and financial disclosure were reported[368](index=368&type=chunk) [Controls and Procedures](index=71&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that Tillys' disclosure controls and internal control over financial reporting were effective as of February 3, 2024, with no material changes during the quarter - Management concluded that disclosure controls and procedures were effective as of February 3, 2024, providing reasonable assurance that information required for SEC filings is recorded, processed, summarized, and reported timely[370](index=370&type=chunk) - Management assessed and concluded that the internal control over financial reporting was effective as of February 3, 2024, based on the COSO Report framework[374](index=374&type=chunk) - BDO USA, P.C., the independent registered public accounting firm, issued an unqualified opinion on the effectiveness of Tillys' internal control over financial reporting as of February 3, 2024[375](index=375&type=chunk)[378](index=378&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[376](index=376&type=chunk) [Other Information](index=74&type=section&id=Item%209B.%20Other%20Information) No officers or directors adopted or terminated Rule 10b5-1(c) trading arrangements during the fiscal quarter ended February 3, 2024 - No officers or directors adopted or terminated any Rule 10b5-1(c) trading arrangements during the fiscal quarter ended February 3, 2024[385](index=385&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=74&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to Tillys, Inc - This item is not applicable[385](index=385&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=74&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's Proxy Statement - Information for this item is incorporated by reference from the 2024 Proxy Statement[387](index=387&type=chunk) [Executive Compensation](index=74&type=section&id=Item%2011.%20Executive%20Compensation) Information concerning executive compensation is incorporated by reference from the company's 2024 Proxy Statement - Information for this item is incorporated by reference from the 2024 Proxy Statement[388](index=388&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=74&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Details regarding security ownership of beneficial owners, management, and related stockholder matters are incorporated by reference from the company's 2024 Proxy Statement - Information for this item is incorporated by reference from the 2024 Proxy Statement[389](index=389&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=74&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the company's 2024 Proxy Statement - Information for this item is incorporated by reference from the 2024 Proxy Statement[390](index=390&type=chunk) [Principal Accounting Fees and Services](index=74&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the company's 2024 Proxy Statement - Information for this item is incorporated by reference from the 2024 Proxy Statement[391](index=391&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=74&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists financial statements and schedules, along with a comprehensive index of exhibits filed or incorporated by reference - Financial statements and schedules are referenced to Item 8 of this Annual Report on Form 10-K[393](index=393&type=chunk) - A detailed exhibit index is provided, listing various documents such as the Amended and Restated Certificate of Incorporation, Bylaws, equity and incentive award plans, and credit agreements[394](index=394&type=chunk)[396](index=396&type=chunk)[397](index=397&type=chunk) [Form 10-K Summary](index=74&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates that no Form 10-K Summary is provided - No Form 10-K Summary is provided[395](index=395&type=chunk)

Financial Data and Key Metrics Changes - Total net sales for Q4 2023 were $173 million, a decrease of 4.1% compared to the previous year [45] - Gross margin was 27% of net sales, down from 29% last year, with product margins declining by 140 basis points due to increased markdowns [10][11] - Net loss was $20.6 million or $0.69 per share, compared to a breakeven result last year [11] - Total cash and marketable securities at year-end were $95 million, down from $113 million the previous year [11] Business Line Data and Key Metrics Changes - E-commerce net sales increased by 4.7%, representing 27.4% of total net sales compared to 25.1% last year [10] - Total comparable net sales, including both physical stores and e-commerce, decreased by 8.8% for the comparable 14-week period [22] - Net sales from physical stores decreased by 7%, representing 72.6% of total net sales compared to 74.9% last year [22] Market Data and Key Metrics Changes - The company ended the fiscal year with 248 total stores, a net decrease of one store compared to the end of fiscal 2022 [10] - Total inventories at cost were up 2.6% per square foot at the end of fiscal 2023 compared to the end of fiscal 2022 [47] Company Strategy and Development Direction - The company plans to open five new stores in fiscal 2024, focusing on existing markets while improving business performance [8] - A new brand campaign is set to launch before the back-to-school season, aimed at building emotional connections with customers [20] - Capital expenditures for fiscal 2024 are expected not to exceed $15 million, focusing on warehouse management systems and inventory management tools [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from inflationary pressures and a shift in consumer preferences towards experiences over goods [5] - There is cautious optimism about improving sales trends as the company transitions into warmer weather and spring categories [7] - Management expects total net sales for Q1 2024 to be in the range of $109 million to $119 million, with a comparable store net sales decrease of approximately 14% to 7% [24] Other Important Information - The company is actively renegotiating costs and adjusting retail prices to improve product margins [36] - Management noted that the increase in SG&A expenses was primarily due to the extra week in the fourth quarter [23] Q&A Session Summary Question: What are the plans for improving margins? - Management indicated that there is room for improvement in margins and that they are actively working on it [27] Question: What changes are being made in marketing strategies? - A new head of marketing has joined, focusing on top-of-funnel customer acquisition and increasing presence on social media platforms like TikTok [51] Question: How are sales trends across different product categories? - Sales pressure has been consistent across all departments, with early traction noted in the junior merchandise category [54] Question: What are the expectations for the upcoming sales events? - The largest sales weeks are anticipated around the Easter holiday, with expectations of some revenue shift from Q3 to Q2 due to the extra week in fiscal 2023 [81]

