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What changed in TILLY'S, INC.'s 10-K — 2025 vs 2026

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Paragraph-level year-over-year comparison of TILLY'S, INC.'s 2025 and 2026 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2026 report.

+277 added−286 removedSource: 10-K (2025-04-10) vs 10-K (2024-04-11)

Top changes in TILLY'S, INC.'s 2026 10-K

277 paragraphs added · 286 removed · 245 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

101 edited+8 added−20 removed39 unchanged
Biggest changeThe table below shows our number of stores by type of retail center as of the end of each of the last three fiscal years: 2023 2022 2021 Regional Mall 138 140 137 Off-Mall (1) 92 91 90 Outlet 18 18 14 248 249 241 (1) Includes neighborhood and lifestyle centers, "power" centers, and street-front locations. 9 The table below shows the total number of stores by state as of February 3, 2024: State Number of Stores State Number of Stores Arizona 18 New Jersey 7 California 101 New Mexico 1 Colorado 5 New York 4 Delaware 1 North Carolina 2 Florida 19 Ohio 3 Georgia 2 Oklahoma 2 Illinois 7 Oregon 5 Indiana 4 Pennsylvania 4 Kansas 1 Rhode Island 2 Maryland 1 South Dakota 1 Massachusetts 5 Tennessee 3 Michigan 1 Texas 20 Minnesota 2 Utah 6 Missouri 1 Virginia 2 Nebraska 1 Washington 6 New Hampshire 2 Wisconsin 3 Nevada 6 Distinctive Store Experience Tillys is a customer-driven lifestyle brand.
Biggest changeThe table below shows the total number of stores by state as of February 1, 2025: State Store Count State Store Count State Store Count Arizona 19 Michigan 1 Oklahoma 2 California 101 Minnesota 2 Oregon 4 Colorado 5 Missouri 1 Pennsylvania 4 Delaware 1 Nebraska 1 Rhode Island 2 Florida 16 New Hampshire 2 South Dakota 1 Georgia 2 Nevada 7 Tennessee 2 Illinois 7 New Jersey 6 Texas 18 Indiana 4 New Mexico 1 Utah 6 Kansas 1 New York 3 Virginia 2 Maryland 1 North Carolina 2 Washington 6 Massachusetts 5 Ohio 3 Wisconsin 2 9 Distinctive Store Experience Tillys is a customer-driven lifestyle brand.
In addition, we utilize the website to offer current information on our upcoming events, promotions and store locations. Marketing and Advertising Our marketing approach is designed to create an authentic connection with our customers by consistently generating excitement for our brand and the active, outdoor and social lifestyle we represent.
In addition, we utilize our website to offer current information on our upcoming events, promotions and store locations. Marketing and Advertising Our marketing approach is designed to create an authentic connection with our customers by consistently generating excitement for our brand and the active, outdoor and social lifestyle we represent.
We believe our digital platform is an extension of our brand and retail stores, offering substantially the same merchandise assortment as offered in our stores but with opportunities to provide extensions of that same assortment online, whether in terms of sizing or particular styles that may not be available in stores at a particular point in time, providing our customers a seamless shopping experience.
We believe our digital platform is an extension of our brand and retail stores, offering substantially the same merchandise assortment as offered in our stores but with opportunities to provide extensions of that same assortment online, whether in terms of sizing or particular styles that may not 10 be available in stores at a particular point in time, providing our customers a seamless shopping experience.
Shaked, our Co-Founder, Executive Chairman of the Board of Directors, and Interim President and Chief Executive Officer, plays an important role in developing our long-term growth initiatives, driving planned improvements in our business, and cultivating our unique culture. Mr. Henry, our Executive Vice-President and Chief Financial Officer, has over 20 years of specialty retail industry experience.
Shaked, our Co-Founder, Executive Chairman of the Board of Directors, President and Chief Executive Officer, plays an important role in developing our long-term growth initiatives, driving planned improvements in our business, and cultivating our unique culture. Mr. Henry, our Executive Vice President and Chief Financial Officer, has over 20 years of specialty retail industry experience.
We do this by blending the most relevant brands and styles with music videos, product-related visuals, and a dedicated team of store associates. Our associates share the same passion as our customers for the brands that we sell, enabling them to easily engage with our customers and make shopping at Tillys a fun, social experience.
We do this by blending the most relevant brands and styles with music videos, product-related visuals, and a dedicated team of store associates. Our associates share the same passion as our customers for the brands that we sell, enabling them to engage with our customers and make shopping at Tillys a fun, social experience.
Our merchandise includes a wide assortment of relevant brands, styles, colors, sizes, and price points to ensure our customers have a variety of choices every time they visit our stores. We offer a balanced mix of merchandise across the apparel, footwear and accessories categories serving young men, young women, boys, and girls.
Our merchandise includes a wide assortment of relevant brands, styles, colors, sizes, and price points to ensure our customers have a variety of choices every time they visit our stores. We offer a mix of merchandise across the apparel, footwear and accessories categories serving young men, young women, boys, and girls.
We use multiple forms of digital advertising, including pay per click, display, retargeting, paid social and affiliate marketing. We continue to invest in digital marketing to grow our overall business. 11 • Email Marketing. We utilize email marketing to build awareness, drive traffic to our stores and online platform and to promote local in-store promotions and events.
We use multiple forms of digital advertising, including pay per click, display, retargeting, paid social and affiliate marketing. We continue to invest in digital marketing to grow our overall business. • Email Marketing. We utilize email marketing to build awareness, drive traffic to our stores and online platform and to promote local in-store promotions and events.
Our proprietary brand capabilities enhance our ability to rapidly identify and respond to trends and consistently offer proven fashion items that provide a broader demographic appeal. We work with numerous vendors based in the United States to supply us with our proprietary branded product.
Our proprietary brand capabilities enhance our ability to rapidly identify and respond to trends and consistently offer proven fashion items that provide a broader demographic appeal. We work primarily with numerous vendors based in the United States to supply us with our proprietary branded product.
We believe that our differentiated in-store environment, evolving selection of relevant brands, and broader and deeper assortment positions us as a retail destination that appeals to a larger demographic than many other specialty retailers. • Dynamic merchandise model.
We believe that our differentiated in-store environment, evolving selection of brands, and broader and deeper assortment positions us as a retail destination that appeals to a larger demographic than many other specialty retailers. • Dynamic merchandise model.
We intend to continue to maintain a disciplined approach to store growth in the future by targeting existing markets with room for growth and potential new markets with high population density, clustering our stores to build better brand awareness in key markets.
We intend to continue to maintain a disciplined approach to store openings in the future by targeting existing markets with room for growth and potential new markets with high population density, clustering our stores to build better brand awareness in key markets.
We intend to continue to maintain a disciplined approach to store growth in the future by targeting existing markets with room for growth and potential new markets with high population density, and clustering stores within key markets to build brand awareness.
We intend to continue to maintain a disciplined approach to store openings in the future by targeting existing markets with room for growth and potential new markets with high population density, and clustering stores within key markets to build brand awareness.
We are energized and inspired by our customers’ individuality and passion for an active, outdoor and social lifestyle. Our stores bring these interests together in a vibrant, stimulating and authentic environment that is an extension of our customers’ multitasking lifestyles.
We are energized and inspired by our customers’ individuality and passion for an active, outdoor and social lifestyle. We believe our stores bring these interests together in a vibrant, stimulating and authentic environment that is an extension of our customers’ multitasking lifestyles.
We face intense competition in our industry and we may not be able to compete effectively.” Trademarks “Ambitious”, “Blue Crown”, "Destined", “Eldon”, “Full Tilt”, “If it’s not here...it’s not happening”, "Infamous", “RSQ”, "RSQ by Tillys", “RSQ Skate”, “Sky and Sparrow”, “Tilly's”, “Tilly’s Clothing & Shoes”, "Tilly's Clothing Shoes Accessories, “Vindicated”, “West of Melrose”, and "2/Second Saturdays" and logos related to some of these names, are among our trademarks registered with the United States Patent and Trademark Office.
We face intense competition in our industry and we may not be able to compete effectively.” Trademarks “Ambitious”, “Blue Crown”, "Destined", “Eldon”, “Full Tilt”, “If it’s not here...it’s not happening”, "Infamous", “RSQ”, "RSQ by Tillys", “RSQ Skate”, “Sky and Sparrow”, “Tilly's”, “Tilly’s Clothing & Shoes”, "Tilly's Clothing Shoes Accessories, "Tillys Home", “Vindicated”, “West of Melrose”, "2/S Tillys", and "2/Second Saturdays" and logos related to some of these names, are among our trademarks registered with the United States Patent and Trademark Office.
Our influencer strategy, in support of driving brand awareness and growth, is designed to connect customers to key categories, trends and activities that is authentic to the Tillys brand. • Digital Marketing . We use digital marketing to drive new customers to Tillys.com and our stores.
Our influencer strategy, in support of driving brand awareness and growth, is designed to connect customers to key styles, categories, trends and activities that is authentic to the Tillys brand. • Digital Marketing . We use digital marketing to drive new customers to Tillys.com and our stores.
Each of our Board committees (Audit, Compensation, and Nominating/Governance) are chaired by, and comprised of, only the independent members of our Board of Directors, consistent with NYSE requirements. Our Board of Directors is comprised of three individuals who self-identify as men and three individuals who self-identify as women.
Each of our Board committees (Audit, Compensation, and Nominating/Governance) are chaired by, and comprised of, only the independent members of our Board of Directors, consistent with NYSE requirements. Our Board of Directors is comprised of four individuals who self-identify as men and three individuals who self-identify as women.
Merchandise is shipped in a floor-ready condition (having price tickets, sensor tags and hangers when required), allowing store employees to spend less time with merchandise processing tasks and more time serving our customers.
Merchandise is shipped in a floor-ready condition (having price tickets, sensor tags and hangers when required), allowing store employees to spend less time with merchandise processing tasks and more time serving 11 our customers.
We offer an integrated digital platform for our customers to shop how and when they like, in-store, online and on their mobile device, to drive meaningful connection with our customers.
We offer an integrated digital platform for our customers to shop how and when they like, in-store, online and on their mobile device, to seek to drive meaningful connection with our customers.
We believe our e-commerce platform is an extension of our brand and retail stores, offering substantially the same merchandise assortment as offered in our stores but with opportunities to provide extensions of that same assortment online, whether in terms of sizing or particular styles that may not be available in stores at a particular point in time.
We believe our e-com platform is an extension of our brand and retail stores, offering substantially the same merchandise assortment as offered in our stores but with opportunities to provide extensions of that same assortment online, whether in terms of sizing or particular styles that may not be available in stores at a particular point in time.
We also operate an 81,000 square foot e-commerce fulfillment center in Irvine, California to process e-commerce orders in a highly automated environment that leverages material-handling equipment, automated systems and other technologies consistent with our current distribution facility in order to support our e-commerce business. We believe our distribution and fulfillment infrastructure is adequate to support our current business needs.
We also operate an 81,000 square foot e-com fulfillment center in Irvine, California to process e-com orders in a highly automated environment that leverages material-handling equipment, automated systems and other technologies consistent with our current distribution facility in order to support our e-com business. We believe our distribution and fulfillment infrastructure is adequate to support our current business needs.
In recent years, we have invested in a new point-of-sale system and upgraded our website platform and order management system that have enhanced our omni-channel capabilities, including fulfilling e-commerce orders from stores, allowing customers to place orders online to pick up in-store, and ordering items in store for fulfillment by e-commerce.
In recent years, we have invested in a new point-of-sale system and upgraded our website platform and order management system that have enhanced our omni-channel capabilities, including fulfilling e-com orders from stores, allowing customers to place orders online to pick up in-store, and ordering items in store for fulfillment by e-com.
Outside of our stores, we connect with our consumers using the same authentic approach, including social media, community outreach and sponsorship of contests, demonstrations, and other events. We believe the Tillys experience drives customer awareness, loyalty and repeat visits while generating excitement for our brand.
Outside of our stores, we seek to connect with our consumers using the same authentic approach, including social media, community outreach and sponsorship of contests, demonstrations, and other events. We believe the Tillys experience drives customer awareness, loyalty and repeat visits while generating excitement for our brand.
We focus on opening new stores in locations that have above-average incomes and an ability to draw from a sufficient population. We may also close certain stores in any given year based on market conditions, under-performance, or lease negotiations with landlords.
We focus on opening new stores in locations that have above-average incomes and an ability to draw from a sufficient population. We also expect to close certain stores in any given year based on market conditions, under-performance, or lease negotiations with landlords.
From a distribution center operations perspective, substantially all purchased corrugated boxes used for shipping products from our distribution center to Tillys stores are made from previously used corrugated material. During fiscal 2023, we reused approximately 40% of those corrugated boxes for future shipping needs, and we recycled the remaining 60% of corrugated boxes.
From a distribution center operations perspective, substantially all purchased corrugated boxes used for shipping products from our distribution center to Tillys stores are made from previously used corrugated material. During fiscal 2024, we reused approximately 60% of those corrugated boxes for future shipping needs, and we recycled the remaining 40% of corrugated boxes.
We believe our success operating in these different retail venues and geographies demonstrates the portability of the Tillys brand. • Multi-pronged marketing approach . We utilize a multi-pronged marketing strategy to connect with our customers and drive traffic to our stores and online platforms.
We believe our historical success in operating in these different retail venues and geographies demonstrates the portability of the Tillys brand. • Multi-pronged marketing approach . We utilize a multi-pronged marketing strategy to attempt to connect with our customers and drive traffic to our stores and online platforms.
In addition, our omni-channel capabilities allow customer online orders to be picked up in our stores at our customers' discretion, allowing us to satisfy an order from existing inventories within our stores, as well as shipping product from our e-commerce fulfillment center to our stores.
In addition, our omni-channel capabilities allow customer online orders to be picked up in our stores at our customers' discretion, allowing us to satisfy an order from existing inventories within our stores, as well as shipping product from our e-com fulfillment center to our stores.
We have a direct-to-consumer program that allows online orders to be fulfilled and shipped directly to our customers from our brick-and-mortar stores when inventory is otherwise unavailable in our e-commerce fulfillment center.
We have a direct-to-consumer program that allows online orders to be fulfilled and shipped directly to our customers from our brick-and-mortar stores when inventory is otherwise unavailable in our e-com fulfillment center.
We regard our trademarks as valuable and intend to maintain such marks and any related registrations. We are not aware of any claims of infringement or other challenges to our right to use our marks in the United States. We vigorously protect our trademarks.
We regard our trademarks as valuable and intend to maintain such marks and any related registrations. We are not aware of any claims of infringement or other challenges to our right to use our marks in the United States.
We compete with various publicly-traded and privately-held teen-oriented apparel retailers for customers, store locations, store associates and management personnel, including but not limited to Abercrombie & Fitch, Aeropostale, American Eagle Outfitters, Boot Barn, The Buckle, Forever 21, H&M, Hot Topic, Pacific Sunwear, Urban Outfitters, and Zumiez.
We compete with various publicly-traded and privately-held teen-oriented apparel retailers for customers, store locations, store associates and management personnel, including but not limited to Abercrombie & Fitch, Aeropostale, American Eagle Outfitters, Boot Barn, The Buckle, H&M, Hollister, Hot Topic, Pacific Sunwear, Urban Outfitters, and Zumiez.
Key drivers for future growth include deploying targeted online and mobile marketing efforts, leveraging customer personalization to cater to individual shopping patterns, and 6 expanding our digital capabilities to meet evolving customer needs.
