Revenue is recognized for store sales when the customer receives and pays for the merchandise at the register, net of estimated returns and taxes collected from our customers. For e-commerce ("e-com") net sales, we recognize revenue, net of sales taxes and estimated sales returns, and the related cost of goods sold at the time the merchandise is shipped to the customer. Amounts related to shipping and handling that are billed to customers are reflected in net sales, and the related costs are reflected in cost of goods sold in the Consolidated Statements of Operations.

We accrue for estimated sales returns by customers based on historical sales return results. As of November 1, 2025, February 1, 2025 and November 2, 2024, our reserve for sales returns was $1.1 million, $1.2 million and $1.2 million, respectively, and is included in accrued expenses on the accompanying Consolidated Balance Sheets.

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. The customer liability balance was $8.1 million, $9.5 million and $8.6 million as of November 1, 2025, February 1, 2025 and November 2, 2024, respectively, and is included in deferred revenue on the accompanying Consolidated Balance Sheets. 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 our historical gift card breakage rate, we recognize breakage revenue over the redemption period in proportion to actual gift card redemptions. Revenue recognized from gift cards was $1.8 million and $2.0 million for the thirteen weeks ended November 1, 2025 and November 2, 2024, respectively. For the thirteen weeks ended November 1, 2025 and November 2, 2024, the opening gift card balance was $8.2 million and $8.8 million, respectively, of which $0.5 million were recognized as revenue during both of these periods. Revenue recognized from gift cards was $6.3 million and $7.2 million for the thirty-nine weeks ended November 1, 2025 and November 2, 2024, respectively. For the thirty-nine weeks ended November 1, 2025 and November 2, 2024, the opening gift card balance was $9.5 million and $10.2 million, respectively, of which $2.8 million and $3.3 million, respectively, were recognized as revenue during these periods.

We have a customer loyalty program where customers accumulate points based on purchase activity. Once a loyalty member achieves a certain point level, the member earns an award that may be used towards the purchase of merchandise. Unredeemed awards and accumulated partial points are accrued as deferred revenue and awards redeemed by the member for merchandise are recorded as an increase to net sales. Our loyalty program allows customers to redeem their awards instantly or build up to additional awards over time. Unredeemed awards and accumulated partial points expire 365 days after the customer's original purchase date. A liability is estimated based on the standalone selling price of points earned and expected future redemptions. The deferred revenue for this program was $4.5 million, $4.6 million, and $4.7 million as of November 1, 2025, February 1,

2025 and November 2, 2024, respectively. The value of points redeemed through our loyalty program was $1.6 million and $1.7 million for the thirteen-weeks ended November 1, 2025 and November 2, 2024, respectively. For the thirteen weeks ended November 1, 2025 and November 2, 2024, the opening loyalty program balance was $4.6 million and $4.8 million, respectively, of which $1.4 million and $1.7 million, respectively were recognized as revenue during these periods. The value of points redeemed through our loyalty program was $4.7 million and $5.4 million for the thirty-nine weeks ended November 1, 2025 and November 2, 2024, respectively. For the thirty-nine weeks ended November 1, 2025 and November 2, 2024, the opening loyalty program balance was $4.6 million and $4.7 million, respectively, of which $3.6 million were recognized as revenue during each of these periods.

Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Equipment is depreciated over five to seven years. Furniture and fixtures are depreciated over five years. Computer software is depreciated over three years. Leasehold improvements and the cost of acquiring leasehold rights are amortized over the lesser of the term of the lease or the estimated useful life of the improvement. The cost of assets sold or retired and the related accumulated depreciation is removed from the accounts with any resulting gain or loss included in net loss in the accompanying Consolidated Statements of Operations.