Exhibit 99.1 Tilly's, Inc. Reports Fiscal 2023 Fourth Quarter Operating Results GAAP Loss Per Share of $(0.69); Non-GAAP Loss Per Share of $(0.17) Non-GAAP Net Loss Beats Prior Outlook Irvine, CA – March 14, 2024 – Tilly's, Inc. (NYSE: TLYS, the "Company") today announced financial results for the fourth quarter of fiscal 2023 ended February 3, 2024. "Our business currently faces many headwinds from the macro environment. Despite these headwinds, we are challenging ourselves to improve our business performa ...

Store Operations - As of October 28, 2023, Tilly's operates 249 stores across 33 states, an increase from 247 stores the previous year[92] - Tilly's plans to open four new stores in fiscal 2024, with total capital expenditures not exceeding $15 million[94] Financial Performance - Total net sales for the third quarter were $166.5 million, a decrease of $11.4 million or 6.4% compared to $177.8 million last year[107] - Gross profit was $48.7 million, or 29.3% of net sales, down from $54.6 million, or 30.7% of net sales last year[108] - SG&A expenses increased to $51.2 million, or 30.8% of net sales, compared to $48.3 million, or 27.1% of net sales last year[109] - Operating loss was $(2.5) million, or (1.5)% of net sales, compared to operating income of $6.3 million, or 3.6% of net sales last year[110] - Net loss was $(0.8) million, or $(0.03) per share, compared to net income of $5.1 million, or $0.17 per diluted share last year[113] - Total net sales for the thirty-nine weeks were $450.1 million, a decrease of $41.9 million or 8.5% compared to $491.9 million last year[114] - Gross profit for the thirty-nine weeks was $119.0 million, or 26.4% of net sales, down from $150.4 million, or 30.6% of net sales last year[115] - SG&A expenses for the thirty-nine weeks were $141.4 million, or 31.4% of net sales, compared to $137.8 million, or 28.0% of net sales last year[116] - Operating loss for the thirty-nine weeks was $(22.5) million, or (5.0)% of net sales, compared to operating income of $12.6 million, or 2.6% of net sales last year[117] - Net sales from e-commerce were $90.0 million, a decrease of $5.8 million or 6.1%, representing 20.0% of total net sales compared to 19.5% last year[121] Expenses and Costs - Store payroll and related expenses accounted for approximately 47% of total selling, general and administrative expenses in the first nine months of fiscal 2023[93] - The average hourly rate for store payroll in the first nine months of fiscal 2023 was 26% higher than in the same period of 2019 and 7% higher than in the previous year[93] - SG&A expenses are expected to increase over time to support the company's growth, with a higher percentage during lower volume periods[102] Capital Expenditures - Total capital expenditures for fiscal 2023 are expected to be approximately $13 million, including 7 new stores and upgrades to distribution and IT systems[93] Cash Flow and Financing - Working capital decreased to $76.4 million as of October 28, 2023, down from $94.1 million at January 28, 2023, a decline of $17.7 million[125] - Net cash used in operating activities was $10.5 million for the thirty-nine weeks ended October 28, 2023, compared to $11.1 million for the same period last year, reflecting a decrease of $0.6 million[128] - Net cash used in investing activities was $18.7 million this year, a significant change from net cash provided of $55.5 million last year[130] - The company entered into a credit agreement with Wells Fargo Bank, providing a revolving credit facility of up to $65.0 million, maturing on April 27, 2026[134] - As of October 28, 2023, the company was eligible to borrow up to $63.0 million under the credit agreement and had no outstanding borrowings[139] - The company reported a net cash provided by financing activities of $37 thousand this year, compared to a net cash used of $10.8 million last year[133] Market Conditions - The company anticipates that inflationary pressures will continue to adversely impact consumer confidence and spending, affecting operating results[93] Inventory and Assets - An increase in merchandise inventories net of accounts payable was recorded at $9.6 million[125] - The company experienced a decrease in cash, cash equivalents, and marketable securities by $19.3 million primarily due to lower net income[125] Covenants and Obligations - The company is subject to various covenants under the credit agreement, including a financial covenant requiring availability to remain above $6.0 million[137] - There were no material changes to the company's contractual obligations as of October 28, 2023[140]