Key drivers for potential future growth include deploying targeted online and mobile marketing efforts, leveraging customer personalization to cater to individual shopping patterns, and expanding our digital capabilities to meet evolving customer needs.
We also monitor sell-through rates online versus stores to identify opportunities for inventory transfers to generate greater sales efficiencies. By adapting allocation strategies to capitalize on these individual store and online differences, we believe we can continue to improve our net sales results. • Enhancing Omni-Channel Capabilities.
We also monitor sell-through rates among stores and online to identify opportunities for inventory transfers to generate greater sales efficiencies. By adapting allocation strategies to capitalize on these individual store and online differences, we believe we can improve our net sales results. • Enhancing Omni-Channel Capabilities.
We believe that we compete effectively with our competitors based on our differentiated merchandising strategy, store environment, flexible real estate strategy and company culture. However, many of our competitors are larger, have significantly more stores, and have substantially greater financial, marketing and other resources than we do.
We believe that we have the potential to compete effectively with our competitors based on our differentiated merchandising strategy, store environment, flexible real estate strategy and company culture. However, many of our competitors are larger, have significantly more stores, and have substantially greater financial, marketing and other resources than we do.
We seek to maximize our comparable store sales by consistently offering new, on-trend and relevant merchandise, including exclusive and proprietary branded merchandise, across a broad assortment of categories, increasing our brand awareness through our multi-pronged marketing approach, providing an authentic in-store and online experience for our core customers, and maintaining a high level of customer service.
We seek to maximize our comparable store sales by working to offer new, on-trend and relevant merchandise, including exclusive and proprietary branded merchandise, across a broad assortment of categories, increasing our brand awareness through our multi-pronged marketing approach, providing an authentic in-store and online experience for our core customers, and maintaining a high level of customer service.
Social Matters We support a variety of programs to assist the communities in which we operate, including but not limited to: • We provide significant financial and other support to the Tilly’s Life Center Foundation ("TLC"), a non-profit charitable organization managed by our co-founder, Tilly Levine, which seeks to empower our youth and improve their self-confidence through a variety of educational programs.
Social Matters We support a variety of programs to assist the communities in which we operate, including but not limited to: • We support the Tilly’s Life Center Foundation ("TLC"), a non-profit charitable organization managed by our co-founder, Tilly Levine, which seeks to empower our youth and improve their self-confidence through a variety of educational programs.
We utilize our own proprietary, branded merchandise to expand our price point range, identify and respond to changing fashion trends quickly, fill merchandise gaps and provide a deeper selection of styles and colors for proven fashion items. Our proprietary brands represented approximately 32%, 32% and 30% of our total net sales in fiscal 2023, 2022 and 2021, respectively.
We utilize our own proprietary, branded merchandise to expand our price point range, identify and respond to changing fashion trends quickly, fill merchandise gaps and provide a deeper selection of styles and colors for proven fashion items. Our proprietary brands represented approximately 33%, 32% and 32% of our total net sales in fiscal 2024, 2023 and 2022, respectively.
In addition, we compete with independent specialty shops, department stores, off-price retailers, online marketplaces such as Amazon, online retailers such as Shein and Fashion Nova, stores and websites operated by our third-party brands, and direct marketers that sell similar lines of merchandise and that target customers through catalogs and e-commerce.
In addition, we compete with independent specialty shops, department stores, off-price retailers, online marketplaces such as Amazon, online retailers such as Shein, Revolve, Temu, and Fashion Nova, stores and websites operated by our third-party brands, and direct marketers that sell similar lines of merchandise and that target customers through catalogs, e-commerce and social media.
Our stores have proven to be successful in a variety of retail centers and geographies. We operate stores in malls, lifestyle centers, power centers, community centers, outlet centers, and street-front locations across 89 markets in 33 states.
Historically, our stores have proven to be successful in a variety of retail centers and geographies. We operate stores in malls, lifestyle centers, power centers, community centers, outlet centers, and street-front locations across 86 markets in 33 states.
However, the number of total employees, especially part-time employees, fluctuates depending upon our seasonal needs and, in fiscal 2023, varied between approximately 5,400 and 7,600 employees. None of our employees are represented by a labor union and we consider our relationship with our employees to be good.
However, the number of total employees, especially part-time employees, fluctuates depending upon our seasonal needs and, in fiscal 2024, varied between approximately 5,500 and 7,600 employees. None of our employees are represented by a labor union and we consider our relationship with our employees to be good.
We believe we offer an unparalleled selection of global, specialty and emerging brands, styles, colors, sizes and price points to ensure our customers have a variety of choices every time they visit our stores.
We believe we offer a compelling selection of global, specialty and emerging brands, styles, colors, sizes and price points to ensure our customers have a variety of choices every time they visit our stores.
Governance Matters Although we are a controlled company as a result of the Company stock held by our Co-Founder, Executive Chairman and Interim President and Chief Executive Officer, Hezy Shaked, five of the six members of our Board of Directors are independent under applicable NYSE rules.
Governance Matters Although we are a controlled company as a result of the Company stock held by our Co-Founder, Executive Chairman and Chief Executive Officer, Hezy Shaked, six of the seven members of our Board of Directors are independent under applicable NYSE rules.
For example, "fiscal 2023" refers to the fiscal year ended February 3, 2024; "fiscal 2022" refers to the fiscal year ended January 28, 2023; and "fiscal 2021" refers to the fiscal year ended January 29, 2022. Our Strengths We believe that the following strengths distinguish us from our competitors: • Destination retailer with a broad and differentiated assortment.
For example, "fiscal 2024" refers to the fiscal year ended February 1, 2025; "fiscal 2023" refers to the fiscal year ended February 3, 2024; and "fiscal 2022" refers to the fiscal year ended January 28, 2023. Our Strengths We believe that the following strengths distinguish us from our competitors: • Destination retailer with a broad and differentiated assortment.
With regard to existing stores, we have nearly 100 lease decisions to make during fiscal 2024, covering a range of stores in a variety of markets. These lease decisions include lease extension options, lease kick-out options, and lease expirations that require negotiated renewals.
With regard to existing stores, we have nearly 90 lease decisions to make during fiscal 2025, covering a range of stores in a variety of markets. These lease decisions include lease extension options, lease kick-out options, and lease expirations that require negotiated renewals.
Customers may also shop online, where we feature substantively the same assortment of products as is carried in our brick-and-mortar stores, supplemented by additional online-only styles. Our goal is to serve as a destination for the latest, most relevant merchandise and brands important to our customers.
Customers may also shop online at www.tillys.com, where we feature the same assortment of products as is carried in our brick-and-mortar stores, supplemented by additional online-only styles. Our goal is to serve as a destination for the latest, most relevant merchandise and brands important to our customers.
This, in addition to our customer connectivity, facilitates a partnership culture with our key vendors and provides us access to an extensive variety of products and styles, as well as certain merchandise that is exclusive to our stores and website. Our merchandise purchasing group also works closely with independent third parties who design and procure merchandise for our proprietary brands.
We believe this facilitates a partnership culture with our key vendors and provides us access to an extensive variety of products and styles, as well as certain merchandise that is exclusive to our stores and website. Our merchandise purchasing group also works closely with independent third parties who design and procure merchandise for our proprietary brands.
We continue to improve our approach to inventory management over time through more refined micro-merchandising tactics based on specific store and online characteristics. We regularly update individual store profiles for every store to highlight the differences in brand performance, gender penetrations, and customer interests that exist within our fleet of stores.
We continually seek to improve our inventory management over time through more refined micro-merchandising tactics based on specific store and online characteristics. We regularly update individual store profiles to highlight the differences in brand performance, gender penetrations, and customer interests that exist within our fleet of stores.
Examples of our proprietary brands, ranked by total net sales generated in fiscal 2023, include: Denim, apparel, accessories and fragrance brand for young men, young women and kids Apparel and accessories brand for young women and girls Apparel brand for young women Apparel and accessories for young women Apparel, beauty and fragrance brand for young women Home accessories and gift brand for young women, men and kids We believe that our extensive selection of merchandise, from established global, specialty and emerging third-party brands as well as our proprietary brands, caters to a wide demographic of core customers and enhances our image as a destination for the most sought-after apparel, footwear, accessories and hardgoods.
Examples of our proprietary brands, ranked by total net sales generated in fiscal 2024, include: Denim, apparel, accessories and fragrance brand for young men, young women and kids Apparel and accessories brand for young women and girls Apparel brand for young women Apparel and accessories for young women We believe that our extensive selection of merchandise, from established global, specialty and emerging third-party brands as well as our proprietary brands, caters to a wide demographic of core customers and enhances our image as a destination for sought-after apparel, footwear, and accessories.
We believe these omni-channel capabilities and investments will drive additional traffic to our stores, increase sales opportunities with customers who come to the store to pick up their online orders, and improve our online conversion rates overall. • Reinvest in Existing Stores.
We believe these omni-channel capabilities and investments will drive additional traffic to our stores, increase sales opportunities with customers who come to the store to pick up their online orders, and improve our online conversion rates overall. • Real Estate Opportunities.
We currently expire unredeemed awards and accumulated partial points 365 days after the customer's original purchase date. This program is designed to interact with our customers in a more direct and targeted manner, and to provide more insight into their shopping behaviors and preferences.
We currently expire unredeemed awards and accumulated partial points 365 days after the customer's purchase date on which those awards/points were earned. This program is designed to interact with our customers in a more direct and targeted manner, and to provide more insight into their shopping behaviors and preferences.
Growth Strategy Despite our recent operating challenges, we continue to believe in the following strategies to drive long-term sales and profitability, including: • Drive Comparable Store Sales Improvement.
Key Operating Strategies Despite our recent operating challenges, we continue to believe in the following strategies to drive long-term sales growth and a return to profitability, including: • Drive Comparable Store Sales Improvement.
We continue to seek new opportunities to enhance our existing loyalty program to further reward our most loyal customers. We believe the combination of these factors, together with the operating strategies described below, will improve our comparable store sales results over time. • Increase Our Operating Margins.
We continue to seek new opportunities to enhance our loyalty program to further reward our most loyal customers. We believe the combination of these factors, together with the operating strategies described below, give us an opportunity to improve our comparable store sales results over time. • Increase Our Operating Margins.
Our goal is to provide our customers with a seamless shopping experience. Our e-commerce platform allows us to reach new customers and build our brand in markets where we currently do not have stores. For example, we generate e-commerce sales in all 50 states and the District of Columbia although we have physical stores in only 33 states.
Our goal is to provide our customers with a seamless shopping experience. Our e-com platform allows us to reach new customers and build our brand in markets where we currently do not have stores. For example, we generate e-com sales in all 50 states and the District of Columbia while having physical stores in just 33 states.
Store Openings and Closings The following table shows the number of stores opened and closed in each of our last five fiscal years: Fiscal Year Stores Opened Stores Closed Total Number of Stores at End of Period 2019 14 3 240 2020 2 4 238 2021 9 6 241 2022 11 3 249 2023 7 8 248 43 24 We currently expect to open 5 new stores during fiscal 2024 within existing markets.
Store Openings and Closings The following table shows the number of stores opened and closed in each of our last five fiscal years: Fiscal Year Stores Opened Stores Closed Total Number of Stores at End of Period 2020 2 4 238 2021 9 6 241 2022 11 3 249 2023 7 8 248 2024 7 15 240 36 36 We currently expect to open a limited number of new stores during fiscal 2025 within existing markets.
In fiscal 2023, our top two selling brands overall were our proprietary RSQ brand (21% of our total net sales) and our proprietary Full Tilt brand (6% of our total net sales).
In fiscal 2024, our top two selling brands overall were our proprietary RSQ brand (23% of our total net sales) and our proprietary Full Tilt brand (6% of our total net sales).
Our purchasing group and planning and allocation team are highly coordinated and maintain a disciplined buying strategy. 8 To ensure a relevant assortment, our teams: • perform comprehensive analysis of sales trends for both stores and e-commerce; • constantly seek out new emerging brands, while maintaining close partnerships with existing brands; • utilize trend and color forecasting services; • attend trade shows and youth culture events; • conduct store visits to gather feedback from our customers and staff; and • maintain market and consumer insight through shopping trends of leading retailers, direct competitors and relevant social media influencers.
To ensure a relevant assortment, our teams: • perform comprehensive analysis of sales trends for both stores and e-com; • constantly seek out new emerging brands, while maintaining close partnerships with existing brands; • utilize trend and color forecasting services; • attend trade shows and youth culture events; 8 • conduct store visits to gather feedback from our customers and staff; and • maintain market and consumer insight through shopping trends of leading retailers, direct competitors and relevant social media influencers.
We also will continue to use established business processes to identify and execute initiatives focused on lowering our unit costs and improving operational efficiency throughout our organization. • Continue Growing E-Commerce. Our e-commerce net sales represented approximately 22%, 21% and 21% of our total net sales in fiscal 2023, 2022, and 2021, respectively.
We will also continue to use established business processes to attempt to identify and execute initiatives focused on lowering our unit costs and improving operational efficiency throughout our organization. • Growth Opportunity in E-Com. Our e-com net sales represented approximately 22%, 22% and 21% of our total net sales in fiscal 2024, 2023, and 2022, respectively.
Our third-party and proprietary branded merchandise includes a broad selection of lifestyle and emerging brands. We strive to keep our merchandise mix current by continuously introducing emerging brands and styles not available at many other specialty retailers in order to identify and respond to the evolving desires of our customers.
Our third-party and proprietary branded merchandise includes a broad selection of lifestyle and emerging brands. We strive to keep our merchandise mix current by continuously introducing emerging brands and styles in order to identify and respond to the evolving desires of our customers.
We believe our extensive selection of third-party and proprietary merchandise allows us to identify and offer several trends simultaneously, offer a greater range of price points, and manage our inventories more dynamically. By closely monitoring trends and shipping product to our stores multiple times per week, we are able to adjust our merchandise mix based on store size and location.
We believe our extensive selection of third-party and proprietary merchandise allows us to identify and offer several trends simultaneously and offer a greater range of price points. By closely monitoring trends and shipping product to our stores multiple times per week, we seek to adjust our merchandise mix based on store size and location on a frequent basis.
In each case, our real estate decisions will be driven by the overarching goal of improving our profitability. As a result, we may close a limited number of stores from time to time if acceptable potential for profitability cannot be obtained through lease negotiations with landlords.
In each case, our real estate decisions will be driven by the overarching goal of improving our profitability. As a result, we may close a limited number of stores from time to time if we are unable to achieve acceptable lease economics through our lease negotiations with landlords.
We also expect to continue to expand digital marketing efforts through customer loyalty programs, SMS marketing, push messaging and building brand awareness in the communities surrounding our existing stores to drive growth across all channels. • Improve Inventory Allocation and Management.
We also expect to continue to expand digital marketing efforts through customer loyalty programs, SMS marketing, push messaging and building brand awareness in the communities surrounding our existing stores to drive net sales growth both in stores and online. 6 • Improve Inventory Allocation and Management.
For example, we sell merchandise to customers in all 50 states and the District of Columbia even though we have brick-and-mortar stores in only 33 states. We also believe our fully-integrated digital platform reinforces the Tillys brand image and serves as an advertising vehicle for our retail stores.
For example, we sell merchandise to customers in all 50 states and the District of Columbia while having physical stores in just 33 states. We also believe our fully-integrated digital platform reinforces the Tillys brand image and serves as an advertising vehicle for our retail stores.
