Good afternoon, and welcome to Lulu's Fashion Lounge First Quarter 2026 Earnings Call. Today's call is being recorded. At this time, I'd like to turn the conference over to Lulu's General Counsel and Corporate Secretary, Naomi Beckman-Strauss. Thank you. You may begin.

Good afternoon, everyone, and thank you for joining us to discuss Lulu's First Quarter Fiscal 2026 results. Before we begin, we would like to remind you that this conference call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements, including but not limited to statements regarding management's expectations, plans, strategies, goals and objectives, and their implementation. These forward-looking statements are subject to various risks, uncertainties, assumptions, and other important factors, which could cause our actual results, performance, or achievements to differ materially from results, performance, or achievements expressed or implied by these forward-looking statements. These risks, uncertainties, and assumptions are detailed in this afternoon's press release as well as our filings with the SEC, including our annual report on Form 10-K for the fiscal year end of December 28, 2025, which can be found on our website at investors.lulus.com. During our call today, we've heard certain non-GAAP financial information, including adjusted EBITDA, adjusted EBITDA margin, net debt, and free cash flow. Our non-GAAP measures may be different from non-GAAP measures used by other companies. Reconciliation of GAAP to non-GAAP measures, as well as the description, limitations, and rationale for using each measure, can be found in this afternoon's press release and in our SEC filing. We also use certain key operating metrics, including gross margin, average order value, and active customers. The description of these metrics can also be found in this afternoon's press release and in our SEC filing. Joining me on the call today are our CEO, Crystal Ansem, our CFO, Heidi Crane, and our President and CIO, Mark Voss. Following our prepared remarks, we'll open the call for your questions. With that, I'll turn the call over to Crystal.

Thank you, Naomi, and good afternoon, everyone. we appreciate you joining us today. In the first quarter, we continued to make meaningful progress across the business as we executed against the operational and merchandising initiatives supporting our reset. We exited 2025 in the first quarter of 2026, having completed much of the foundational reset work, and are now positioning the business for recovery and reacceleration in the second half of the year. We believe the continued strength of our higher margin event driven categories, combined with our assortment optimization efforts, have improved order economics, deepened customer engagement, and further reinforced our position as a special occasion brand. Lulu's remains a trusted destination for life's most meaningful moments, from graduations and weddings to birthdays, vacations, date nights, and the everyday social moments in These emotionally resonant purchase occasions continue to support strong customer engagement, repeat purchasing behavior, and full price demand across our core Gen Z and millennial customer base. What differentiates the Lulu's brand is our ability to combine elevated, feminine fashion with accessible price points while helping customers feel confident and photo-ready for the moments that matter most. While we took targeted actions during the quarter to further optimize portions of our casual apparel and footwear assortments, we continue to see encouraging momentum across key areas of the business, including sustained strength in event-driven categories, significantly improved assortment productivity, expanding gross margins, and continued progress against our operational efficiency initiatives. To that end, let me share some additional detail on key positive developments during the first quarter of 26. We continue to see healthy demand for special occasions, led by reorder cocktail dresses, and supported by color ads across occasion wear, assortment, as well as chastened to high-performing, newly introduced styles. Additionally, sell-through for new product introductions improved significantly during the quarter, leading to reorder eligibility rates that nearly doubled year over year, highlighting the effectiveness of our more refined assortment strategy and identifying styles that better align with what the Lulu's customer is looking for. Gross margins expanded by 480 basis points to 45.1%, marking our highest first quarter gross margin percentage since 2022. The continued expansion in gross margin reinforces that the structural improvements we have made across sourcing, assortment discipline, and inventory productivity are driving healthier order economics and improving the earnings profile of the business. We have seen great brand momentum to start the year, supported by growing engagement across experiential marketing, influencer partnerships, earned media and social channels, all while maintaining disciplined marketing efficiency. Our brand marketing strategy remains focused around culturally relevant moments that resonate with our customer, including weddings, graduations, prom, vacations, and other social occasions where customers turn to Lulus with confidence. During the quarter, our 2026 prom event, creator collaborations, influencer and celebrity placements, and seasonal occasion dressing stories generated strong engagement and visibility across channels. We also announced our 2026 brand campaign in early April, which we anticipate will further drive awareness, positioning the business well to build momentum and scale as we celebrate moments that matter to our customers and that align with our brand identity. We also continue to benefit from the scale and authenticity of our community, which now includes more than 9 million social media followers and a broad network of influencers and ambassadors that help amplify the brand organically. Combined with the launch of our brand campaign, we believe these efforts further reinforce Lulu's temple luxury positioning. Our wholesale channel is scaling rapidly, with revenue in the quarter doubling year-over-year as it complements and amplifies our D2C business by meeting our customers where they already shop and increasing awareness of the Lulu's brand across new audiences and new channels. The in-store experience allows customers to engage directly with the quality, fit, and value of our product assortment, helping deepen trust and engagement with our brand. We continue to view wholesale as a highly strategic and capital-efficient growth channel, expanding brand awareness and driving incremental customer acquisition. And last, adjusted EBITDA improved significantly year-over-year, highlighting our progress, prioritizing profitability, maintaining a lean cost structure, and driving operational focus. Despite dipping negative in the first quarter, as anticipated, driven by our planned inventory reset, we expect to see a return to positive adjusted EBITDA in the second quarter and for the full year. Importantly, during the first quarter, we made significant progress on the reset of our casual apparel and footwear businesses, as we discussed on our last call, while intentionally prioritizing profitability and assortment quality to support a faster and healthier return to growth. During the quarter, we intentionally maintained disciplined inventory receipts and a tighter, more curated assortment within casual apparel and footwear as we continue optimizing these categories around productivity, customer alignment, and profitability. These actions contributed to a meaningfully cleaner inventory position exiting the quarter, and that positions us well to reintroduce higher quality, more productive newness through the balance of the year. We will continue to iterate on new product in the coming quarters, identify top performers, and build back reorder momentum behind the styles that resonate with customers most. Inventory at the end of Q1 was down meaningfully year-over-year, including a 39% reduction in casual apparel categories, nearly 46% reduction in footwear, while markdown exposure exiting the quarter was also substantially lower. As expected, return rates increased year-over-year during the quarter, driven primarily by a greater mix of elevated occasion product and higher average unit retails. We expect return trends to improve as casual apparel and footwear assortments normalize through the back half of the year, positioning us for healthier revenue trajectory and improving return rates. We're encouraged by the progress we made in the first quarter, including improved margins, stronger inventory productivity, continued wholesale momentum, and meaningful balance sheet improvement. We see opportunities to deepen engagement and grow revenue per customer by expanding further into wedding-related occasions and other event-adjacent categories that naturally extend the customer lifecycle, increase purchase frequency, and support continuous engagement throughout the year. Most importantly, we remain deeply focused on serving our customers, strengthening the emotional connection they have with our brand, and continuing to deliver the confidence, quality, and experience they expect from Lulu's during life's most meaningful moments. With that, I'd like to turn the call over to Mark Voss, our President and Chief Information Officer. Mark will provide updates around progress we are seeing against our strategic focus areas. Mark?

