Good afternoon, and welcome to the Tilly's fiscal fourth quarter 2022 results conference call. All participants will be in a listen-only mode. Should you need any assistance during the call, please signal a conference specialist by pressing a star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star, then one on your telephone keypad. To withdraw your question, please press Star, then two. Please also note that this event is being recorded today. I would now like to turn the conference over to Gar Jackson, Investor Relations. Please go ahead. Good afternoon, and welcome to the Tilly's fiscal 2022 fourth quarter earnings call. Ed Thomas, President and CEO, and Michael Henry, CFO, will discuss the company's results and then host a Q&A session. For a copy of Tilly's earnings press release, please visit the investor relations section of the company's website at tillys.com. From the same section, shortly after the conclusion of the call, you will also be able to find a recorded replay of this call for the next 30 days. Certain forward-looking statements will be made during this call that reflect Tilly's judgment and analysis only as of today, March 9, 2023, and actual results may differ materially from current expectations based on various factors affecting Tilly's business. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with any forward-looking statements, please see the disclaimer regarding forward-looking statements that is included in our fiscal 2022 fourth quarter earnings release, which is furnished to the SEC today on Form 8-K, as well as our other filings with the SEC reference in that disclaimer. Today's call will be limited to 1 hour and will include a Q&A session after our prepared remarks. I will now turn the call over to Ed. Thanks, Gar. Good afternoon, everyone, and thank you for joining us today. Our fourth quarter results exceeded the revised sales and earnings outlook ranges we provided in early January in connection with the annual ICR conference. Overall, fiscal 2022 was a very challenging year for us and our customers, particularly in light of one of the worst inflationary environments of the past 40 years. Fiscal 2023 has gotten off to a slow start thus far, as we have anniversaried last year's February comparable net sales increase of 15.4%, while also experiencing unseasonably cold and wet weather over the last several weeks, particularly here in California, wherein approximately 40% of our stores reside, and we've seen a meaningful decline in our business relative to our fourth quarter run rate. From March onward, we are going up against negative double-digit monthly comp results for the remainder of the year. Consequently, we believe we will see an improving trend in our business very soon, and despite our slow start to the first quarter, we are cautiously optimistic about the spring-summer season overall based on the product newness that has just started to roll out to stores in recent weeks. In men's, we expect graphic tees will continue to be a leading product for us, and we have a variety of new fabrics and silhouettes in short sleeve button-up shirts. Within men's bottoms, we expect to see growing interest in non-denim shorts and pants with an improved inventory position compared to last year. In women's, we are optimistic about newness in trend color and silhouettes. We are investing more in fashion tops in a number of ways, and we expect to have compelling offerings in bottoms with new silhouettes emerging to complement a strong cargo trend. We also have seen growing interest in our swimwear, dresses, and skirts offerings compared to last year. In footwear, we believe we have a strong brand portfolio for both genders. In accessories, we believe we have improved our women's collection, in particular, with trends that are more feminine and current. Additionally, we will have an expanded home collection compared to last year, and we are optimistic about a new lower price designer sunglass business. For boys and girls, we expect to be in a much better inventory position on branded graphic tees than we had last year when we were experiencing supply chain issues. Altogether at this time, we feel good about our spring assortment and believe we will see more favorable comparable results for the remainder of the quarter and fiscal year based on the significantly easier comparisons we will be going up against from here on in. In terms of store real estate, we currently expect to open approximately 10 new stores during fiscal 2023, with one store set to open near the end of March, four expected in the third quarter, and the remainder expected to open between the back to school and holiday seasons, subject in each case to finalizing acceptable lease terms. For existing stores, we have nearly 80 lease decisions to make this year and are just over halfway through those decisions. Given the current environment, we continue to approach our lease renewals with reasonable conservatism to contain lease costs as much as possible. If we are unable to negotiate what we believe to be reasonable lease costs, we will close stores as necessary to protect our overall profitability. At this time, we are aware of 2 planned store closures in 2023 based on the current status of negotiations, one of which closed in late February. Our anticipated capital expenditure priorities in fiscal 2023 beyond new stores include an upgrade to our mobile app, updating our warehouse management systems to allow for more efficient inventory management across facilities, and continuing IT infrastructure and cybersecurity investments to better position ourselves for future growth. We currently expect our total capital expenditures for the year, inclusive of new stores, to be within the $15 million-$20 million range. In terms of