Our extensive selection of third-party and proprietary merchandise allows us to identify and address trends more quickly, offer a greater range of price points, and manage our inventories more dynamically. We offer a mix of merchandise for young men, young women, boys and girls across the apparel, footwear, accessories and hardgoods categories.
Our extensive selection of third-party and proprietary merchandise allows us the opportunity to identify and address trends more quickly, and offer a greater range of price points. We offer a mix of merchandise for young men, young women, boys and girls across the apparel, footwear, accessories and hardgoods categories. We believe this category mix contributes to our broad demographic appeal.
We believe that significant growth opportunities continue to exist within the online portion of our business and, relative to fiscal 2023, we believe it may continue to grow as a percentage of total net sales in the future.
We believe that continued growth opportunities exist within the online portion of our business and, relative to fiscal 2024, we believe it has potential to grow as a percentage of total net sales in the future.
With 248 total stores at the end of fiscal 2023, we believe there are numerous attractive opportunities for Tillys to continue to open new stores in the future. We currently expect to open 5 new stores during fiscal 2024 within existing markets.
With 240 total stores at the end of fiscal 2024, we believe there are numerous opportunities for Tillys to continue to open new stores in the future. We currently expect to open a limited number of stores during fiscal 2025 within existing markets.
We also keep our merchandise mix relevant by introducing emerging brands and new merchandise from established brands not available at many other retailers. Our merchandising capabilities enable us to adjust our merchandise mix with a frequency that promotes a current look to our stores and website. • Flexible real estate strategy across real estate venues and geographies.
We continuously seek to update our merchandise mix by introducing emerging brands and new merchandise from established brands. Our merchandising capabilities enable us to adjust our merchandise mix with a frequency that promotes a current look to our stores and website. • Flexible real estate strategy across real estate venues and geographies.
We believe this category mix contributes to our broad demographic appeal. Our apparel merchandise includes branded, fashion, and core styles for tops, outerwear, bottoms, swim and dresses. Accessories merchandise includes backpacks, hydration bottles, hats, sunglasses, small electronics and accessories, handbags, watches, jewelry, and more.
Our apparel merchandise includes branded, fashion, and core styles for tops, outerwear, bottoms, swim and dresses. Accessories merchandise includes backpacks, hydration bottles, hats, sunglasses, small electronics and accessories, handbags, watches, jewelry, and more.
Merchandise Purchasing Our merchandising team is organized by category and product type under the leadership of our Chief Merchandising Officer and our divisional merchandise managers, a technical design and fashion trend team, buyers, associate buyers and assistant buyers.
Merchandise Purchasing Our merchandising team is organized by category and product type under the leadership of our Senior Vice President, General Merchandise Manager, a technical design and fashion trend team, buyers, associate buyers and assistant buyers.
We endeavor to recycle all plastic packing material received with merchandise from our product suppliers. Our distribution centers are equipped with approximately 75% DesignLights Consortium (“DLC”) classified LED lamps.
We endeavor to recycle packing material received with merchandise from our product suppliers. Our distribution centers are equipped with Design Lights Consortium classified LED lamps.
Tillys is headquartered in Irvine, California and operated 248 stores in 33 states as of February 3, 2024. Our stores are located in a variety of retail centers, including malls, lifestyle centers, "power" centers, community centers, outlet centers, and street-front locations.
Tillys is headquartered in Irvine, California and operated 240 stores in 33 states as of February 1, 2025. Our stores are located in malls, lifestyle centers, "power" centers, community centers, outlet centers, and street-front locations.
We believe we have the opportunity to drive operating margin expansion through net sales growth, store unit growth, improving product margins off of company lows in fiscal 2023, and continued process improvements.
We believe we have the opportunity to drive operating margin expansion through net sales growth, store unit growth, improving product margins, and continued process improvements over time.
Our third-party brands represented approximately 68%, 68% and 70% of our total net sales in fiscal 2023, 2022 and 2021, respectively, with no third-party brand accounting for more than 4% of our total net sales during fiscal 2023. 7 Selected third-party brands (in alphabetical order) include: adidas BDG Billabong Birkenstock Brixton Champion Converse Crocs Diamond Supply Dickies Dr.
Our third-party brands represented approximately 67%, 68% and 68% of our total net sales in fiscal 2024, 2023 and 2022, respectively, with no third-party brand accounting for more than 5% of our total net sales during fiscal 2024. 7 Selected third-party brands (in alpha-numeric order) include: adidas Affliction Asics BDG Billabong Birkenstock Brixton Converse CVLA Crocs Dickies Dr.
Selected brands involved in our sustainability program partnership include, among others, HydroFlask, Jansport, The North Face, Billabong, adidas, Birkenstock, Teva, Vans, Levi’s, Obey, Vissla, Brixton, Katin, RVCA, Santa Cruz, and O’Neill, as well as our own RSQ and Full Tilt proprietary brands.
Selected brands involved in our sustainability program partnership include, among others, HydroFlask, The North Face, Billabong, adidas, Levi’s, Brixton, RVCA, BDG, Rip Curl, Volcom, and O’Neill, as well as our own RSQ and Full Tilt proprietary brands.
Human Capital Management • We provide a variety of health and wellness programs for our corporate employees to promote healthy lifestyles, including periodic onsite health fairs, blood drives, breast cancer screenings, flu shots, among other items. • In order to help ensure we provide a healthy, respectful and safe working environment for all employees, we provide periodic diversity and anti-harassment training for all employees to improve workplace sensitivity. • We distribute monthly health tips and guidelines to encourage healthy living habits, and we provide weekly fruit deliveries to our corporate office and distribution center break rooms to promote healthier eating choices. • We provide one paid day off per year to all employees to be utilized for volunteer work of their choosing.
Our support of TLC includes customer donations at our store registers (round-up for charity), cash donations by the Company, use of a portion of our e-com distribution center office space for their operations, and use of Company staff to aid in event planning. • We donate end of season products to certain charitable organizations for their use in supporting their respective missions. 13 Human Capital Management • We provide a variety of health and wellness programs for our corporate employees to promote healthy lifestyles, including periodic onsite health fairs, blood drives, breast cancer screenings, flu shots, among other items. • In order to help ensure we provide a healthy, respectful and safe working environment for all employees, we provide periodic diversity and anti-harassment training for all employees to improve workplace sensitivity. • We distribute monthly health tips and guidelines to encourage healthy living habits, and we provide weekly fruit deliveries to our corporate office and distribution center break rooms to promote healthier eating choices. • We provide one paid day off per year to all employees to be utilized for volunteer work of their choosing.
Our target customer regularly shops online and via mobile devices in addition to visiting stores, giving us a continued opportunity to grow our e-commerce platform over time.
Our target customer regularly shops online and via mobile devices in addition to visiting stores, giving us continuous opportunities to grow our e-com net sales over time.
We support the Tilly’s Life Center Foundation ("TLC"), a non-profit charitable organization created by our co-founder, Tilly Levine, which seeks to empower our youth and improve their self-confidence through a variety of educational programs.
We are also partnering with brands in co-op marketing in an effort to grow awareness and increase brand sales. • Community Outreach. We support the Tilly’s Life Center Foundation ("TLC"), a non-profit charitable organization created by our co-founder, Tilly Levine, which seeks to empower our youth and improve their self-confidence through a variety of educational programs.
Our purchasing approach focuses on product relevance, quality, fit, availability, cost and speed of production in order to provide timely frequent delivery of merchandise to our stores.
Our purchasing approach focuses on product relevance, quality, fit, availability, cost and speed of production in order to provide timely frequent delivery of merchandise to our stores. Our purchasing group and planning and allocation team are highly coordinated and maintain a disciplined buying strategy.
In addition, each store typically has 10 or more full time equivalent store associates who reflect our customers' lifestyles and promote the Tillys brand not only inside the store, but also in their schools and 10 communities.
In addition, each store typically has 10 or more full time equivalent store associates who reflect our customers' lifestyles and promote the Tillys brand not only inside the store, but also in their schools and communities. The number of store associates we employ generally increases during peak selling seasons, particularly the back-to-school and the winter holiday seasons.
In addition, we expect to improve operating margins and support growth by leveraging previous investments in infrastructure, including our dedicated fulfillment center for e-commerce, upgraded e-commerce platform, and in-store point-of-sale system.
In addition, we expect to improve operating efficiencies over time by leveraging previous investments in infrastructure, including our dedicated fulfillment center for e-com, upgraded warehouse management systems, website and mobile app, and in-store point-of-sale system.
Our training programs and workshops are offered at the store, district and regional levels, allowing managers from multiple locations to interact with each other and exchange ideas to better operate stores. Store associates receive training from their managers to improve their product expertise and selling skills.
We provide our managers with the knowledge and tools to succeed through comprehensive training programs, focusing on both operational expertise and supervisory skills. Our training programs and workshops are offered at the store, district and regional levels, allowing managers from multiple locations to interact with each other and exchange ideas to better operate stores.
We have given our customers the opportunity to support TLC with point-of-sale donations by allowing them to elect to "round up" their purchases to the nearest dollar and donate the rounded up portion to TLC.
We have given our customers the opportunity to support TLC with point-of-sale donations by allowing them to elect to "round up" their purchases to the nearest dollar and donate the rounded up portion to TLC. Distribution We process and distribute merchandise to our stores through a 126,000 square foot distribution facility co-located with our headquarters in Irvine, California.
Employees As of February 3, 2024, we employed approximately 1,536 full-time and approximately 4,512 part-time employees, of which approximately 528 were employed at our corporate office and distribution facilities and approximately 5,520 were employed at our store locations.
We vigorously protect our trademarks. 12 Employees As of February 1, 2025, we employed approximately 1,410 full-time and approximately 4,209 part-time employees, of which approximately 487 were employed at our corporate office and distribution facilities and approximately 5,132 were employed at our store locations.
We require all employees to periodically certify their reading, understanding, and compliance with such policy. 14 We maintain a whistleblower hotline wherein employees, customers and/or vendors can confidentially report unethical or illegal behavior by Company management or other employees.
We maintain a Code of Ethical Business Conduct which can be found on our website at www.tillys.com under the Investor Relations link. We require all employees to periodically certify their reading, understanding, and compliance with such policy. We maintain a whistleblower hotline wherein employees, customers and/or vendors can confidentially report unethical or illegal behavior by Company management or other employees.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf there is a significant decrease in demand for our products or if we fail to accurately predict fashion trends or consumer demands, economic trends or unseasonable weather impacts the anticipated demand for certain product categories, we may be forced to rely on markdowns or promotional sales to dispose of excess inventory.
Biggest changeIf there is a significant decrease in demand for our products, if we fail to accurately predict fashion trends or consumer demands, economic trends or unseasonable weather impacts the anticipated demand for certain product categories, or we are otherwise unable to accurately track inventory at the store level and aggregate daily sales information, communicate customer information and process purchasing card transactions, or process shipments of goods and report financial information, we may hold significant inventory, which can impact our ability to effectively cycle new products, increase storage costs or incur other costs or expenses, and we may be forced to rely on markdowns, promotional sales, or inventory liquidators to dispose of excess inventory.
After the directors in each class serve for the initial terms provided in our certificate of incorporation, each class will serve for a staggered three-year term; • our certificate of incorporation permits removal of a director only for cause by the affirmative vote of the holders of a majority of the voting power of the company once the Board of Directors is divided into three classes and provides that director vacancies can only be filled by an affirmative vote of a majority of directors then in office; 24 • our amended and restated bylaws require advance notice of stockholder proposals and director nominations; and • Section 203 of the Delaware General Corporation Law may prevent large stockholders from completing a merger or acquisition of us.
After the directors in each class serve for the initial terms provided in our certificate of incorporation, each class will serve for a staggered three-year term; • our certificate of incorporation permits removal of a director only for cause by the affirmative vote of the holders of a majority of the voting power of the company once the Board of Directors is divided into three classes and provides that director vacancies can only be filled by an affirmative vote of a majority of directors then in office; • our amended and restated bylaws require advance notice of stockholder proposals and director nominations; and • Section 203 of the Delaware General Corporation Law may prevent large stockholders from completing a merger or acquisition of us.
See “— Our founders control a majority of the voting power of our common stock, which may prevent other stockholders from influencing corporate decisions and may result in conflicts of interest, and a significant portion of our Class A common stock is held by a concentrated group of stockholders, which may adversely impact other stockholders .” While we have paid special cash dividends in the past, there can be no assurance that we will pay dividends in the future, which may make our Class A common stock less desirable to investors and decrease its value.
See “— Our founders control a majority of the voting power of our common stock, which may prevent other stockholders from influencing corporate decisions and may result in conflicts of interest, and a significant portion of our Class A common stock is held by a concentrated group of stockholders, which may adversely impact other stockholders .” 23 While we have paid special cash dividends in the past, there can be no assurance that we will pay dividends in the future, which may make our Class A common stock less desirable to investors and decrease its value.
If a third-party claims to have licensing rights with respect to merchandise we purchased from a vendor, or we acquire unlicensed merchandise, we could be obligated to remove such merchandise from our stores, incur costs associated with destruction of such merchandise if the distributor or vendor is unwilling or unable to reimburse us and be subject to liability under various civil and criminal causes of action, including actions to recover unpaid royalties and other damages and 22 injunctions.
If a third-party claims to have licensing rights with respect to merchandise we purchased from a vendor, or we acquire unlicensed merchandise, we could be obligated to remove such merchandise from our stores, incur costs associated with destruction of such merchandise if the distributor or vendor is unwilling or unable to reimburse us and be subject to liability under various civil and criminal causes of action, including actions to recover unpaid royalties and other damages and injunctions.
Deterioration in our relationships with our suppliers, supply chain disruption, or increased demand for their products could have a material adverse impact on our business, and there 18 can be no assurance that we will be able to acquire desired merchandise in sufficient quantities on terms acceptable to us in the future.
Deterioration in our relationships with our suppliers, supply chain disruption, or increased demand for their products could have a material adverse impact on our business, and there can be no assurance that we will be able to acquire desired merchandise in sufficient quantities on terms acceptable to us in the future.
These factors could cause comparable store sales or net store sales per square foot to decline or fail to grow at expected rates, which could adversely affect our results of operations and stock price during such periods. Our business depends upon identifying and responding to changing customer fashion preferences and fashion-related trends.
These factors could cause comparable store sales or net store sales per square foot to continue to decline or fail to grow at expected rates, which could adversely affect our results of operations and stock price during such periods. Our business depends upon identifying and responding to changing customer fashion preferences and fashion-related trends.
In addition, we must make significant payments for common area maintenance and real estate taxes. Many of our lease agreements also contain provisions which increase the rent payments on a set time schedule, causing the cash rent paid for 17 a location to escalate over the term of the lease.
In addition, we must make significant payments for common area maintenance and real estate taxes. Many of our lease agreements also contain provisions which increase the rent payments on a set time schedule, causing the cash rent paid for a location to escalate over the term of the lease.
Any failure or perceived failure by us to comply with federal, state, or foreign laws or self-regulatory 21 standards could result in negative publicity, significant fines and expenses for remediation, diversion of management time and effort and proceedings against us by governmental entities, individuals or others.
Any failure or perceived failure by us to comply with federal, state, or foreign laws or self-regulatory standards could result in negative publicity, significant fines and expenses for remediation, diversion of management time and effort and proceedings against us by governmental entities, individuals or others.