	November 1, 2025		February 1, 2025		November 2, 2024
Leasehold improvements	$	152,878	$	156,461	$	160,152
Computer hardware and software	49,158		48,807		51,653
Furniture and fixtures	42,866		44,493		46,370
Machinery and equipment	33,687		34,029		34,663
Vehicles	2,254		2,222		2,265
Construction in progress	3,005		2,945		3,967
Property and equipment, gross	283,848		288,957		299,070
Accumulated depreciation	(249,475)		(248,818)		(256,467)
Property and equipment, net	$	34,373	$	40,139	$	42,603

Depreciation expense related to property and equipment was $2.5 million and $3.3 million for the thirteen-weeks ended November 1, 2025 and November 2, 2024, respectively. Depreciation expense related to property and equipment was $8.1 million and $9.6 million for the thirty-nine weeks ended November 1, 2025 and November 2, 2024, respectively.

We conduct all of our retail sales and corporate operations in leased facilities. Lease terms generally range up to 10 years in duration (subject to elective extensions) and provide for escalations in base rents. Many of our store leases contain one or more options to renew the lease at our sole discretion. Generally, we do not consider any additional renewal periods to be reasonably certain of being exercised.

Most store leases include tenant allowances from landlords, rent escalation clauses and/or contingent rent provisions. Certain leases provide for additional rent based on a percentage of sales and annual rent increases generally based upon the Consumer Price Index. In addition, most of our store leases are net leases, which typically require us to be responsible for certain property operating expenses, including property taxes, insurance, common area maintenance, in addition to base rent. Many of our store leases contain certain co-tenancy provisions that permit us to pay rent based on a pre-determined percentage of sales when the occupancy of the retail center falls below minimums established in the lease. For non-cancelable operating lease agreements, operating lease assets and operating lease liabilities are established for leases with an expected term greater than one year, and we recognize a single lease cost, with such cost allocated over the lease term, on a straight-line basis. We do not record any leases with terms of 12 months or less as operating lease assets or operating lease liabilities, these are instead expensed as incurred. Contingent rent, determined based on a percentage of net sales in excess of specified levels, is recognized as rent expense when the achievement of those specified net sales is probable.

Our operating leases typically include non-lease components such as common-area maintenance costs, utilities, and other maintenance costs. We have elected to include non-lease components with the lease payments for the purpose of calculating the lease right-of-use assets and liabilities to the extent that they are fixed. Non-lease components that are not fixed are expensed as incurred as variable lease payments.

We lease approximately 172,000 square feet of office and warehouse space (10 and 12 Whatney, Irvine, California) from a company that is owned by the co-founders of Tillys. During each of the thirteen and thirty-nine week periods ended November 1, 2025 and November 2, 2024, we incurred rent expense of $0.5 million and $1.6 million related to this lease. Pursuant to the lease agreement, the lease payment adjusts annually based upon the Los Angeles/Anaheim/Riverside Urban Consumer Price Index (the "LAARUCPI"), not to exceed 7%. The lease began on January 1, 2003 and terminates on December 31, 2027.

We lease approximately 26,000 square feet of office and warehouse space (11 Whatney, Irvine, California) from a company that is owned by one of the co-founders of Tillys. During each of the thirteen and thirty-nine week periods ended November 1, 2025 and November 2, 2024, we incurred rent expense of $0.2 million and $0.5 million related to this lease. Pursuant to the lease agreement, the lease payment adjusts annually at the greater of 5% or the change in the LAARUCPI. The lease began on June 29, 2012 and terminates on June 30, 2032.

We lease approximately 81,000 square feet of office and warehouse space (17 Pasteur, Irvine, California) from a company that is owned by one of the co-founders of Tillys. We use this property as our e-com distribution center. During each of the thirteen and thirty-nine week periods ended November 1, 2025 and November 2, 2024, we incurred rent expense of $0.4 million and $1.1 million related to this lease. The lease payment adjusts annually based upon the greater of 5% or the change in the LAARUCPI. The lease began on November 1, 2011 and terminates on October 31, 2031.

We sublease a portion of our office space, approximately 5,887 square feet, in the 17 Pasteur, Irvine, California facility to Tilly's Life Center ("TLC"), a related party and a charitable organization. During the thirteen-week periods ended November 1, 2025 and November 2, 2024 we recorded sublease income of $24.5 thousand and $23.4 thousand, respectively, related to this lease. During the thirty-nine week periods ended November 1, 2025 and November 2, 2024 we recorded sublease income of $73.6 thousand and $70.1 thousand, respectively, related to this lease. The lease term is for five years and terminates on January 31, 2027. Sublease income is recognized on a straight-line basis over the sublease agreement and is recorded as an offset within the selling, general and administrative section in the Consolidated Statements of Operations.