other uses of capital, we are taking a wait-and-see approach to fiscal 2023 before we consider any additional significant capital outlays, including cash dividends or potential repurchase of stock, and would not anticipate to incur such outlays until we feel more confident that we have stable economic environment underneath us and are able to generate improved sales performance. In closing, although potential recessionary impacts on our customers remain a significant concern, we are cautiously optimistic about our prospects for improving operating results during fiscal 2023 relative to 2022, given the significantly lower comp sales comparisons we will be going up against for the remainder of the year. I will now turn the call over to Mike to provide additional details on our fiscal 2022 fourth quarter operating performance and introduce our fiscal 2023 first quarter outlook. Mike? Thanks, Ed. Good afternoon, everyone. Our fiscal 2022 fourth quarter results compared to last year's fourth quarter were as follows: Total net sales were $180.4 million, a decrease of 11.8% compared to a company fourth quarter record of $204.5 million last year. Total net sales from physical stores were $135 million, a decrease of 11.3% compared to $152.2 million last year. Net sales from physical stores represented 74.9% of our total net sales, compared to 74.4% of total net sales last year. E-commerce net sales were $45.3 million, a decrease of 13.4% compared to $52.3 million last year. E-comm net sales represented 25.1% of total net sales, compared to 25.6% of total net sales last year. We ended the fiscal year with 249 total stores, a net increase of 8 stores compared to the end of fiscal 2021. Gross profit, including buying, distribution, and occupancy expenses, was $52.4 million or 29.1% of net sales, compared to a fourth quarter record of $70.4 million or 34.4% of net sales last year. Product margins declined by 290 basis points compared to last year's near historical peak fourth quarter product margins, primarily due to higher markdowns needed to manage inventory levels. Buying, distribution, and occupancy costs deleveraged by 240 basis points collectively, despite being $0.4 million lower than last year with 8 net new stores due to carrying these costs against lower net sales. Total SG&A expenses were $53.5 million or 29.7% of net sales, compared to $53.1 million or 25.9% of net sales last year. Primary dollar increases in SG&A were from labor-related expenses across store payroll, corporate payroll, and e-comm fulfillment. These increases were partially offset by a $1 million reduction in bonus expense due to the lack of any bonus accrual this year. Operating loss was $1.1 million or 0.6% of net sales, compared to operating income of $17.3 million or 8.5% of net sales last year as a result of the combined factors just noted. Other income was $1.1 million compared to other expense of $0.4 million last year, primarily due to earning significantly higher rates of return on our marketable securities compared to last year and the write-off of certain unamortized costs associated with transitioning our credit facility last year. Pre-tax results were essentially break even compared to pre-tax income of $16.9 million or 8.3% of net sales last year. Income tax benefit was $0.3 million compared to income tax expense of $4.9 million or 28.7% of pre-tax income last year. This year's income tax benefit was primarily due to certain allowable deductions and tax credits. Net income was $0.3 million or $0.01 per diluted share, compared to net income of $12.1 million or $0.38 per diluted share last year. Weighted average diluted shares were 30 million this year compared to 31.4 million last year. Turning to our balance sheet, we ended the fiscal year with total cash and marketable securities of $113 million and no debt outstanding, compared to $139 million and no debt last year. We repurchased approximately $11 million worth of company stock during fiscal 2022. We ended the fiscal year with total inventories at cost down 8% per square foot and down 15% in total units compared to last year. Total capital expenditures for fiscal 2022 were $15.1 million compared to $13.4 million last year, the increase being primarily due to the increased costs of new store openings. Turning to the first quarter of fiscal 2023, total comparable net sales through March 7 decreased by 19.9% compared to last year, with a 21% decrease in fiscal February and a 17.3% decrease thus far in fiscal March. Based on current and historical trends, we currently estimate that our total net sales for the first quarter of fiscal 2023 will be in the range of approximately $122 million-$133 million, translating to a comparable store net sales decline in the range of approximately 11%-18.5% for the first quarter of fiscal 2023 compared to last year. We expect our SG&A to be in the range of $43 million-$44 million. At these sales levels, we would expect to report an estimated loss per share in the range of $0.27-$0.41 for the first quarter of fiscal 2023, with an estimated income tax rate of 27% and total shares outstanding of 29.9 million. We currently expect to have 249 total stores at the end of the first quarter compared to 241 at the end of last year's first quarter. Operator, we'll now go to our Q&A session. We will now begin the question-and-answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause just momentarily to assemble our roster. Our first question here will come from Jeff Van Sinderen with B. Riley. Please go ahead. Hi, everyone. Just wanted to follow up on Q1 so far, just anything you're noticing in the difference between regions. Obviously, the weather in Southern California hasn't been spectacularly wonderful. Maybe also touch on kind of the promotional backdrop, if