In addition, local authorities or management from the mall or shopping center could close the mall or shopping center in response to security concerns. Such closures, as well as lower traffic due to security concerns, could result in decreased sales. We may be subject to unionization and work stoppages, or slowdowns.
In addition, local authorities or management from the mall or shopping center could close the mall or shopping center in response to security concerns. Such closures, as well as lower traffic due to security concerns, could result in decreased sales. 24 We may be subject to unionization and work stoppages, or slowdowns.
In addition, our merchandise supply could be impacted if our suppliers’ imports become subject to existing or future duties and quotas, or if our suppliers face increased competition from other companies for production facilities, import quota capacity and 19 shipping capacity.
In addition, our merchandise supply could be impacted if our suppliers’ imports become subject to existing or future duties and quotas, or if our suppliers face increased competition from other companies for production facilities, import quota capacity and shipping capacity.
All of our employees are employed at will and are not contractually bound to stay with the company. If we lose the services of any of our 20 key personnel or we are not able to attract additional qualified personnel, we may not be able to successfully manage our business.
All of our employees are employed at will and are not contractually bound to stay with the company. If we lose the services of any of our key personnel or we are not able to attract additional qualified personnel, we may not be able to successfully manage our business.
Our business and growth depends upon the leadership and experience of our key executive management team, including our co-founder, Hezy Shaked, who currently serves as our Interim President and Chief Executive Officer and Executive Chairman of our Board of Directors, and Michael Henry, our Executive Vice-President and Chief Financial Officer.
Our business and growth depends upon the leadership and experience of our key executive management team, including our co-founder, Hezy Shaked, who currently serves as our President and Chief Executive Officer and Executive Chairman of our Board of Directors, and Michael Henry, our Executive Vice-President and Chief Financial Officer.
We believe that our brand image and brand awareness has contributed significantly to the success of our business. We also believe that maintaining and enhancing our brand image, particularly in new markets where we have limited brand recognition, is important to maintaining and expanding our customer base.
We believe that our brand image and brand awareness has contributed significantly to the historical success of our business. We also believe that maintaining and enhancing our brand image, particularly in new markets where we have limited brand recognition, is important to maintaining and expanding our customer base.
Most of our merchandise is produced in foreign countries, making the price and availability of our merchandise susceptible to international trade and other international conditions. Although we purchase our merchandise from domestic suppliers, these suppliers have a majority of their merchandise made in foreign countries.
Most of our merchandise is produced in foreign countries, making the price and availability of our merchandise susceptible to international trade and other international conditions. Although we predominantly purchase our merchandise from domestic suppliers, these suppliers have a majority of their merchandise made in foreign countries.
Additionally, instances of supply chain disruptions and delays, as well as continued heightened inflation, could lead to inefficiencies and heightened costs passed to us by our vendors that could negatively impact our performance and our results of operations.
Additionally, instances of supply chain disruptions and delays, as well as continued heightened inflation and tariffs, could lead to inefficiencies and heightened costs passed to us by our vendors that could negatively impact our performance and our results of operations.
Shaked serves as Executive Chairman of the Board of Directors and Interim President and Chief Executive Officer, and is the voting trustee, pursuant to a voting trust agreement, covering the shares owned by Ms. Levine. As a result, Mr.
Shaked serves as Executive Chairman of the Board of Directors and President and Chief Executive Officer, and is the voting trustee, pursuant to a voting trust agreement, covering the shares owned by Ms. Levine. As a result, Mr.
In addition, any expansion of our business would require significant amounts of cash from operations to pay our existing and future lease obligations, build out new store space, remodel existing stores, purchase inventory, create new marketing and advertising initiatives, fund the expansion of our e-commerce business, pay personnel, pay for the increased costs associated with operating as a public company, and, if necessary, further invest in our infrastructure and facilities.
In addition, any expansion of our business would require significant amounts of cash from operations to pay our existing and future lease obligations, build out new store space, remodel existing stores, purchase inventory, create new marketing and advertising initiatives, fund the expansion of our e-com business, pay personnel, pay for the increased costs associated with operating as a public company, and, if necessary, further invest in our infrastructure and facilities.
The implementation of these strategies or plans may not be completed or achieve the anticipated results within the expected timeframe, which may result in declines in net sales or unanticipated cost increases.
The implementation of these strategies or plans may not be completed or achieve the anticipated results within the expected timeframe, which may result in further declines in net sales or unanticipated cost increases.
Government regulations limiting carbon dioxide and other greenhouse gas emissions may also increase compliance, shipping, and merchandise costs, and other regulation affecting energy inputs, could materially affect our profitability.
Government regulations limiting carbon dioxide and other greenhouse gas emissions may also increase compliance, shipping, and merchandise costs, and other 25 regulation affecting energy inputs, could materially affect our profitability.
If we encounter any disruptions to our operations within these buildings or if they were to shut down for any reason, including by fire or other natural disaster, or as a result of pandemics/epidemics, then we may be prevented from effectively operating our stores, shipping and processing our merchandise and operating our e-commerce platform.
If we encounter any disruptions to our operations within these buildings or if they were to shut down for any reason, including by fire or other natural disaster, or as a result of pandemics/epidemics, then we may be prevented from effectively operating our stores, shipping and processing our merchandise and operating our e-com platform.
Further, if we lose key vendors or are unable to find alternative vendors to supply us with substitute merchandise for lost products, our business may be adversely affected. If we cannot retain or find qualified employees to meet our staffing needs in our stores, our distribution and e-commerce fulfillment centers, or our corporate offices, our business could be adversely affected.
Further, if we lose key vendors or are unable to find alternative vendors to supply us with substitute merchandise for lost products, our business may be adversely affected. If we cannot retain or find qualified employees to meet our staffing needs in our stores, our distribution and e-com fulfillment centers, or our corporate offices, our business could be adversely affected.
Our corporate headquarters, distribution and e-commerce fulfillment centers and certain information technology systems are in Irvine, California, and if their operations are disrupted, we may not be able to fully operate our store support functions, ship merchandise to our stores, or fulfill e-commerce orders, which would adversely affect our business.
Our corporate headquarters, distribution and e-com fulfillment centers and certain information technology systems are in Irvine, California, and if their operations are disrupted, we may not be able to fully operate our store support functions, ship merchandise to our stores, or fulfill e-com orders, which would adversely affect our business.
We are required to make significant lease payments for our store leases, corporate offices, and distribution centers, which may strain our cash flow. We lease all of our retail store locations as well as our corporate headquarters, warehouses, distribution and e-commerce fulfillment centers. We do not own any real estate.
We are required to make significant lease payments for our store leases, corporate offices, and distribution centers, which may strain our cash flow. We lease all of our retail store locations as well as our corporate headquarters, warehouses, distribution and e-com fulfillment centers. We do not own any real estate.
If our management information systems fail to operate or are unable to support our business, our store and e-commerce operations could be severely disrupted, and we could be required to make significant additional expenditures to remediate any such failure, which may negatively impact our financial condition.
If our management information systems fail to operate or are unable to support our business, our store and e-com operations could be severely disrupted, and we could be required to make significant additional expenditures to remediate any such failure, which may negatively impact our financial condition.
It may be difficult for us to foresee regulatory changes impacting our business and our actions needed to respond to changes in the law could be costly and may negatively impact our operations. 25 We depend on cash generated from our operations to support our growth, which could strain our cash flow.
It may be difficult for us to foresee regulatory changes impacting our business and our actions needed to respond to changes in the law could be costly and may negatively impact our operations. We depend on cash generated from our operations to support our business, which could strain our cash flow.
Climate change, extreme weather conditions, wildfires, droughts, and rising sea levels could affect our ability to procure merchandise at costs and in quantities we currently experience. Climate change, environmental, social and governance (“ESG”) and sustainability are a growing global movement.
Climate change, extreme weather conditions, wildfires, droughts, and rising sea levels could affect our ability to procure merchandise at costs and in quantities we currently experience. Climate change, environmental, social and governance matters, and sustainability are a growing global movement.
We experienced significant decreases in net sales during fiscal 2023 and 2022, at least partly in light of inflationary pressures on consumers and concerns regarding the economic and geo-political environment, and similar impacts may occur in the future.
We experienced significant decreases in net sales during fiscal 2024 and 2023, at least partly in light of inflationary pressures on consumers and concerns regarding the economic and geo-political environment, and similar impacts may occur in the future.
We are not involved in the manufacture of any of the merchandise we purchase from our vendors for sale to our customers, and we do not independently investigate whether these vendors legally hold intellectual property rights to merchandise that they are manufacturing or distributing.
We do not manufacture any of the merchandise we purchase from our vendors for sale to our customers, and we do not independently investigate whether these vendors legally hold intellectual property rights to merchandise that they are manufacturing or distributing.
We rely on third parties to ship our merchandise from our distribution center in Irvine, California to our stores located across the United States, as well as to ship e-commerce sales packages directly to our customers.
We rely on third parties to ship our merchandise from our distribution center in Irvine, California to our stores located across the United States, as well as to ship e-com sales packages directly to our customers.
In addition, if the Class B common stock were to be converted to Class A common stock at any time, these third-party stockholders would represent a significant portion of the total voting power of our outstanding common stock, and could create similar risks to those resulting from Mr. Shaked’s and Ms. Levine’s beneficial ownership of our Class B common stock.
In addition, if the Class B common stock were to be converted to Class A common stock at any time, these third-party stockholders would represent a significant portion of the total voting power of our outstanding common stock, and could create similar risks to those resulting from Mr. Shaked’s and Ms.
Our ability to successfully open and operate new stores is subject to a variety of risks and uncertainties, such as: • identifying suitable store locations, the availability of which is beyond our control; • obtaining acceptable lease terms; • sourcing sufficient levels of inventory; • selecting the appropriate merchandise that appeals to our customers; • hiring and retaining store employees; • assimilating new store employees into our corporate culture; 16 • effectively marketing new store locations; • avoiding construction delays and cost overruns in connection with the build-out of new stores; • managing and expanding our infrastructure to accommodate growth; and • integrating the new stores with our existing buying, distribution and other support operations.
Our ability to successfully open and operate new stores is subject to a variety of risks and uncertainties, such as: • identifying suitable store locations, the availability of which is beyond our control; • obtaining acceptable lease terms; • sourcing sufficient levels of inventory; • selecting the appropriate merchandise that appeals to our customers; • hiring and retaining store employees; 16 • assimilating new store employees into our corporate culture; • effectively marketing new store locations; • avoiding construction delays and cost overruns in connection with the build-out of new stores; and • integrating the new stores with our existing buying, distribution and other support operations.
Violations of and/or changes in laws, including employment laws and laws related to our merchandise and our e-commerce platform, could make conducting our business more expensive or change the way we do business.
Violations of and/or changes in laws, including employment laws and laws related to our merchandise and our e-com platform, could make conducting our business more expensive or change the way we do business.
By maintaining or increasing the amount of our proprietary branded merchandise, we are also exposed to greater fashion risk, as we may fail to anticipate fashion trends correctly. These risks, if they occur, could have a material adverse effect on sales and profitability.
By maintaining or increasing the amount of our proprietary branded merchandise, we are also exposed to greater fashion risk, as we may fail to anticipate fashion trends correctly. These risks could have a material adverse effect on sales and profitability.
There can be no assurance that the steps taken by us to protect our proprietary rights will be adequate to prevent infringement of our trademarks and proprietary rights by others, including imitation and misappropriation of our brand. There can be no assurance that obstacles will not arise as we expand our product lines and geographic scope.
There can be no assurance that the steps taken by us to protect our proprietary rights will be adequate to prevent infringement of our trademarks and proprietary rights by others, including imitation and misappropriation of our brand. There can be no assurance that obstacles will not arise should we expand our product lines and 21 geographic scope.
Even the perception of privacy or data protection concerns, whether or not valid, may inhibit customer engagement with us and our e-commerce platform.
Even the perception of privacy or data protection concerns, whether or not valid, may inhibit customer engagement with us and our e-com platform.
Failure to successfully market our brand in new and existing markets could harm our business, results of operations and financial condition. Any inability to balance merchandise bearing our proprietary brands with the third-party branded merchandise we sell may have an adverse effect on our sales and gross margin. Our proprietary branded merchandise represents a significant portion of our net sales.
Failure to successfully market our brand could harm our business, results of operations and financial condition. Any inability to balance merchandise bearing our proprietary brands with the third-party branded merchandise we sell may have an adverse effect on our sales and gross margin. Our proprietary branded merchandise represents a significant portion of our net sales.
Maintaining and enhancing our brand image may require us to make substantial investments in areas such as merchandising, marketing, store operations, e-commerce, social media, community relations, store graphics, catalog distribution and employee training, which could adversely affect our cash flow and which may not ultimately be successful.
Maintaining and enhancing our brand image may require us to make substantial investments in areas such as merchandising, marketing, store operations, e-com, social media, community relations, store graphics, and employee training, which could adversely affect our cash flow and which may not ultimately be successful.
We primarily rely on cash flows generated from existing stores to fund our current operations and our growth plans. An increase in our net cash outflow for new stores or remodels of existing stores could adversely affect our operations by reducing the amount of cash available to address other aspects of our business.
We primarily rely on cash flows generated from existing stores to fund our operations. An increase in our net cash outflow for new stores or remodels of existing stores could adversely affect our operations by reducing the amount of cash available to address other aspects of our business.
Our e-commerce platform and its continued growth subjects us to certain risks that could have an adverse effect on our results of operations, including: • diversion of traffic from our stores; • risks related to proper allocation of merchandise between e-commerce and stores; • liability for online content; • government regulation impacting the Internet, including with respect to privacy; and • increased risks related to the computer systems that operate our website and related support systems, including computer viruses, electronic break-ins, other cyber security breaches, system errors or failures, or similar disruptions.
Growth in the online portion of our business subjects us to certain risks that could have an adverse effect on our results of operations, including: • diversion of traffic from our stores; • risks related to proper allocation of merchandise between e-com and stores; • liability for online content; • government regulation impacting the Internet, including with respect to privacy; and • increased risks related to the computer systems that operate our website and related support systems, including computer viruses, electronic break-ins, other cyber security breaches, system errors or failures, or similar disruptions.
If we are not successful in selling our inventory during these periods, we may be forced to rely on markdowns or promotional sales to dispose of the inventory, or we may not be able to sell the inventory at all, which could have an adverse effect on our margins and operating income.
If we are not successful in managing our inventory levels or selling our inventory, we may be forced to rely on markdowns or promotional sales to dispose of the inventory, or we may not be able to sell the inventory at all, which could have an adverse effect on our margins and operating income.
If we cannot identify changing trends in advance, fail to react to changing trends, misjudge the market for a trend, or fail to timely secure and market then-fashionable inventory, our sales could be adversely affected, and we may be faced with a substantial amount of unsold inventory, reduced sales, loss of customers or other missed opportunities.
If we cannot identify changing trends in advance, fail to react to changing trends, misjudge the market for a trend, or fail to timely secure and market then-fashionable inventory, our sales could be adversely affected, and we may be faced with a substantial amount of unsold inventory, reduced sales, loss of customers, adverse impacts to our brand recognition and customer loyalty, or other missed opportunities.
While we offer a multichannel shopping experience and use social media as a way to interact with our customers and enhance their shopping experiences, multichannel retailing is rapidly evolving, and we must keep pace with changing customer expectations and new developments by our competitors.