Tilly's, Inc. (NYSE:TLYS) Q3 2023 Results Conference Call November 30, 2023 4:30 PM ET Company Participants Gar Jackson - Investor Relations Ed Thomas - President and CEO Michael Henry - EVP and CFO Conference Call Participants Jeff Van Sinderen - B. Riley Mike Zabran - ROTH MKM Marni Shapiro - the Retail Tracker Mitch Kummetz - Seaport Research Operator Good day, and welcome to Tilly's Third Quarter 2023 Results Conference Call [Operator Instructions]. Please also note this event is being recorded. And I' ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 __________________________________________________ FORM 10-Q __________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 29, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-35535 _________________________________________________ ...

Tilly's Inc. (NYSE:TLYS) Q2 2023 Results Conference Call August 31, 2023 4:30 PM ET Company Participants Gar Jackson - Founder & President Ed Thomas - President, CEO and Director Michael Henry - Executive VP, CFO and Corporate Secretary Conference Call Participants Matt Koranda - Roth MKM Mitch Kummetz - Seaport Jeff Van Sinderen - B. Riley Operator Hello, and welcome to Tilly's Second Quarter 2023 Results Earnings Conference -- Earnings Results Conference Call. All participants will be in a listen-only mod ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 __________________________________________________ FORM 10-Q __________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 29, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-35535 ________________________________________________ ...

Financial Data and Key Metrics Changes - Total net sales for Q1 2023 were $123.6 million, a decrease of 15.2% compared to the previous year [18] - Gross margin decreased to 21.0% of net sales from 30.1% last year, with buying, distribution, and occupancy costs increasing by 620 basis points [19] - Operating loss was $17.3 million or 14% of net sales, compared to operating income of $1.1 million or 0.8% of net sales last year [22] - Net loss was $12 million or $0.40 per share, compared to net income of $0.8 million or $0.03 per diluted share last year [28] Business Line Data and Key Metrics Changes - Footwear had a single-digit negative sales comp percentage, while all other merchandising departments experienced double-digit negative sales comp results [9] - Total comparable net sales, including e-commerce, decreased by 17.5%, with a 19.7% decrease from physical stores and an 8.3% decrease from e-commerce [19] - Spring/summer product categories performed better in Q2 compared to Q1, led by women's and girls' categories, which had positive comps [11] Market Data and Key Metrics Changes - California, which accounts for 40% of total stores, was the weakest performing geographic area, with total sales down over 20% [9][48] - Total store transactions decreased by a high teens percentage during the quarter, although there was an improvement in April [10] Company Strategy and Development Direction - The company plans to open seven new stores during fiscal 2023, with three stores pushed to 2024 due to delays [16] - A new Chief Merchandising Officer and Vice President of Merchandise Planning and Allocation have been hired to improve business operations and sales growth [13][14] - The company is investing in a new warehouse management system to enhance labor and inventory management efficiency [15] Management's Comments on Operating Environment and Future Outlook - Management noted that the economic environment remains uncertain and inflationary, impacting the young customer demographic [8] - The company expects total net sales for Q2 2023 to be in the range of approximately $148 million to $158 million, translating to a comparable store net sales decline of approximately 10% to 15% [24] - Management expressed cautious optimism for the back-to-school season, which is typically need-based, potentially leading to better sales trends [68] Other Important Information - Total capital expenditures for Q1 were $4.3 million, with expectations of approximately $15 million for the year [29] - The company ended Q1 with total cash and marketable securities of $93 million and no debt outstanding [23] Q&A Session Summary Question: Can you elaborate on the assortment issues mentioned? - Management indicated that most challenges were due to seasonal categories not performing well, particularly shorts and swim, primarily because of weather [26] Question: How is the second quarter revenue guide structured? - The low end of the guide is based on historical averages, while the high end considers May's performance as a percentage of Q2 [32][33] Question: What trends are being observed in traffic versus ticket? - Traffic was down 12% in Q1 and May, while average sale values remained relatively stable [35] Question: What are the expectations for product margins going forward? - Management is considering actions to keep inventory fresh and avoid overstocking as they approach the back-to-school season [40] Question: How are occupancy costs being managed? - Occupancy costs are expected to rise year-over-year due to an increase in store count, but management is satisfied with lease negotiations [42][45] Question: How is inventory being managed in light of seasonal softness? - Management feels confident about inventory content but expects a highly promotional environment for certain categories [59]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 28, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-35535 TILLY'S, INC. (Exact name of registrant as specified in its charter) Delaware 45-2164791 (State or other jurisdiction of incorporation or organization) 10 Whatne ...