you would, and then maybe touch on inventory out there. It seems like, you know, most folks have kinda brought down their inventory levels. If you could touch on new store performance that you experienced in 2022 and how that plays into your store opening plans. Okay. Hi, Jeff. It's Ed. In terms of performance regionally, we're down in every region of the country, so we're seeing it across the board. Clearly, California, where we have a great amount of stores, we've seen a bigger impact in the California stores with the weather being tough for the last couple of weeks. That's been a challenge for sure. Traffic is down across the chain, and sales are down accordingly. In terms of inventory, our inventory is very clean coming into the quarter. I would have liked to have seen a little bit more newness at the beginning of the quarter, but we're in really good shape now. honestly, some of that newness is seasonal categories like swim, more, spring/summer merchandise that probably would not have had a great sell-through, with the weather being as challenging as it has been. I think you asked me, like, you asked 4 questions, so I might have missed... I did. I did. He was asking about the pro-promotional environment. As far as the promotional environment, I'm not seeing anything abnormal out there. I don't think promotions are driving customers into stores. I think this is more of a partially economic, where I think a lot of customers are challenged economically. Part of it is to make sure that you have a compelling assortment in your merchandise mix, and I think, actually, I think we do. I think it's just that our customer is probably a little bit more challenged than some. Promotionally, I don't see it. There's a lot of clearance inventory in the market from the price guys to others. There's a lot more than what I think we normally see, but we expected that with so many companies being over inventoried, being in a tough inventory position. I don't believe that's been any abnormal challenge to us as a company. Okay. Just one more in there was asking about a lot of questions wrapped up into one. Just the new store performance that you experienced in 2022 and I guess how that plays into your store opening plans for 2023. The new stores overall outperformed their plans. You know, we opened stores in different parts of the country. One of our most recent store openings is in our backyard in Cerritos. That store has been record-breaking for us. It's a little bit bigger than the average store. It's about 9,000 sq ft, but the results there have been phenomenal. There's plenty availability of real estate out there, as you would imagine. We are capitalizing on where we think the expansion is appropriate. We're still staying with our strategy of doing both off mall and mall. The economics obviously have to be right. We're being very thoughtful. My guess is... I mean, right now, we'll probably do 10 or 11 stores this year. That could change, during the course of the year if we see our business start to turn faster. Okay. Helpful. Just one more quick one to squeeze in. Just any update on the search for a new... I think you're looking for a new CMO? It is actively in process, so a lot of good candidates. Okay. Good to hear. Thanks for taking my questions, and best of luck for the rest of the quarter. Thanks, Jeff. Our next question will come from Matt Koranda with ROTH M KM. Please go ahead. Hey, guys. Good afternoon. Some of mine have been asked already, just the comp guide for the quarter for Q1 sounds like it, you expect things to maybe improve into March and April. Maybe just, is that easier comparisons that you have, that you're lapping? Are you assuming some recapture of demand, sort of post the bad weather we've had here in California? Just curious if you could give us some of the assumptions there. Sure, Matt, this is Mike. Yes, our compares get meaningfully easier from here forward. We noted in our prepared remarks that we were going up against a positive 15.4% comp from February. As you go into March week one, last year we were down 3%, then down 8%, then down 27%, 24%, 38% to finish March with a -23%. April was a -16% with, you know, just very consistent negative double digits all month long. That really carries all the way through the year. Negative double-digit comps every month for the rest of the year. We do think that the weather out here, in the West had a pretty negative impact on us on top of going up against our last month of double-digit comps from last year. California, both Southern and Northern, are our two weakest areas of performance so far, and they had the largest drop off of performance from where they were in Q4. As Ed mentioned, all areas are negative. In the fourth quarter, Southern California in particular was our strongest performing market. It is now our weakest. There's been a really big swing there of 14 comp points to the negative. Somewhat similar in Northern California, it was our second or third best performing area in Q4. It is now our second worst, and it has dropped by 7.5 comp points so far from the Q4 run rate to now. Seeing that dynamic and understanding just the craziness of the weather we've had out here for the past several weeks, we do believe at this time, as we start to go up against those weaker comparisons and hopefully get some more normalized spring-ish type of weather, that we'll see the business turn. It hasn't happened in stores yet. We have seen some movement in e-comm, I would tell you. E-comm has had a few positive days here and there, not consistently, but it is in the negative single digits as opposed to stores are still at -20 at this point. That's another thing, like we're starting to see signs of life on the e-comm side of the business. It just hasn't carried