While we offer a multichannel shopping experience and use social media as a way to interact with our customers and enhance their shopping experiences, multichannel retailing is rapidly evolving, and we may not be able to keep pace with changing customer expectations and new developments by our competitors.
Our comparable store sales can vary significantly from period to period for a variety of reasons, such as the age of stores, changing economic factors, unseasonable weather, continued declines in mall and retail foot traffic, changing fashion trends, pricing, the timing of the release of new merchandise and promotional events and increased competition.
Our comparable store sales have been declining for the past three fiscal years and can vary significantly from period to period for a variety of reasons, such as the age of stores, changing economic factors, unseasonable weather, continued declines in mall and retail foot traffic, changing fashion trends, pricing, the timing of the release of new merchandise and promotional events and increased competition.
The retail industry is highly competitive. We currently compete with a variety of publicly-traded and privately-held specialty apparel retail chains such as, but not limited to, Abercrombie & Fitch, Aeropostale, American Eagle Outfitters, Boot Barn, The Buckle, Forever 21, H&M, Hot Topic, Pacific Sunwear, Urban Outfitters, and Zumiez.
We currently compete with a variety of publicly-traded and privately-held specialty apparel retail chains such as, but not limited to, Abercrombie & Fitch, Aeropostale, American Eagle Outfitters, Boot Barn, The Buckle, H&M, Hollister, Hot Topic, Pacific Sunwear, Urban Outfitters, and Zumiez.
We may also elect, or be required, to take actions with respect to some or all of our existing leases that are in contravention to the existing terms of those leases in response to adverse pressures, including negotiating with landlords for rent abatement, terminating certain leases, or discontinuing payment, such as the actions we took in response to the closures of our stores during the COVID-19 pandemic, which may subject us to legal, reputational and financial risks.
We may also elect, or be required, to take actions with respect to some or all of our existing leases that are in contravention to the existing terms of those leases in response to adverse pressures, including negotiating with landlords for rent abatement, terminating certain leases, or discontinuing payment, which may subject us to legal, reputational and financial risks.
Any failure to continue to open profitable new stores or improve the performance of existing stores could have a material adverse effect on our financial condition, results of operations, and stock price. Our continued growth depends upon our ability to continue to grow our e-commerce business and improve its profitability, which is subject to a variety of risks and uncertainties.
Any failure to continue to open profitable new stores or improve the performance of existing stores could have a material adverse effect on our financial condition, results of operations, and stock price. Our business depends upon our ability to grow and improve the online portion of our business, which is subject to a variety of risks and uncertainties.
Our failure to address and respond to these risks successfully could reduce e-commerce net sales, increase costs and damage the reputation of our brand or our business. Any failure to continue to grow e-commerce net sales or improve the profitability of e-commerce operations could have a material adverse impact on our financial condition, results of operations, and stock price.
Our failure to address and respond to these risks successfully could reduce e-com net sales, increase costs and damage the reputation of our brand or our business. Any failure to increase e-com net sales or profitably operate our e-com operations could have a material adverse impact on our financial condition, results of operations, and stock price.
If our business does not generate sufficient cash flows from operating activities, and sufficient funds are not otherwise available to us from borrowings under our available revolving credit facility or from other sources, we may not be able to service our operating lease expenses, grow our business, respond to competitive challenges or to fund our other liquidity and capital needs, which would harm our business.
If our business does not generate sufficient cash flows from operating activities, and sufficient funds are not otherwise available to us from borrowings under our available revolving credit facility or from other sources, we may not be able to service our operating lease expenses, grow our business, respond to competitive challenges or to fund our other liquidity and capital needs, which would harm our business. 17 Additional sites that we lease are likely to be subject to similar long-term leases.
Moreover, we may not be able to obtain delivery terms as favorable as those received from the transportation providers we currently use, which would further increase our costs. These circumstances may negatively impact our financial condition and results of operations. We rely on print and online marketing services. We use the U.S.
Moreover, we may not be able to obtain delivery terms as favorable as those received from the transportation providers we currently use, which would further increase our costs. These circumstances may negatively impact our financial condition and results of operations.
These economic pressures may result in increased costs for many products and services that are necessary for the operation of our business (including product costs, labor costs, shipping costs, and digital marketing costs, among others), as well as decreases in consumer spending or demand for our products, any of which could adversely impact our financial condition and results of operations. 15 We face intense competition in our industry and we may not be able to compete effectively.
These economic pressures may result in increased costs for many products and services that are necessary for the operation of our business (including product costs, labor costs, shipping costs, and digital marketing costs, among others), as well as decreases in consumer spending or demand for our products, any of which could adversely impact our financial condition and results of operations.
Our ability to maintain the strength and distinctiveness of our brand image in our existing markets, successfully integrate new stores into their surrounding communities, or to expand into new markets will be adversely impacted if our marketing initiatives are unsuccessful and we fail to connect with our target customer.
Our ability to maintain or improve our brand image in our existing markets, successfully integrate new stores into their surrounding communities, or to expand into new markets could be adversely impacted if our marketing initiatives are unsuccessful and we fail to connect with our target customers.
For example, our management information systems serve an integral part in enabling us to order merchandise, process merchandise at our distribution center and retail stores, perform and track sales transactions, manage personnel, pay vendors and employees, operate our e-commerce platform and report financial and accounting information to management.
For example, our management information systems serve an integral part in enabling us to order merchandise, allocate merchandise among our stores and e-com operation, process merchandise at our distribution centers and retail stores, perform and track sales 20 transactions, manage personnel, pay vendors and employees, operate our website and report financial and accounting information to management.
We are a controlled company within the meaning of the NYSE rules, and, as a result, we may rely on exemptions from certain corporate governance requirements that provide protection to stockholders of other companies. Mr.
Levine’s beneficial ownership of our Class B common stock. 22 We are a controlled company within the meaning of the NYSE rules, and, as a result, we may rely on exemptions from certain corporate governance requirements that provide protection to stockholders of other companies. Mr.
Additional risks not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and results of operations in future periods. Risks Related to our Business Our net sales could be adversely impacted by decreases in consumer spending.
Additional risks not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and results of operations in future periods.
The investing public may use comparable store sales or net store sales per square foot projections or results, over a certain period of time, such as on a quarterly or yearly basis, as an indicator of our profitability growth.
We may continue to experience comparable store sales or sales per square foot declines, which may cause our results of operations to decline. The investing public may use comparable store sales or net store sales per square foot projections or results, over a certain period of time, such as on a quarterly or yearly basis, as an indicator of profitability.
From February 2017 through December 2021 we paid aggregate special cash dividends of $5.70 per share to all holders of record of issued and outstanding shares of our common stock across six separate special cash dividends, and there can be no assurance that we will pay additional cash dividends on our common stock in the future.
Although we previously paid aggregate special cash dividends of $5.70 per share to all holders of record of issued and outstanding shares of our common stock between February 2017 and December 2021, we have not issued any cash dividends to stockholders since that date, There can be no assurance that we will pay additional cash dividends on our common stock in the future.
Additional sites that we lease are likely to be subject to similar long-term leases. If an existing or future store is not profitable, and we decide to close it, we may nonetheless be committed to perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term.
If an existing or future store is not profitable, and we decide to close it, we may, and have had to, nonetheless perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term.
Any increase in the cost of our merchandise or limitation on the amount of merchandise we are able to purchase could have a material adverse effect on our financial condition and results of operations.
Any increase in the cost of our merchandise or limitation on the amount of merchandise we are able to purchase could have a material adverse effect on our financial condition and results of operations. Changes in United States trade policy, including recently announced tariffs, could have a material adverse impact on our business, financial condition, and results of operations.
If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our Class A common stock could decrease, which could cause the price of our Class A common stock and trading volume to decline. 23 Financial forecasting by us and financial analysts who may publish estimates of our performance may differ materially from actual results.
If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our Class A common stock could decrease, which could cause the price of our Class A common stock and trading volume to decline.
Our costs under these leases are a significant amount of our expenses and grow rapidly as we expand the number of locations and existing locations experience expense increases. We are required to pay additional rent under many of our lease agreements based upon achieving certain sales plateaus for each store location.
Our costs under these leases are a significant amount of our expenses and can grow rapidly with store count growth and/or increases in lease costs at existing locations over time. We are required to pay additional rent under many of our lease agreements based upon achieving certain sales plateaus for each store location.
Generally, we order merchandise months in advance of it being received and offered for sale.
We must actively and effectively manage our purchase of inventory. Generally, we order merchandise months in advance of it being received and offered for sale.
We may not be able to implement our business strategies on the timelines we anticipate, in a cost-effective manner, or at all. At any point in time, we are in the process of implementing new merchandising strategies, customer-facing technology enhancements, new systems or upgrades to existing systems, and cost reduction or containment plans.
At any point in time, we are in the process of implementing new merchandising strategies, customer-facing technology enhancements, new systems or upgrades to existing systems, and cost reduction or containment plans.
In addition, we compete with independent specialty shops, department stores, e-commerce only retailers, off-price retailers, online marketplaces such as Amazon, stores and websites operated by our third-party brands, and direct marketers that sell similar lines of merchandise and target customers through catalogs and e-commerce. Moreover, the internet and new technologies facilitate competitive entry and comparison shopping in our retail market.
In addition, we compete with independent specialty shops, department stores, e-com only retailers such as Fashion Nova, Revolve, Shein and Temu, off-price retailers, online marketplaces such as Amazon, stores and websites operated by our third-party brands, and direct marketers that sell similar lines of merchandise and target customers through catalogs, e-com and social media.
Our business largely depends on a strong brand image, and if we are not able to maintain and enhance our brand, particularly in new markets where we have limited brand recognition, we may be unable to increase or maintain our level of sales.
We cannot guarantee that we will be able to find adequate temporary or seasonal personnel to staff our operations when needed, which may strain our existing personnel or increase costs, and negatively impact our operations. 18 Our business largely depends on a strong brand image, and if we are not able to maintain and enhance our brand, particularly in new markets where we have limited brand recognition, we may be unable to increase or maintain our level of sales.
We sell merchandise over the internet through our e-commerce website, www.tillys.com. The e-commerce retail market continues to rapidly evolve, creating new competition and increasing cost pressures from shipping charges and online marketing costs.
We sell merchandise over the internet through our website, www.tillys.com. The e-com retail market continues to rapidly evolve, creating new competition and increasing cost pressures from shipping charges and online marketing costs. As a result, there can be no guarantee that we will be able to increase our e-com net sales or to profitably operate our e-com operations.
Our continued growth depends upon our ability to successfully open profitable new stores and improve the performance of our existing stores, which is subject to a variety of risks and uncertainties.
Our business depends upon our ability to successfully open profitable new stores and improve the performance of our existing stores, which is subject to a variety of risks and uncertainties. There can be no assurance that we will be able to open new stores that are profitable or improve the performance of our existing stores sufficiently to achieve profitability.
We purchase merchandise in advance of the season in which it will be sold and if we purchase too much inventory or do not receive inventory on time we may need to reduce prices in order to sell it, which may adversely affect our overall profitability. We must actively manage our purchase of inventory.
If our competitors were to duplicate or improve on some or all of our in-store experience or product offerings, our competitive position and our business could suffer. 15 We purchase merchandise in advance of the season in which it will be sold and if we purchase too much inventory or do not manage our inventory levels effectively, we may need to reduce prices in order to sell it or face other negative impacts, which may adversely affect our overall profitability.
As a result, we may be forced to mark down our merchandise in order to dispose of slow moving inventory, which may result in lower profit margins, negatively impacting our financial condition and results of operations.
We may be forced to mark down our merchandise in order to dispose of slow moving inventory, which may result in lower profit margins. All of these risks could negatively impact our financial condition and results of operations. We may not be able to implement our business strategies on the timelines we anticipate, in a cost-effective manner, or at all.
Our stores are mostly located in the southwestern and northeastern United States and in Florida, with a significant number of stores located in California, putting us at risk of concentration issues and other region-specific disruptions. The majority of our stores are located in California, Arizona, Nevada, Florida and the northeastern United States.
Any disruption or shut down at these locations could significantly impact our operations and have a material adverse effect on our financial condition and results of operations. 19 Our stores are mostly located in the southwestern and northeastern United States and in Florida, with a significant number of stores located in California, putting us at risk of concentration issues and other region-specific disruptions.
Due to unanticipated supply chain disruptions, we may fail to receive inventory timely or in line with when we anticipate customers will be seeking to purchase merchandise for a given season. In addition, seasonal fluctuations also affect our inventory levels, as we usually order and carry a significant amount of inventory before the back-to-school and winter holiday shopping seasons.
Due to unanticipated supply chain disruptions, we may fail to receive inventory timely or in line with when we anticipate customers will be seeking to purchase merchandise for a given season.
Removed
We depend upon consumers feeling confident to spend discretionary income on our product offerings to drive our sales.
Added
Risks Related to our Business We have a recent history of operating losses, and if we are unable to improve our performance or return to profitability, we may need to begin borrowing under our credit facility to finance operations and/or find additional sources of liquidity to meet our cash requirements. We incurred net losses in fiscal 2024 and 2023.
Removed
If our competitors were to duplicate or improve on some or all of our in-store experience or product offerings, our competitive position and our business could suffer. We may experience comparable store sales or sales per square foot declines, which may cause our results of operations to decline.
Added
If we continue to incur significant operating losses, we may need to begin borrowing to finance our day-to-day operations and/or require additional sources of liquidity, including debt financing or equity financing to fund our operating requirements in the future.
Removed
We have grown our store count over time, however, there can be no assurance that we will continue to be able to open new stores that are profitable or to continue to improve the performance of our existing stores sufficiently to improve our profitability.
Added
We cannot guarantee you that we will be successful in improving 14 our performance or, if we are able to do so, that we would be able to maintain profitability, including as a result of the factors described herein.
Removed
As a result, there can be no guarantee that we will be able to continue to grow our e-commerce net sales or to improve the profitability of our e-commerce operations.
Added
If we require additional funding to meet our cash flow needs, we may be required to obtain such funding through, among other things, incurring debt under our existing credit agreement, additional loans or the issuance of debt or equity securities. However, additional funding may not be available to us on acceptable terms, or at all.
Removed
We cannot guarantee that we will be able to find adequate temporary or seasonal personnel to staff our operations when needed, which may strain our existing personnel or increase costs, and negatively impact our operations.
Added
If we are unable to meet our liquidity needs, our business and operating results would be adversely affected, including reputational harm, failure to satisfy our existing obligations, insolvency or bankruptcy. Our net sales could be adversely impacted by decreases in consumer spending. We depend upon consumers feeling confident to spend discretionary income on our product offerings to drive our sales.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeItem 1C. Cybersecurity We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. Our cybersecurity risk management program includes a cybersecurity incident response plan. 26 We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF).
Biggest changeItem 1C. Cybersecurity We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. Our cybersecurity risk management program includes a cybersecurity incident response plan. We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF).
He has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants.
He has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity 26 personnel and our retained external cybersecurity consultants.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAll of our 248 stores, encompassing a total of approximately 1.8 million total square feet as of February 3, 2024, are occupied under operating leases.
Biggest changeAll of our 240 stores, encompassing a total of approximately 1.7 million total square feet as of February 1, 2025, are occupied under operating leases.
The store leases generally have a base lease term of 10 years and many have renewal option periods, and we are generally responsible for payment of property taxes and utilities, common area maintenance and mall marketing fees. We consider all of our properties adequate for our present and anticipated future needs. 27
The store leases generally have a base lease term of 10 years and many have renewal option periods, and we are generally responsible for payment of property taxes and utilities, common area maintenance and mall marketing fees. We consider all of our properties adequate for our present and anticipated future needs.
