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 May 2, 2026, January 31, 2026 and May 3, 2025, our reserve for sales returns was $1.4 million, $1.2 million and $1.3 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 $8.0 million, $8.7 million and $8.8 million as of May 2, 2026, January 31, 2026 and May 3, 2025, 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 $2.4 million and $2.3 million for the thirteen weeks ended May 2, 2026 and May 3, 2025, respectively. For the thirteen weeks ended May 2, 2026 and May 3, 2025, the opening gift card balance was $8.7 million and $9.5 million, respectively, of which $1.4 million was recognized as revenue during both of 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 $5.0 million, $4.6 million, and $4.6 million as of May 2, 2026, January 31, 2026 and May 3, 2025, respectively. The value of points redeemed through our loyalty program was $1.6 million and $1.3 million for the thirteen-weeks ended May 2, 2026 and May 3, 2025, respectively. For the thirteen weeks ended May 2, 2026 and May 3, 2025,

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.


	May 2, 2026		January 31, 2026		May 3, 2025
Leasehold improvements	$	148,597	$	150,338	$	156,839
Computer hardware and software	50,033		49,119		48,992
Furniture and fixtures	41,015		41,797		44,517
Machinery and equipment	33,412		33,513		34,068
Vehicles	2,254		2,254		2,222
Construction in progress	3,929		4,428		2,796
Property and equipment, gross	279,240		281,449		289,434
Accumulated depreciation	(246,721)		(247,945)		(251,558)
Property and equipment, net	$	32,519	$	33,504	$	37,876

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-week periods ended May 2, 2026 and May 3, 2025, we incurred rent expense of $0.5 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-week periods ended May 2, 2026 and May 3, 2025 we incurred rent expense of $0.2 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-week periods ended May 2, 2026 and May 3, 2025 we incurred rent expense of $0.4 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 May 2, 2026 and May 3, 2025 we recorded sublease income of $25.8 thousand and $24.5 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
2026	$	3,322	$	43,712	$	47,034	$	79
2027	4,167		47,269		51,436		—
2028	2,251		32,246		34,497		—
2029	2,363		23,154		25,517		—
2030	2,481		15,848		18,329		—
Thereafter	2,229		31,929		34,158		—
Total minimum lease payments	16,813		194,158		210,971		79
Less: Amount representing interest	1,876		33,215		35,091		—
Present value of operating lease liabilities	$	14,937	$	160,943	$	175,880	$	79


	Thirteen Weeks Ended
	May 2, 2026						May 3, 2025
	Cost of goods sold		SG&A		Total		Cost of goods sold		SG&A		Total
Fixed operating lease expense	$	14,974	$	310	$	15,284	$	16,497	$	341	$	16,838
Variable lease expense	3,725		21		3,746		3,574		12		3,586
Total lease expense	$	18,699	$	331	$	19,030	$	20,071	$	353	$	20,424

Thirteen Weeks Ended

May 2, 2026

May 3, 2025

Cash paid for amounts included in the measurement of operating lease liabilities (in thousands)

$16,193

$17,614

Weighted average remaining lease term (in years)

4.7 years

4.9 years

Weighted average interest rate (1)

7.68%

6.82%

(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.