over to stores yet. That's how we're thinking about things as we sit here right now. Okay. Very helpful color. Then just on inventory, I mean, you guys obviously very clean on a square footage basis. I think, Ed, you mentioned something in the Q&A here about feeling a little bit better about newness, and maybe you didn't feel as good about it in the fourth quarter. Just anywhere you feel like you need more on the inventory to kinda serve the needs of your consumer. Then just inventory trends maybe for Mike, just at the, how we should expect that to trend through the year? Is it pretty normal seasonally this year? A return to normal, I guess, and that we should expect a little bit of inventory build in the first quarter? Any trends you can mention throughout the year that in terms of expectations would be helpful. Matt, I feel really good about the content of our inventory right now. There's a lot more newness in the mix, than there was three weeks ago, or more, current goods. I feel really good. There's no category, whether it's men's, women's, footwear, accessories. They're all very current with new goods and some early reads on sell-throughs, it's early, have been really good. I feel really good about that. Mike could talk about the ramp-up of the inventory and what we expect. Yeah. I think you should expect the normal discipline that you're used to seeing from us, that we will do everything we can to manage inventory as closely to sales trends as possible. you know, we are. We finished the year at minus 8 per square foot on a cost basis. That's in dollars. We were down 15 in units. we feel like, you know, at least we didn't have a big overhang of too much inventory ending last year and coming into the first quarter. we're certainly expecting better results for the rest of the first quarter and then leading into the rest of the year. we're constantly making changes to our inventory plans every single week. I'll just say expect a normal discipline from us of being as tight to sales as we can make it. Okay. Very helpful, guys. I'll jump back in queue here. Our next question will come from Mitch Kummetz with Seaport Research Partners. Please go ahead. Yeah, thanks for taking my question. Just got a couple on the margins. Let me start with gross margin for Q1. You didn't give a number or A range in the press release. I think you gave us enough to back into something. I guess my question is more on the puts and takes in Q1. Like, if you break out gross margin by kind of your bigger buckets, whether it's sort of product margin, distribution expense, occupancy, can you give us a better sense as to how you see those playing out for the quarter? Sure. The, the variability from the better end to the worst end of our range is very largely product margins. If our sales are gonna be $10 million lower, we're gonna be more aggressive on markdowns to keep inventory clean, we've contemplated that. At these sales levels, the dollars of occupancy and distribution and buying really don't change all that much. Occupancy is relatively fixed. you know, we have 248 stores as we sit here right now. There'll be a store that'll open later this month. The dollars from the top of our range to the bottom of our range really don't move that much. You've got about $25 million of occupancy dollars. You've got a little under $10 million of distribution costs, and you've got a little under $2 million of buying costs. That's really not gonna move all that much. A couple $100,000 here or there, not by millions. It really is in product margins that the variability would exist to be responsive to keeping inventory clean. Okay. That's helpful. Thanks, Mike. On the SG&A, the dollar range you gave, $43 million-$44 million, I believe that's up a little bit year-over-year, despite the sales decline. I mean, again, I'm sure there's a lot of fixed expense in that SG&A number, but I guess I'm mostly interested in kinda like what are you seeing in terms of wage trends, especially in store and any other, you know, expenses you might wanna call out. Yeah, you're on it, Mitch. The key thing is store payroll. So far in the first quarter, our average hourly rate is 7% higher than a year ago. Obviously, that's a problem when your comps are down 19.9, but your wage rate is up 7%. We're trying to be as tight on store payroll hours usage as we can, and we have operated stores with lower average hours than a year ago as we did through all the quarters last year. But, you know, minimum wages keep jumping up so much that it's just been something that still puts pressure on those dollars in a way that, you know. I don't know what's normal anymore after the last three years. You know, over many years in retail, you know, as sales move up and down, you're able to flex your payroll a lot more effectively. With minimum wage increases, it hides the operational efficiencies that you're actually generating in terms of hours used because each hour that you have is more expensive than it was before. Compared to last year, it's 7% higher. Compared to pre-pandemic, it's 24% higher than it was in 2019. I mean, that's just an extraordinary number to think about, percentage-wise. So that's why you might not see quite as much movement to the favorable side on SG&A as you might wanna naturally assume. All right. Well, thanks for all that, and good luck this quarter. Thank you. Thank you. This concludes our question-and-answer session. I'd like to turn the conference back over to Ed Thomas for any closing remarks. Thank you all for joining us on the call today. We look forward to sharing our first quarter results with you in early June. Have a good evening. Thank you. The conference has now concluded. Thank you very much for attending today's presentation. You may now disconnect your lines.