The lease began on June 29, 2012 and terminates on June 30, 2032. We lease approximately 81,000 square feet for our e-commerce fulfillment center located at 17 Pasteur, Irvine, California. The lease began on November 1, 2011 and terminates on October 31, 2031.
The lease began on June 29, 2012 and terminates on June 30, 2032. We lease approximately 81,000 square feet for our e-com fulfillment center located at 17 Pasteur, Irvine, California. The lease began on November 1, 2011 and terminates on October 31, 2031.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings The information under the subheading "Legal Proceedings" contained in "Note 10: Commitments and Contingencies" to our consolidated financial statements included in this Report is incorporated by reference into this Item. Item 4. Mine Safety Disclosures Not applicable. 28 PART II
Biggest changeItem 3. Legal Proceedings The information under the subheading "Legal Proceedings" contained in "Note 10: Commitments and Contingencies" to our consolidated financial statements included in this Report is incorporated by reference into this Item. Item 4. Mine Safety Disclosures Not applicable. 27 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe number of stockholders of record is based upon the actual number of stockholders registered at such date and does not include holders of shares in “street names” or persons, partnerships, associates, corporations or other entities identified in security position listings maintained by depositories. Dividends on Common Stock We did not pay any special cash dividends in 2023 and 2022.
Biggest changeThe number of stockholders of record is based upon the actual number of stockholders registered at such date and does not include holders of shares in “street names” or persons, partnerships, associates, corporations or other entities identified in security position listings maintained by depositories.
Securities Authorized for Issuance under Equity Compensation Plans The information required by this Item is incorporated herein by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after the end of the fiscal year ended February 3, 2024 (the "2024 Proxy Statement").
Securities Authorized for Issuance under Equity Compensation Plans The information required by this Item is incorporated herein by reference to our Proxy Statement for the 2025 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after the end of the fiscal year ended February 1, 2025 (the "2025 Proxy Statement").
Stock Performance Graph The following graph compares the cumulative stockholder return on our Class A common stock for the five years ended February 3, 2024 to the cumulative return of (i) the S&P Midcap 400 Index and (ii) the S&P 400 Apparel Retail Index over the same period.
Stock Performance Graph The following graph compares the cumulative stockholder return on our Class A common stock for the five years ended February 1, 2025 to the cumulative return of (i) the S&P Midcap 400 Index and (ii) the S&P 400 Apparel Retail Index over the same period.
Comparison of 5-Year Cumulative Total Return as of February 3, 2024 Among Tilly's, Inc., the S&P Midcap 400 Index and the S&P 400 Apparel Retail Index Recent Sales of Unregistered Securities We did not sell any unregistered equity securities during the fiscal year or purchase any of our securities during the three months ended February 3, 2024. 29 Item 6.
Comparison of 5-Year Cumulative Total Return as of February 1, 2025 Among Tilly's, Inc., the S&P Midcap 400 Index and the S&P 400 Apparel Retail Index Recent Sales of Unregistered Securities We did not sell any unregistered equity securities during the fiscal year or purchase any of our securities during the three months ended February 1, 2025. Item 6.
This graph assumes an initial investment of $100 on February 2, 2019 in our Class A common stock, the S&P Midcap 400 Index and the S&P 400 Apparel Retail Index and assumes the reinvestment of dividends, if any.
This graph assumes an initial investment of $100 on February 1, 2020 in our Class A common stock, the S&P Midcap 400 Index and the S&P 400 Apparel Retail Index and assumes the reinvestment of dividends, if any.
As of April 5, 2024, we had approximately ten stockholders of record, eight of whom were holders of our Class A common stock and two of whom were holders of our Class B common stock.
As of April 4, 2025, we had approximately ten stockholders of record, eight of whom were holders of our Class A common stock and two of whom were holders of our Class B common stock.
There can be no assurance that we will pay additional cash dividends on our common stock in the future, and we do not currently have any formal plans to issue dividends in the future.
Dividends on Common Stock We have not paid any dividends on our common stock since December 2021, and we do not currently have any plans to issue dividends in the future.
Removed
We paid special cash dividends of $1.00 per share in each of July and December of 2021 to all holders of record of issued and outstanding shares of our common stock.
Removed
In accordance with the terms of our Asset-Backed Credit Agreement, we are prohibited from declaring or paying any cash dividends to our stockholders prior to April 27, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOperating (loss) income percentage measures operating (loss) income as a percentage of our net sales. 33 Results of Operations The following tables summarize key components of our results of operations for the periods indicated, both in dollars and as a percentage of our net sales: Fiscal Year Ended (1) February 3, 2024 January 28, 2023 January 29, 2022 (in thousands) Statements of Operations Data: Net sales $ 623,083 $ 672,280 $ 775,694 Cost of goods sold 453,702 465,916 496,083 Rent expense, related party 3,724 3,616 2,948 Total cost of goods sold 457,426 469,532 499,031 Gross profit 165,657 202,748 276,663 Selling, general and administrative expenses 196,106 191,028 188,527 Rent expense, related party 533 533 541 Total selling, general and administrative expenses 196,639 191,561 189,068 Operating (loss) income (30,982) 11,187 87,595 Other income (expense), net 5,199 1,980 (594) (Loss) income before income taxes (25,783) 13,167 87,001 Income tax expense 8,709 3,490 22,752 Net (loss) income $ (34,492) $ 9,677 $ 64,249 Percentage of Net Sales: Net sales 100.0 % 100.0 % 100.0 % Cost of goods sold 72.8 % 69.3 % 64.0 % Rent expense, related party 0.6 % 0.5 % 0.3 % Total cost of goods sold 73.4 % 69.8 % 64.3 % Gross profit 26.6 % 30.2 % 35.7 % Selling, general and administrative expenses 31.5 % 28.4 % 24.3 % Rent expense, related party 0.1 % 0.1 % 0.1 % Total selling, general and administrative expenses 31.6 % 28.5 % 24.4 % Operating (loss) income (5.0) % 1.7 % 11.3 % Other income (expense), net 0.8 % 0.3 % (0.1) % (Loss) income before income taxes (4.1) % 2.0 % 11.2 % Income tax expense 1.4 % 0.5 % 2.9 % Net (loss) income (5.5) % 1.4 % 8.3 % The following table presents store operating data for the periods indicated: Fiscal Year Ended February 3, 2024 January 28, 2023 January 29, 2022 Store Operating Data: Stores operating at end of period 248 249 241 Comparable store sales change (2) (10.6) % (14.6) % 16.3 % Total square feet at end of period (in thousands) 1,801 1,818 1,764 Average net sales per brick-and-mortar store (in thousands) (3) $ 1,944 $ 2,171 $ 2,511 Average net sales per square foot (3) $ 267 $ 297 $ 342 E-commerce revenues (in thousands) (4) $ 137,453 $ 141,130 $ 165,950 E-commerce revenues as a percentage of net sales 22.1 % 21.0 % 21.4 % (1) The fiscal year ended February 3, 2024 included 53 weeks.
Biggest changeOperating (loss) income percentage measures operating (loss) income as a percentage of our net sales. 31 Results of Operations The following tables summarize key components of our results of operations for the periods indicated, both in dollars and as a percentage of our net sales: Fiscal Year Ended (1) February 1, 2025 February 3, 2024 January 28, 2023 (in thousands) Statements of Operations Data: Net sales $ 569,453 $ 623,083 $ 672,280 Cost of goods sold 416,029 453,702 465,916 Rent expense, related party 3,727 3,724 3,616 Total cost of goods sold 419,756 457,426 469,532 Gross profit 149,697 165,657 202,748 Selling, general and administrative expenses 199,014 196,106 191,028 Rent expense, related party 532 533 533 Total selling, general and administrative expenses 199,546 196,639 191,561 Operating (loss) income (49,849) (30,982) 11,187 Other income, net 3,837 5,199 1,980 (Loss) income before income taxes (46,012) (25,783) 13,167 Income tax expense 217 8,709 3,490 Net (loss) income $ (46,229) $ (34,492) $ 9,677 Percentage of Net Sales: Net sales 100.0 % 100.0 % 100.0 % Cost of goods sold 73.1 % 72.8 % 69.3 % Rent expense, related party 0.7 % 0.6 % 0.5 % Total cost of goods sold 73.7 % 73.4 % 69.8 % Gross profit 26.3 % 26.6 % 30.2 % Selling, general and administrative expenses 34.9 % 31.5 % 28.4 % Rent expense, related party 0.1 % 0.1 % 0.1 % Total selling, general and administrative expenses 35.0 % 31.6 % 28.5 % Operating (loss) income (8.8) % (5.0) % 1.7 % Other income, net 0.7 % 0.8 % 0.3 % (Loss) income before income taxes (8.1) % (4.1) % 2.0 % Income tax expense 0.0 % 1.4 % 0.5 % Net (loss) income (8.1) % (5.5) % 1.4 % The following table presents store operating data for the periods indicated: Fiscal Year Ended February 1, 2025 February 3, 2024 January 28, 2023 Store Operating Data: Stores operating at end of period 240 248 249 Comparable store sales change (2) (8.0) % (10.6) % (14.6) % Total square feet at end of period (in thousands) 1,730 1,801 1,818 Average net sales per brick-and-mortar store (in thousands) (3) $ 1,791 $ 1,944 $ 2,171 Average net sales per square foot (3) $ 247 $ 267 $ 297 E-com revenues (in thousands) (4) $ 124,728 $ 137,453 $ 141,130 E-com revenues as a percentage of net sales 21.9 % 22.1 % 21.0 % (1) The fiscal year ended February 3, 2024 included 53 weeks.
Asset-Backed Credit Agreement On April 27, 2023 (the “Closing Date”), we entered into an asset-backed credit agreement and revolving line of credit note (the "Note" and, collectively, the “Credit Agreement”) with Wells Fargo Bank, National Association, as lender (the “Bank”).
Credit Agreement On April 27, 2023 (the “Closing Date”), we entered into an asset-backed credit agreement and revolving line of credit note (the "Note" and, collectively, the “Credit Agreement”) with Wells Fargo Bank, National Association, as lender (the “Bank”).
Numerous factors affect our comparable store sales, including: • overall economic trends; • our ability to attract traffic to our stores and online platform; • our ability to identify and respond effectively to consumer preferences and fashion trends; • competition; • the timing of our releases of new and seasonal styles; • changes in our product mix; • pricing; • the level of customer service that we provide in stores; • our ability to source and distribute products efficiently; • calendar shifts of holiday or seasonal periods; • the number and timing of store openings and the relative proportion of new stores to mature stores; and • the timing and success of promotional and advertising efforts.
Numerous factors affect our comparable store sales, including: • overall economic trends; • our ability to attract traffic to our stores and online platform; • our ability to identify and respond effectively to consumer preferences and fashion trends; • competition; • the timing of our releases of new and seasonal styles; • changes in our product mix; • pricing; • the level of customer service that we provide in stores; • our ability to source, distribute and allocate products efficiently; • calendar shifts of holiday or seasonal periods; • the number and timing of store openings and the relative proportion of new stores to mature stores; and • the timing and success of promotional and advertising efforts.
The Credit Agreement provides for an asset-based, senior secured revolving credit facility (“Revolving Facility”) of up to $65.0 million (“Revolving Commitment”) consisting of revolving loans, letters of credit and swing line loans, with a sub-limit on letters of credit outstanding at any time of $10.0 million and a sub-limit for swing line loans of $7.5 million, which replaced our previous senior unsecured credit agreement.
The Credit Agreement provides for an asset-based, senior secured revolving credit facility (“Revolving Facility”) of up to $65.0 million (“Revolving Commitment”) consisting of revolving loans, letters of credit and swing line loans, with a sub-limit on letters of credit outstanding at any time of $10.0 million and a sub-limit for swing line loans of $7.5 million, which replaced our previous senior secured credit agreement.
These costs are significant and can be expected to continue to increase as our store count grows over time. The components of our reported cost of goods sold may not be comparable to those of other retail companies. We regularly analyze the components of gross profit as well as gross profit as a percentage of net sales.
These costs are significant and can be expected to continue to increase to the extent our store count grows over time. The components of our reported cost of goods sold may not be comparable to those of other retail companies. We regularly analyze the components of gross profit as well as gross profit as a percentage of net sales.
Thereafter, we are permitted to declare or pay cash dividends and/or repurchase our common stock provided, among other things, no default or event of default exists as of the date of any such payment and after giving effect thereto and certain minimum availability and minimum projected availability tests are satisfied.
We are permitted to declare or pay cash dividends and/or repurchase our common stock provided, among other things, no default or event of default exists as of the date of any such payment and after giving effect thereto and certain minimum availability and minimum projected availability tests are satisfied.
This reflects that various costs, including occupancy costs, generally do not increase in proportion to the seasonal sales increase. 32 Selling, General and Administrative Expenses Our selling, general and administrative, or SG&A, expenses are comprised of store selling expenses and corporate-level general and administrative expenses.
This reflects that various costs, including occupancy costs, generally do not increase in proportion to the seasonal sales increase. Selling, General and Administrative Expenses Our selling, general and administrative, or SG&A, expenses are comprised of store selling expenses and corporate-level general and administrative expenses.
This adjustment calculation requires us to develop assumptions and estimates, which are based on factors such as merchandise seasonality, historical trends and inventory levels, including estimated sell-through rates of remaining units. 38 To the extent that management’s estimates differ from actual results, additional markdowns may be required that could reduce our gross margin, operating income and the carrying value of inventories.
This adjustment calculation requires us to develop assumptions and estimates, which are based on factors such as merchandise seasonality, historical trends and inventory levels, including estimated sell-through rates of remaining units. 36 To the extent that management’s estimates differ from actual results, additional markdowns may be required that could reduce our gross margin, operating income and the carrying value of inventories.
Comparable store sales exclude gift card breakage income and e-commerce shipping and handling fee revenue. Some of our competitors and other retailers may calculate comparable or “same store” sales differently than we do. As a result, data in this Report regarding our comparable store sales may not be comparable to similar data made available by other retailers.
Comparable store sales exclude gift card breakage income and e-com shipping and handling fee revenue. Some of our competitors and other retailers may calculate comparable or “same store” sales differently than we do. As a result, data in this Report regarding our comparable store sales may not be comparable to similar data made available by other retailers.
The lease is accounted for as an operating lease and expires on October 31, 2031. Our store leases are generally non-cancellable operating leases expiring at various dates through fiscal year 2034. Certain leases provide for additional rent based on a percentage of sales and annual rent increases based upon the Consumer Price Index.
The lease is accounted for as an operating lease and expires on October 31, 2031. Our store leases are generally non-cancellable operating leases expiring at various dates through fiscal year 2035. Certain leases provide for additional rent based on a percentage of sales and annual rent increases based upon the Consumer Price Index.
The policies and estimates discussed below involve the selection or application of alternative accounting policies that are material to our consolidated financial statements. With respect to critical accounting policies, even a relatively minor variance between actual and expected experience can potentially have a materially favorable or unfavorable impact on subsequent results of operations.
The policies and estimates discussed below involve the selection or application of alternative accounting policies that are material to our consolidated financial statements. With respect to critical accounting policies, even a relatively minor variance between actual and expected outcomes can potentially have a materially favorable or unfavorable impact on subsequent results of operations.
