Good day and welcome to the Tilly’s Inc. Third Quarter Fiscal 2014 Results Conference Call. Today’s conference is being recoded. At this time, I’d like to turn the conference over to Ms. Anne Rakunas, ICR Inc. Please go ahead ma’am.

Thank you. Good afternoon, everyone. Thank you for joining us today to discuss Tilly’s third quarter fiscal 2014 earnings results. On today’s call are Daniel Griesemer, President and CEO and Jennifer Ehrhardt, CFO. A copy of today’s press release is available in the Investor Relations section of Tilly’s website at tillys.com. Shortly after we end this call, a recording of the call will be available as a replay for 30 days in the Investor Relations section of the company’s website. I’d like to remind you that certain statements that we will make in this presentation are forward-looking statements. These forward looking statements reflect Tilly’s judgment and analysis only as of today and actual results may differ materially from current expectations based on a number of factors affecting Tilly’s business. Accordingly you should not place undue reliance on the forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with the forward-looking statements to be made in this conference call and webcast, we refer you to the disclaimer regarding forward-looking statements that’s included in our third quarter 2014 earnings release which is furnished to the SEC today on Form 8-K, as well as our filings with the SEC referenced in that disclaimer. As for today’s call, we have a limit of one hour, so when we get to the Q&A portion, please limit yourself to one question at a time to give others the opportunity to also have their questions addressed. And with that, I will turn the call over to Daniel Griesemer, Tilly’s President and Chief Executive Officer. Dan?

Thank you Anne and good afternoon everyone, thank you for joining us today. On our call I’ll be providing you with an overview of our third quarter performance and the key factors that drove our results. Next I’ll review that progress made in our 2014 strategic initiatives during the quarter and then Jennifer will review our financial results in more detail and provide our outlook for the fourth quarter fiscal 2014. I’ll provide a few closing comments and then we’ll open up the call for your questions. We’re pleased with the meaningful progress we are making on our initiatives to increase sales and profitability as our third quarter results exceeded expectations. During the quarter, we continued to focus on product differentiation and innovation and further improve our digital capabilities. The moderate improvement in sales trends that we experienced at the beginning of the third quarter continued throughout the back-to-school selling period and into September, while we’ve recognized there is still more work to be done and we encourage that our efforts together with a slightly better teen retail environment resulted in a general improvement in customer response. Additionally, our strong product offering and disciplined inventory management resulted in an increase in product margins. We continue to control our expenses ending the quarter with the higher cash balance year-over-year and we maintained our debt free balance sheet. During the third quarter, we continued to advance our 2014 growth initiatives that we believe are laying the solid foundation for increase market share and improved profitability. As we previously outlined these include increased product differentiation and innovation, a greater emphasis on our digital platform and evolving our real estate strategy. First in terms of product differentiation and innovation, we continue to do what we do best. We stayed true to our convictions and…

Thank you Dan and good afternoon everyone. For the third quarter, net sales grew 6.1% to $131.3 million compared to $123.8 million in the third quarter of 2013. Comparable store sales which include e-commerce sales decreased by 1.2% compared to the same period in 2013, reflecting a moderate improvement in sales trends driven by progress in our initiatives and a slightly better team retail environment as Dan mentioned. During the quarter, we experienced continued improvement in men’s footwear accessories and kids. The improvement in footwear was driven by a men’s key back-to-school initiative rolled out late in the second quarter. Our third quarter comps reflects decreases in traffic partially offset by increased average transaction value. Growth profit increased 7.1% to $40.5 million or 30.9% of net sales compared to 30.6% of net sales in the third quarter of 2013. The 30 basis points improvement was primarily due to a 30 basis points increase in product margins. Occupancy deleverage was offset by favorable pickups in the quarter related to new stores and store closures. Selling general and administrative expenses were $32 million or 24.4% of net sales compared to an SG&A rate of 22.4% in the third quarter of 2013 and primarily reflect deleverage on store payroll and incremental marketing expense in the quarter. We also expect to incur incremental marketing expenses in the fourth quarter based upon the continued strength in customer response to our marketing efforts today. Our operating margin was 6.5% compared to 8.2% in the third quarter of 2013. Net income was $5.1 million or $0.18 per diluted share based on a weighted average diluted share count of $28 million shares and an effective tax rate of approximately 40.2% which was slightly lower than expected due to higher pretax income in the quarter than estimated. This compares…

Thanks Jennifer. Our third quarter results illustrate the progress we are making on our initiatives to increase sales and improve profitability and we believe we are on the right track with our efforts. Our differentiated product offering, engaging marketing and promotional activities, dynamic store experience and digital capabilities have us well positioned for the important holiday selling season. We have seen a good start to the holiday season with continued improvements in the sales trends through November. I’m encouraged by these improved trends which reflect meaningful progress on our initiatives and while we are pleased with the trends during November, we recognize that the majority of the holiday period is still ahead of us and traffic and consumer spending patterns remain inconsistent. We strongly believe in the fundamentals of our business and remain disciplined and committed to pursuing opportunities that we believe will increase our market share, deliver strong product margins and improve profitability in the long-term. I’d now like to open up the call for your questions. Operator?

Thank you. (Operator Instructions) And we will go to our first question from Neely Tamminga with Piper Jaffray.

So question for you first Dan, and then I do have just a follow-up on the metrics for you Jennifer. So on the big picture as it relates to the omnichannel e-commerce dedicated facility, how should we think about -- could you use maybe like Cyber Monday or Black Friday weekend to help us contextualize the efficiencies that that facility has really gained for you guys maybe this year versus last year since this is the first Cyber Monday and Black Friday utilizing that, that would be helpful? And then, just a housekeeping sort of follow-up on the metrics Jennifer. How should we think about the underlying comp metrics for Q4, would they be comparable to that of what we just saw for Q3 kind of slight declines in traffic, positive increases in transaction value that would be built up in the assumption on the comp? Thank you.