Fiscal Year	Related Party		Other		Total		Sublease Income
2025	$	1,083	$	14,927	$	16,010	$	25
2026	4,411		46,718		51,129		105
2027	4,167		36,228		40,395		—
2028	2,251		26,400		28,651		—
2029	2,363		18,748		21,111		—
Thereafter	4,710		34,687		39,397		—
Total minimum lease payments	18,985		177,708		196,693		130
Less: Amount representing interest	2,249		28,501		30,750		—
Present value of operating lease liabilities	$	16,736	$	149,207	$	165,943	$	130

(1) Since our leases do not provide an implicit rate, we used our incremental borrowing rate ("IBR") at lease inception, or lease modification, in determining the present value of future minimum payments. In determining an appropriate IBR, our assumptions included the use of a consistent discount rate for a portfolio of leases entered into at varying dates, the full 10-year term of the lease, excluding any options, and the total minimum lease payments.

Our effective income tax rate was 0.8% of pre-tax loss, compared to 0.1% of pre-tax loss, for the thirty-nine weeks ended November 1, 2025 and November 2, 2024, respectively. Both years' income tax rates are lower than the combined estimated federal and state statutory rates as they include the continuing impact of a full, non-cash deferred tax asset valuation allowance. The income tax rate for fiscal 2025 also includes the refund of certain income tax credit carryback and state net operating loss carryback claims.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. This new legislation has multiple effective dates, with certain provisions becoming effective in 2025 and others implemented through 2027. The net effect of OBBBA did not have a material impact on the Company’s effective tax rate for the period due to the full valuation allowance the Company maintains. The Company continues to evaluate the impact of OBBBA on its consolidated financial statements and will update its estimates as additional guidance becomes available.

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update, Segment reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which amended Topic 280. The amendments in this update enhance segment reporting by expanding the breadth and frequency of segment disclosures required by public entities. ASU 2023-07 requires public entities to disclose factors used to identify the entities' reportable segments, how the Chief Operating Decision Maker (“CODM”) uses the reported measure(s) of a segment's profit or loss to assess segment performance and decide how to allocate resources, significant expenses regularly provided to the CODM and included within the reported measure(s) of a segment's profit or loss, types of products and services from which each reportable segment derives its revenues, and the title and position of the CODM. The new standard is effective for public entities with fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted and is required to be adopted retrospectively for all prior periods presented in the consolidated financial statements. This guidance was effective for us for the annual report for fiscal 2024 and subsequent interim periods and we have adopted the guidance as of the effective date on a retrospective basis. Other than the new disclosure requirements, the adoption of this guidance did not have a significant impact on our consolidated financial statements. Refer to "Note 9: Segment Information" for further information.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid and other disclosures. The new standard is effective for public entities with annual periods beginning after December 15, 2024, with early adoption permitted and should be applied prospectively with the option of retrospective application. Once adopted, we expect to include additional income tax disclosures as required by the new guidance. The standard will not have an impact on our consolidated financial position, results of operations and cash flows.

In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40): Reporting Comprehensive Income - Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses, ("ASU 2024-03"). ASU 2024-03 requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory, employee compensation, and depreciation and amortization. This new standard is effective for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted and should be applied prospectively with the option of retrospective application. We are currently evaluating the impact of this guidance on our consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other - Internal-Use Software: Targeted Improvements to the Accounting for Internal-Use Software, ("ASU 2025-06"). ASU 2025-06 requires entities to begin capitalizing internal-use software when management has authorized and committed to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended. This new standard is effective for fiscal years beginning after December 15, 2027 and interim reporting periods within those annual reporting periods. Early adoption is permitted. This new standard can be adopted using any of: (i) a prospective transition approach (ii) a modified transition approach that is based on the status of the project and whether software costs were capitalized before the date of adoption; or (iii) a retrospective transition approach. We are currently evaluating the impact of this guidance on our consolidated financial statements.