Comparable store net sales exclude gift card breakage income and e-commerce shipping and handling fee revenue. The comparable store sales change for the period ended February 3, 2024 includes the 53rd week in fiscal year 2023. (3) The number of stores and the amount of square footage reflect the number of days during the period that stores were open.
Comparable store net sales exclude gift card breakage income and e-com shipping and handling fee revenue. The comparable store sales change for the period ended February 3, 2024 includes the 53rd week in fiscal year 2023. (3) The number of stores and the amount of square footage reflect the number of days during the period that stores were open.
Store selling expenses include store and regional support costs, including personnel, advertising and debit and credit card processing costs, e-commerce receiving and processing costs and store supplies costs. General and administrative expenses include the payroll and support costs of corporate functions such as executive management, legal, accounting, information systems, human resources, impairment charges and other centralized services.
Store selling expenses include store and regional support costs, including personnel, advertising and debit and credit card processing costs, e-com receiving and processing costs and store supplies costs. General and administrative expenses include the payroll and support costs of corporate functions such as executive management, legal, accounting, information systems, human resources, impairment charges and other centralized services.
We include sales from our e-commerce platform as part of comparable store sales as we manage and analyze our business on a single omni-channel basis and have substantially integrated our investments and operations for our stores and e-commerce platform to give our customers seamless access and increased ease of shopping.
We include sales from our e-com platform as part of comparable store sales as we manage and analyze our business on a single omni-channel basis and have substantially integrated our investments and operations for our stores and e-com platform to give our customers seamless access and increased ease of shopping.
We include sales from our e-commerce platform as part of our comparable store net sales as we manage and analyze our business on an omni-channel basis and have substantially integrated our investments and operations for our stores and e-commerce platform to give our customers seamless access and increased ease of shopping.
We include sales from our e-com platform as part of our comparable store net sales as we manage and analyze our business on an omni-channel basis and have substantially integrated our investments and operations for our stores and e-com platform to give our customers seamless access and increased ease of shopping.
Distribution costs include costs for receiving, processing and warehousing our store merchandise, and shipping of merchandise to or from our distribution and e-commerce fulfillment centers and to our e-commerce customers and between store locations. Occupancy costs include the rent, common area maintenance, utilities, property taxes, security and depreciation costs of all store locations.
Distribution costs include costs for receiving, processing and warehousing our store merchandise, and shipping of merchandise to or from our distribution and e-com fulfillment centers and to our e-com customers and between store locations. Occupancy costs include the rent, common area maintenance, utilities, property taxes, security and depreciation costs of all store locations.
Net cash provided by financing activities was $0.2 million this year resulting from the proceeds of employee exercises of stock options of $0.4 million, partially offset by taxes paid on a short swing profits disgorgement payment to us of $0.2 million.
Net cash provided by financing activities was $0.2 million last year resulting from the proceeds of employee exercises of stock options of $0.4 million, partially offset by taxes paid on a short swing profits disgorgement payment to us of $0.2 million.
The lease is accounted for as an operating lease and expires on December 31, 2027. 37 We lease approximately 26,000 square feet of office and warehouse space from a company that is owned by one of the co-founders of Tillys who is currently our Interim President and Chief Executive Officer. This building is located at 11 Whatney, Irvine, California.
The lease is accounted for as an operating lease and expires on December 31, 2027. 35 We lease approximately 26,000 square feet of office and warehouse space from a company that is owned by one of the co-founders of Tillys who is currently our President and Chief Executive Officer. This building is located at 11 Whatney, Irvine, California.
The lease is accounted for as an operating lease and expires on June 30, 2032. We lease approximately 81,000 square feet for our e-commerce distribution center from a company that is owned by one of the co-founders of Tillys who is currently our Interim President and Chief Executive Officer. This building is located at 17 Pasteur, Irvine, California.
The lease is accounted for as an operating lease and expires on June 30, 2032. We lease approximately 81,000 square feet for our e-com distribution center from a company that is owned by one of the co-founders of Tillys who is currently our President and Chief Executive Officer. This building is located at 17 Pasteur, Irvine, California.
Net Cash (Used In) Provided By Investing Activities Cash flows from investing activities consist primarily of capital expenditures and maturities and purchases of marketable securities. Net cash used in investing activities was $20.0 million this year compared to net cash provided of $42.8 million last year.
Net Cash Provided By (Used In) Investing Activities Cash flows from investing activities consist primarily of capital expenditures and maturities and purchases of marketable securities. Net cash provided by investing activities was $15.8 million this year compared to net cash used in investing activities of $20.0 million last year.
Our comparable store sales are defined as sales from our e-commerce platform and stores open on a daily basis compared to the same respective fiscal dates of the prior year.
Our comparable store sales are defined as sales from our e-com platform and stores open on a daily basis compared to the same respective fiscal dates of the prior year.
E-commerce sales, e-commerce shipping and handling fee revenue and gift card breakage income are excluded from net sales in deriving average net sales per retail store and average net sales per square foot. (4) E-commerce net sales include e-commerce sales and e-commerce shipping and handling fee revenue.
E-com sales, e-com shipping and handling fee revenue and gift card breakage income are excluded from net sales in deriving average net sales per retail store and average net sales per square foot. (4) E-com net sales include e-com sales and e-com shipping and handling fee revenue.
Store selling expenses generally vary proportionately with net sales and store growth. In contrast, general and administrative expenses are generally not directly proportional to net sales and store growth, but will be expected to increase over time to support the needs of our business as our store count grows over time.
Store selling expenses generally vary proportionately with net sales and store growth. In contrast, general and administrative expenses are generally not directly proportional to net sales and store growth, but may be expected to increase over time to support the needs of our business to the extent our store count grows over time.
Fiscal year 2023 consisted of a 53-week period, and fiscal years 2022, and 2021 each consisted of a 52-week period. The discussion and analysis of our financial condition and results of operations for fiscal 2023 compared to fiscal 2022 appears below.
Fiscal year 2024 consisted of a 52-week period, fiscal year 2023 consisted of a 53-week period, and fiscal year 2022 consisted of a 52-week period. The discussion and analysis of our financial condition and results of operations for fiscal 2024 compared to fiscal 2023 appears below.
As permitted by SEC rules, we have omitted the discussion and analysis of our financial condition, cash flows and results of operations for fiscal 2022 compared to fiscal 2021. See Item 7,“Management’s Discussions and Analysis of Financial Condition and Results of Operations”, in our Annual Report on Form 10-K for the year ended January 28, 2023, for this discussion.
As permitted by SEC rules, we have omitted the discussion and analysis of our financial condition, cash flows and results of operations for fiscal 2023 compared to fiscal 2022. See Item 7,“Management’s Discussion and Analysis of Financial Condition and Results of Operations”, in our Annual Report on Form 10-K for the year ended February 3, 2024, for this discussion.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion in conjunction with the consolidated financial statements and the accompanying notes and the information contained in other sections of this report, particularly under the headings “Risk Factors” and “Business”.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion in conjunction with the consolidated financial statements and the accompanying notes and the information contained in other sections of this Annual Report on Form 10-K, or this "Report", particularly under the headings “Risk Factors” and “Business”.
Persistent inflation has also resulted in increased costs for many products and services that are necessary for the operation of our business, such as product costs, labor costs, shipping costs, and digital marketing costs, among others. For example, store payroll and payroll related expenses represented approximately 47% of our total selling, general and administrative expenses for fiscal 2023.
Inflation has resulted in increased costs for many products and services that are necessary for the operation of our business, such as product costs, labor costs, shipping costs, and digital marketing costs, among others. For example, store payroll and payroll-related expenses represented approximately 46% of our total selling, general and administrative expense in fiscal 2024.
The inventory shrinkage reserve reduces the value of total inventory and is a component of inventories on the Consolidated Balance Sheets. The inventory shrinkage reserve at both February 3, 2024 and January 28, 2023 was not material.
The inventory shrinkage reserve reduces the value of total inventory and is a component of inventories on the Consolidated Balance Sheets. The inventory shrinkage reserve at both February 1, 2025 and February 3, 2024 was not material.
There can be no assurance that equity or debt financing will be available to us when we need it or, if available, that the terms will be satisfactory to us and not dilutive to our stockholders. Working Capital Working capital at February 3, 2024, was $71.5 million compared to $94.1 million at January 28, 2023, a decrease of $22.6 million.
There can be no assurance that equity or debt financing will be available to us when we need it or, if available, that the terms will be satisfactory to us and not dilutive to our stockholders. Working Capital Working capital at February 1, 2025, was $31.6 million compared to $71.5 million at February 3, 2024, a decrease of $39.9 million.
The fiscal years ended January 28, 2023, and January 29, 2022 each included 52 weeks. 34 (2) Our comparable store net sales are defined as sales from our e-commerce platform and stores open on a daily basis compared to the same respective fiscal dates of the prior year.
Each of the fiscal years ended February 1, 2025 and January 28, 2023 included 52 weeks. 32 (2) Our comparable store net sales are defined as sales from our e-com platform and stores open on a daily basis compared to the same respective fiscal dates of the prior year.
The Tillys concept began in 1982 when our co-founders, Hezy Shaked and Tilly Levine, opened our first store in Orange County, California. As of February 3, 2024, we operated 248 stores in 33 states, averaging approximately 7,300 square feet per store. We also sell our products through our e-commerce website, www.tillys.com.
The Tillys concept began in 1982 when our co-founders, Hezy Shaked and Tilly Levine, opened our first store in Orange County, California. As of February 1, 2025, we operated 240 stores in 33 states, averaging approximately 7,210 square feet per store. We also sell our products through our website, www.tillys.com.
As of February 3, 2024, we were in compliance with all of our covenants, were eligible to borrow up to a total of $42.4 million, and had no outstanding borrowings under the Credit Agreement. The only utilization of the letters of credit sub-limit under the Credit Agreement was a $2.025 million irrevocable standby letter of credit.
As of February 1, 2025, we were in compliance with all of our covenants, were eligible to borrow up to a total of $48.0 million, and had no outstanding borrowings under the Credit Agreement. The only utilization of the letters of credit sub-limit under the Credit Agreement was a $2.0 million irrevocable standby letter of credit.
Net cash used in operating activities was $6.7 million this year compared to $1.4 million last year. The $5.3 million increase in net cash used in operating activities compared to last year was due primarily to lower net sales.
Net cash used in operating activities was $42.0 million this year compared to $6.7 million last year. The $35.3 million increase in net cash used in operating activities compared to last year was due primarily to lower net sales.
The changes in our working capital during fiscal 2023 were as follows: $ millions Description $94.1 Working capital at January 28, 2023 (18.2) Decrease in cash, cash equivalents, and marketable securities, primarily due to lower net sales (5.9) Decrease in prepaid expenses and other current assets primarily from a reduction in prepaid income taxes (3.3) Decrease in receivables primarily from reduced tenant improvement allowances 2.8 Increase primarily due to a reduction in accrued expenses 2.5 Increase in merchandise inventories, net of accounts payable (0.5) Net change from all other changes in current assets and current liabilities $71.5 Working capital at February 3, 2024 Cash Flow Analysis A summary of operating, investing and financing activities is shown in the following table: Fiscal Year Ended February 3, 2024 January 28, 2023 January 29, 2022 (in 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) Provided by Operating Activities Operating activities consist primarily of net (loss) income adjusted for non-cash items that include depreciation, asset impairment charges, deferred income taxes, gains on maturities of marketable securities and share-based compensation expense, plus the effect on cash of changes during the year in our assets and liabilities.
The changes in our working capital during fiscal 2024 were as follows: $ millions Description $71.5 Working capital at February 3, 2024 (48.3) Decrease in cash, cash equivalents, and marketable securities, primarily due to lower net sales (1.9) Decrease in receivables primarily due to lower tenant income receivables 9.4 Increase in merchandise inventories, net of accounts payable 0.9 Net change from all other changes in current assets and current liabilities $31.6 Working capital at February 1, 2025 Cash Flow Analysis A summary of operating, investing and financing activities is shown in the following table: Fiscal Year Ended February 1, 2025 February 3, 2024 January 28, 2023 (in thousands) Net cash used in operating activities $ (42,018) $ (6,733) $ (1,415) Net cash provided by (used in) investing activities 15,753 (19,993) 42,805 Net cash provided by (used in) financing activities 294 227 (10,065) Net change in cash and cash equivalents $ (25,971) $ (26,499) $ 31,325 Net Cash Used In Operating Activities Operating activities consist primarily of net (loss) income adjusted for non-cash items that include depreciation, asset impairment charges, deferred income taxes, gains on maturities of marketable securities and share-based compensation expense, plus the effect on cash of changes during the year in our assets and liabilities.
Recent Accounting Pronouncements For a description of recently-issued accounting standards not yet adopted, refer to Note 2 to our consolidated financial statements included in this Annual Report on Form 10-K. 39
Recent Accounting Pronouncements For a description of recently-issued accounting standards not yet adopted, refer to Note 2 to our consolidated financial statements included in this Report. 37
The Credit Agreement also includes an uncommitted accordion feature whereby we may increase the Revolving Commitment by an aggregate amount not to exceed $12.5 million, subject to certain conditions. The Revolving Facility matures on April 27, 2026.
The Credit Agreement also includes an uncommitted accordion feature whereby we may increase the Revolving Commitment by an aggregate amount not to exceed $12.5 million, subject to certain conditions. As of February 1, 2025, the Revolving Facility was set to expire on April 27, 2026.
Our business is seasonal and as a result our revenues fluctuate from quarter to quarter. In addition, our revenues in any given quarter can be affected by a number of factors including the timing of holidays and weather patterns.
In addition, our revenues in any given quarter can be affected by a number of factors including the timing of holidays and weather patterns.
Liquidity and Capital Resources Our business relies on cash flows from operating activities as well as cash on hand as our primary sources of liquidity. We currently expect to finance company operations, store growth and remodels, and all of our planned capital expenditures with existing cash on hand, marketable securities and cash flows from operations.
We currently expect to finance company operations, store growth and remodels, and all of our planned capital expenditures with existing cash on hand, marketable securities and cash flows from operations.
References to "fiscal year 2023" or "fiscal 2023" refer to the fiscal year ended February 3, 2024, references to "fiscal year 2022" or "fiscal 2022" refer to the fiscal year ended January 28, 2023 and references to "fiscal year 2021” or "fiscal 2021” refer to the fiscal year ended January 29, 2022.
References to "fiscal year 2024" or "fiscal 2024" refer to the fiscal year ended February 1, 2025, references to "fiscal year 2023" or "fiscal 2023" refer to the fiscal year ended February 3, 2024 and references to "fiscal year 2022” or "fiscal 2022” refer to the fiscal year ended January 28, 2023.
Net cash provided 36 by investing activities in fiscal 2022 consisted of maturities of marketable securities of $147.3 million, partially offset by purchases of marketable securities of $89.3 million and capital expenditures totaling $15.1 million.
Net cash provided by investing activities in fiscal 2024 consisted of maturities of marketable securities of $98.5 million, partially offset by purchases of marketable securities of $74.5 million and capital expenditures totaling $8.2 million.
Net Sales Net sales reflect revenue from the sale of our merchandise at store locations and through e-commerce, net of sales taxes. Store sales are reflected in sales when the merchandise is received by the customer. For e-commerce sales, we recognize revenue, and the related cost of goods sold at the time the merchandise is shipped to the customer.