Sure. On the first part Neely, we are relatively new in the facility and relatively new with our new e-commerce platform, but we are as we said pleased with the strong start, pleased with the seamless execution in both the launch of the new website and bringing this new facility online. A little early to quantify and we look forward to giving more visibility to that I think probably in March as we talk about 2015. We’ve always said that we would enjoy most of the benefits beginning in 2015, so we’re still working out the kinks and getting really efficient there as rest assured we will become very efficient as demonstrated by our ability to do that in other areas of the business.

Neely on regarding the underlying metrics for Q4, you will expect to see those consistent with Q3 being as we mentioned continuing to have traffic headwinds and then having some offset from [ADS] as well as conversion.

We are seeing positive conversion driving that transaction value as well?

In the third quarter, it was nearly flat. But more recently, we’ve seen some strength there.

And we will go now to Dave King with Roth Capital.

I guess first off, just want to follow-up on some of your comments. It sounds like traffic and sales were fairly strong throughout back-to-school month of September and then it sounds like it had been dropped off in October and then rebounded again in November. First is that a fair characterization? And then, how should we think about that in terms of the colder weather that was seen across most of the country, being that you have still fair amount of your footprint at California West Coast et cetera any color you can share in terms of how that impacted you. Thanks.

I think it probably temper your view of the volatility within the quarter. We saw the trends improved as back-to-school unfolded and continue to improve in September. And then soften up a bit I think we know we were effected a bit by lack of clearance particularly on e-commerce and warm weather that negatively affected our winter categories in the month of October. That was partially offset by the addition of a fall catalogue which we mailed and saw a good response too. When you step back and look at the big picture you saw it is a nice trend coming through the quarter and we’ve seen a good start to the holiday season. But we remain cautious about what can happen in early December and in January as a result of historical patterns.

Fair and sounds prudent. And then one quick follow up if I may Dan any color you have or anything you can share at this point terms of initial attraction the outlet concept how that’s been going?

Sure their numbers are incorporated in our comments around new stores. And we are pleased with the performance of them as a group. I think we opened five in the year at all really right before back-to-school with another one just a couple a weeks ago. It is still very early in the concept but we’re pleased with them being part it. The group that is performing as expected.

We will move to now to Jeff Van Sinderen with B. Riley.

Good afternoon and let me add my congratulations on the sequential improvement in the comp. So I guess kind of a few questions to ask you and I’ll try to roll them together but can you break out the e-commerce growth for us in the quarter in the brick-and-mortar comp and then also just in terms of the marketing front. How much was marketing up in Q3 and then how much you’ve planning it up in Q4 and then maybe you could just also touched on plan discount levels for Q4 versus last year. Thanks.

Okay sure. So we are breaking out this specific numbers of e-commerce versus brick-and-mortar is such an integrated customer experience. But we can’t say that the e-commerce performance was ahead of the total company performance still ahead of that negative 1.3 I think that’s really all that needs to be said about that in terms of marketing the significant thing to think about there is marketing we added a book in Q3 because of the strength of the response we were seeing to our marketing efforts we talked about this in the last call. That was kind of a meaningful and incremental addition to the quarter we don’t have that or don’t need that opportunity in the fourth quarter. But you could look for us to increase the marketing spend in areas where we have historically spent our money both catalogue and in our digital efforts. So we won’t be specifically quantifying that for fourth quarter but slight increase is there as a result of increased response to our efforts. And then in terms of discounting we have seen a good start to the holiday season. We are pleased and encouraged by those results through the Black Friday weekend and Cyber Monday. We actually were no more promotional than the year prior and I think we even had better efficiency on our promotional activities. So we are continuing to execute with long term product margin approach and maintaining the integrity of the brand and the brands we carry.

And now we will now to Liz Pierce with Brean Capital.

Thanks good afternoon congratulations guys and nice job in a tough environment. Dan I was curious about your comment on teen retail suggesting that the environment is better. And then just related kind of how the growth I think you called that everything but growth and was just curious for any comment on how that performed. Thanks.

So our comments on teen retailer really coming not trying to overstate that but it does appear that there core option for our teen customer were seeing some slight improvement in the fundamentals of their behavior. So that is a slight improvement in the traffic trends, slight improvement in conversion trends and ADS trends, slight improvement in response to our marketing efforts. It just seems like things are improving slightly, so we thought it was important to call that out. In terms of lack of commenting on juniors we generally make it a point to comment on the things that are meaningful in movement in direction juniors has been and has always been an important part of our business. But there was no meaningful call out there in terms of its performance relative to the second quarter so just it is important to highlight it.

(Operator Instructions) And we’ll go now to Lindsay Drucker Mann with Goldman Sachs.

Hi guys. This is Addie for Lindsay.

Hi, Addie.

If you can provide some more context around the improvement in product margin, was that simply a function of better inventory management and offers they reduce promotions or any other factors and then how much of that will you attribute internal factors that control versus just the environment on turning with that --

Yes, the improved product margins were on top of last year which was the highest product margin in the past five so that kind of puts it into context. These are very healthy margins and come as result of good inventory management and investments in strong performing category. So much of it is internal but we have to call out that we do see a general improvement, a slight improvement in the overall team consumer environment that has to be contributing to some of it.

And at this time we have no further questions. I’ll turn the call back to Mr. Daniel Griesemer for closing remarks.

Okay. Thanks again for joining us and look forward to discussing our fourth quarter results with all of you in March and hope to see with the ICR exchange in January. Have a good evening.

This does conclude our conference. Thank you for your participation.