Store sales are reflected in sales when the merchandise is received by the customer. For e-com sales, we recognize revenue, and the related cost of goods sold at the time the merchandise is shipped to the customer. Net sales also include shipping and handling fees for e-com shipments that have been shipped to the customer.
Any inability to obtain acceptable levels of initial markups, a significant increase in our use of markdowns or a significant increase in inventory shrinkage or inability to generate sufficient sales leverage on the buying, distribution and occupancy components of cost of goods sold could have an adverse impact on our gross profit and results of operations.
Any inability to obtain acceptable levels of initial markups, a significant increase in our use of markdowns or a significant increase in inventory shrinkage or inability to generate sufficient sales leverage on the buying, distribution and occupancy components of cost of goods sold could have an adverse impact on our gross profit and results of operations. 30 Gross profit is also impacted by shifts in the proportion of sales of proprietary branded products compared to third-party branded products, as well as by sales mix shifts within and between brands and between major product departments such as young men's and women's apparel, footwear or accessories.
Net cash used in investing activities in fiscal 2023 consisted of purchases of marketable securities of $121.0 million and capital expenditures totaling $14.0 million, partially offset by maturities of marketable securities of $115.0 million.
Net cash used in investing activities in fiscal 2023 consisted of purchases of marketable securities of $121.0 million and capital expenditures totaling $14.0 million, partially offset by maturities of marketable securities of $115.0 million. 34 Net Cash Provided By (Used In) Financing Activities Financing activities primarily consist of share repurchases, a short-swing profits disgorgement payment, and proceeds from employee exercises of stock options.
Net sales also include shipping and handling fees for e-commerce shipments that have been shipped to the customer. Net sales are net of returns on sales during the 31 period as well as an estimate of returns expected in the future stemming from current period sales. We recognize revenue from gift cards as they are redeemed for merchandise.
Net sales are net of returns on sales during the period as well as an estimate of returns expected in the future stemming from current period sales. We recognize revenue from gift cards as they are redeemed for merchandise. Prior to redemption, we maintain a current liability for unredeemed gift card balances.
How We Assess the Performance of Our Business In assessing the performance of our business, we consider a variety of performance and financial measures. The key indicators of the financial condition and operating performance of our business are net sales, comparable store sales, gross profit, selling, general and administrative expenses and operating (loss) income.
The key indicators of the financial condition and operating performance of our business are net sales, comparable store sales, gross profit, selling, general and administrative expenses and operating (loss) income. 29 Net Sales Net sales reflect revenue from the sale of our merchandise at store locations and through e-com, net of sales taxes.
The primary components of the SG&A variances, both in terms of percentage of net sales and total dollars, were as follows: % $ millions Primarily Attributable to 0.5% $3.4 Increase in non-cash store asset impairment charges 0.4% 2.5 Increase primarily due to the estimated impact of the 53rd week in fiscal 2023 compared to 52-weeks in fiscal 2022 2.2% (0.8) Net change in all other SG&A expenses 3.1% $5.1 Total Operating (Loss) Income Operating loss was $(31.0) million or (5.0)% of net sales, compared to operating income of $11.2 million or 1.7% of net sales, last year.
Selling, General and Administrative ("SG&A") Expenses SG&A expenses were $199.5 million, or 35.0% of net sales, compared to $196.6 million, or 31.6% of net sales, last year. % $ millions Primarily Attributable to 0.4% $1.7 Increase in software as a service expense 0.3% 1.0 Increase in e-com fulfillment services 0.2% 0.9 Increase in non-cash store asset impairment charges 2.6% (0.7) Net change in all other SG&A expenses 3.5% $2.9 Total Operating Loss Operating loss was $49.8 million, or 8.8% of net sales, compared to $31.0 million, or 5.0% of net sales, last year, primarily due to our net sales decrease.
Contractual Obligations We enter into long-term contractual obligations and commitments in the normal course of business, primarily non-cancellable operating leases and software maintenance agreements. We lease approximately 172,000 square feet for our corporate headquarters and distribution center from a company that is owned by the co-founders of Tillys, one of which is currently our Interim President and Chief Executive Officer.
We lease approximately 172,000 square feet for our corporate headquarters and distribution center from a company that is owned by the co-founders of Tillys, one of which is currently our President and Chief Executive Officer. These buildings are located at 10 and 12 Whatney, Irvine, California.
Prior to redemption, we maintain a current liability for unredeemed gift card balances. Our gift cards do not have expiration dates and in most cases there is no legal obligation to remit unredeemed gift cards to relevant jurisdictions.
Our gift cards do not have expiration dates and in most cases there is no legal obligation to remit unredeemed gift cards to relevant jurisdictions. Based on actual historical redemption patterns, we determined that a small percentage of gift cards are unlikely to be redeemed (which we refer to as gift card “breakage”).
Based on actual historical redemption patterns, we determined that a small percentage of gift cards are unlikely to be redeemed (which we refer to as gift card “breakage”). Based on our historical gift card breakage rate, we recognize breakage revenue over the redemption period in proportion to actual gift card redemptions.
Based on our historical gift card breakage rate, we recognize breakage revenue over the redemption period in proportion to actual gift card redemptions. Our business is seasonal and as a result our revenues fluctuate from quarter to quarter.
Preliminary Fiscal 2024 New Store Openings and Capital Expenditure Plans During fiscal 2024, we currently expect to open five new stores. We currently expect that our total capital expenditures for fiscal 2024 will not exceed $15 million, inclusive of our new store plans and upgrades to certain distribution and information technology infrastructure systems.
Fiscal 2025 Preliminary Capital Expenditure Plans We currently expect that our total capital expenditures for fiscal 2025 will be in the range of approximately $5 million to $10 million for a limited number of new store openings and upgrades to certain store, online and infrastructure technologies.
These and other cost increases may continue to have a material adverse impact on our results of operations and financial condition into fiscal 2024, particularly if the broader economy is negatively impacted by recessionary impacts for an extended period of time.
These and other cost increases may continue to have a material adverse impact on our results of operations and financial condition in fiscal 2025, particularly if we are unable to generate net sales growth.
Net sales from physical stores represented 77.9% of total net sales compared to 79.0% of total net sales last year. We ended fiscal 2023 with 248 total stores compared to 249 total stores at the end of fiscal 2022. ◦ Net sales from e-commerce were $137.5 million, a decrease of $3.7 million or 2.6%, compared to $141.1 million last year.
Comparable store net sales decreased 8.0% relative to the comparable 52-week period ended February 3, 2024. Net sales from physical stores represented 78.1% of total net sales this year compared to 77.9% of total net sales last year. ◦ Net sales from e-com were $124.7 million, a decrease of 9.3%.
The increase in the effective income tax rate was primarily attributable to a $15.4 million non-cash deferred tax asset valuation allowance recorded during fiscal 2023. 35 Net (Loss) Income and (Loss) Earnings Per Share Net loss was $(34.5) million or $(1.16) loss per share, compared to net income of $9.7 million or $0.32 per diluted share, last year.
Income Tax Expense Income tax expense was $0.2 million or 0.5% of pre-tax loss, compared to income tax expense of $8.7 million, or 33.8% of pre-tax loss, last year, which included a full, non-cash deferred tax asset valuation allowance (the "valuation allowance") charge of $15.4 million.
Our average hourly rate for store payroll for fiscal 2023 was 26% higher than in the pre-pandemic year of fiscal 2019 and 7% higher than in fiscal 2022. Minimum wage increases are estimated to cost us an additional $2 million during fiscal 2024 compared to fiscal 2023.
Our average hourly rate for store payroll in fiscal 2025 is estimated to be approximately 35% higher than in pre-pandemic fiscal 2019 and approximately 4%, or $1.7 million, higher than in fiscal 2024.
Buying, distribution and occupancy costs increased by $1.8 million and deleveraged by 210 basis points as a percentage of net sales collectively, primarily due to increased occupancy costs, partially offset by a decrease in distribution costs arising from reduced freight costs associated with lower net sales.
Buying, distribution, and occupancy costs deleveraged by 180 basis points collectively, despite being $2.8 million lower than last year, primarily due to carrying these costs against lower net sales this year.
Fiscal Year 2023 Compared to Fiscal Year 2022 Net Sales Total net sales were $623.1 million, a decrease of $49.2 million, or 7.3%, compared to $672.3 million last year. $ millions Attributable to $(70.7) Decrease in comparable net sales of 10.6%, including e-commerce 21.5 Increase in non-comparable store sales, primarily from net sales in new stores $(49.2) Total ◦ Net sales from physical stores were $485.6 million, a decrease of $45.5 million or 8.6%, compared to $531.1 million last year with a comparable store net sales decrease of 12.2%.
Total comparable net sales, including both physical stores and e-com, decreased by 8.0% relative to the comparable 52-week period ended February 3, 2024. $ millions Attributable to $(47.6) Decrease in comparable net sales of 8.0%, including e-com (6.0) Decrease in non-comparable store sales, primarily from net sales in new stores $(53.6) Total ◦ Net sales from physical stores were $444.7 million, a decrease of 8.4%.
Net Cash Provided By (Used In) Financing Activities Financing activities primarily consist of share repurchases, a short-swing profits disgorgement payment, and proceeds from employee exercises of stock options.
Net cash provided by financing activities was $0.3 million this year resulting from the proceeds of employee exercises of stock options.
Product margins declined by 150 basis points primarily due to increased markdowns utilized to manage inventory levels. Selling, General and Administrative ("SG&A") Expenses SG&A expenses were $196.6 million, or 31.6% of net sales, compared to $191.6 million or 28.5% of net sales, last year.
Gross Profit Gross profit including buying, distribution, and occupancy costs, was $149.7 million, or 26.3% of net sales, compared to $165.7 million, or 26.6% of net sales, last year. Product margins improved by 150 basis points primarily due to improved initial markups, partially offset by increased inventory valuation reserves.
Removed
Known or Anticipated Trends Economic Trends We believe the uncertain and inflationary economic environment, significant levels of credit card debt with much higher interest rates, and a shift in consumer preferences for experiences over goods following the COVID-19 pandemic has had, and is likely to continue to have, a significant, adverse impact on our consumers' spending and, by extension, our operating results.
Added
Known or Anticipated Trends We believe the combined impacts of persistent inflation, tariffs, decreases in consumer confidence levels and concerns about a potential economic recession in the current economic environment could negatively impact consumer spending generally and our customer base, in particular, which has had and may in the future have a significant, adverse impact on our operating results and financial condition.
Removed
Gross profit is also impacted by shifts in the proportion of sales of proprietary branded products compared to third-party branded products, as well as by sales mix shifts within and between brands and between major product departments such as young men's and women's apparel, footwear or accessories.
Added
We expect our effective income tax rate to be near zero on an annual basis until such time that we are able to return to generating operating profits on a consistent basis, due to maintaining a full valuation allowance on all deferred tax assets as a result of our recent operating losses.
Removed
E-commerce net sales represented 22.1% of total net sales compared to 21.0% to total net sales last year. Gross Profit Gross profit was $165.7 million, or 26.6% of net sales compared to $202.7 million or 30.2% of net sales, last year.
Added
Our comparable net sales have declined in each of the past three fiscal years. A continuation of decreases in our comparable net sales results at rates equal to or greater than the 8% decrease we produced in fiscal 2024 may result in us having to initiate borrowing under our asset-backed credit facility to finance our operations during fiscal 2025.
Removed
Other Income, Net Other income was $5.2 million compared to $2.0 million last year, primarily attributable to earning significantly higher rates of return on our marketable securities. Income Tax Expense Income tax expense was $8.7 million or 33.8% of pre-tax loss, compared to $3.5 million or 26.5%, of pre-tax income last year.
Added
The Company currently expects to close at least eight stores during the first half of fiscal 2025. How We Assess the Performance of Our Business In assessing the performance of our business, we consider a variety of performance and financial measures.
Removed
Net cash used in financing activities of $10.1 million last year was attributable to the repurchase of shares of our common stock of $10.9 million, partially offset by a short-swing profits disgorgement payment to us of $0.7 million and proceeds of employee exercises of stock options of $0.2 million.
Added
Fiscal Year 2024 Compared to Fiscal Year 2023 Net Sales • Total net sales were $569.5 million, a decrease of 8.6% from fiscal 2023, which included an extra week in the fiscal calendar that accounted for $5.7 million in total net sales in that prior fiscal year.
Removed
Prior to the first anniversary of the Closing Date, we are prohibited from declaring or paying any cash dividends to our stockholders or repurchasing our common stock.
Added
E-com net sales decreased 8.0% relative to the comparable 52-week period ended February 3, 2024. E-com net sales represented 21.9% of total net sales this year compared to 22.1% of total net sales last year.
Removed
These buildings are located at 10 and 12 Whatney, Irvine, California.
Added
The decrease in the effective income tax rate was due to the continuing impact of the valuation allowance.
Added
Net Loss and Loss Per Share Net loss was $46.2 million, or $1.54 net loss per share, compared to net loss of $34.5 million, or $1.16 net loss per share, last year, which included the valuation allowance. 33 Liquidity and Capital Resources Our business relies on cash flows from operating activities as well as cash on hand as our primary sources of liquidity.
Added
However, if our comparable net sales decrease in fiscal 2025 at a rate equal to or greater than the 8% decrease we produced in fiscal 2024, we may be required to begin borrowing under our asset-backed credit facility to finance our day-to-day operations.
Added
In connection with the entry into the Credit Agreement, on April 27, 2023, we entered into certain ancillary agreements including (i) a security agreement in favor of the Bank, and (ii) a guarantee by us in favor of the Bank.
Added
On March 25, 2025, we entered into an amendment to the Credit Agreement with Wells Fargo Bank, National Association, as lender, to extend the maturity date thereunder to June 25, 2027. Contractual Obligations We enter into long-term contractual obligations and commitments in the normal course of business, primarily non-cancellable operating leases and software maintenance agreements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed2 unchanged
Biggest changeHowever, the impact of inflationary cost pressures on gasoline, food, and other consumables may have a material adverse impact on consumer behavior at any point in time, which may by extension have a material adverse effect on our results of operations and financial condition. Foreign Exchange Rate Risk We currently source all merchandise through domestic vendors.
Biggest changeHowever, the impact of inflationary cost pressures on gasoline, food, and other consumables may have a material adverse impact on consumer behavior at any point in time, which may by extension have a material adverse effect on our results of operations and financial condition. Foreign Exchange Rate Risk We currently source a substantial majority of our merchandise through domestic vendors.
We source certain fixtures and materials from various suppliers in other countries. All purchases are denominated in U.S. dollars, and therefore we do not hedge using any derivative instruments. Historically, we have not been impacted by changes in exchange rates. 40
We source certain fixtures and materials from various suppliers in other countries. All purchases are denominated in U.S. dollars, and therefore we do not hedge using any derivative instruments. Historically, we have not been materially impacted by changes in exchange rates. 38
Item 7A. Quantitative and Qualitative Disclosures About Market Risks Interest Rate Risk We may be subject to interest rate risk in connection with borrowings, if any, under our credit facility, which bears interest at variable rates. As of both February 3, 2024 and January 28, 2023, we had no outstanding borrowings under our credit facility.
Item 7A. Quantitative and Qualitative Disclosures About Market Risks Interest Rate Risk We may be subject to interest rate risk in connection with borrowings, if any, under our credit facility, which bears interest at variable rates. As of both February 1, 2025 and February 3, 2024, we had no outstanding borrowings under our credit facility.

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