Thank you, Crystal. I'll start by sharing an update on our progress against our latest key strategic priorities, which center on the highest impact drivers of the business. One, improving order economics. Two, expanding our wholesale channel. And three, leveraging technology to enhance engagement and operational efficiency. Starting with strengthening our casual apparel and footwear categories to drive improved order economics. Our casual apparel and footwear segments play a key role in broadening the Lulu's customer relationship beyond occasion-driven purchases, which tend to be more seasonal and episodic in nature. While occasion wear anchors our brand, casual apparel and footwear create opportunities for more consistent everyday engagement, supporting higher purchase frequency and repeat behavior over time. These categories also deliver lower return rates, making them an important lever for improving overall order profitability and marketing efficiency as they scale. At the same time, we took more aggressive steps in late 2025 and into the first quarter to reset our casual apparel and footwear assortment. We limited new product introductions, focusing only on items with high conviction and strong alignment to our brand and customer. As a result, casual apparel and footwear new product launches were down more than 50% in the first quarter versus the prior year period, and the occasion wear mix subsequently increased. We expect this reset will translate into a significantly improved performance through the remainder of the year. Skew productivity in these categories has already strengthened meaningfully, with a 56% increase in units transacted per new product launched in Q1 2026 compared to Q1 2025 and up sequentially from 21% in Q4 2025. These signals reinforce our confidence that as we move into the back half of the year, casual apparel and footwear product launch volume will normalize and begin to return to growth. As casual apparel and footwear regain momentum in the second half of the year, supported by our focus on strategic, customer-reliant new buys, we expect their share of revenue to increase, providing a tailwind to return rate performance, overall order economics, and customer retention metrics. Just as importantly, these categories support more frequent year-round purchasing behavior and play a critical role in both repeat purchases and new customer acquisition, further boosted by our efforts to improve the shopping experience across the website and strengthen our brand image. While new customer contribution from casual apparel and footwear has and will remain pressured in the first half of the year due to our targeted reset, we expect improvement and momentum to build in Q3 and Q4. As a reminder, Booz's revenue model is not dependent on hitting the fashion trends as they develop in season. It drives the majority of revenue. Instead, Boozer's revenue model is built on building longer-running assortments that make up the majority of our revenue. New assortment success, besides its revenue contribution in-season, is mostly to test, learn, and adopt those winning styles into the future recurring revenue equation of the business. Consequently, just as we are currently experiencing the revenue pressures of past new assortment performance issues in casual apparel and footwear, Firstly, the current successes with the significantly improved sell-through of new products launched, we believe, are strong indicators of future revenue contribution of those product cohorts. In other words, within the Lewis revenue model, we are right now creating the product cohorts that we expect will drive revenue for multiple years to come. In summary, the performance improvements in casual apparel and footwear, combined with the continuing strength in location wear gives us conviction in the revenue turnaround we're working towards. Additionally, the stronger performing casual apparel and footwear revenue contribution directly favors our overall return rates and lowers markdown sales, which should drive significant improvements in order economics and new customer acquisition. As a result, we believe our marketing efficiency will improve, our ability for customer reach will expand, and a positive revenue cycle will commence. From a phasing perspective, we expect more and better new assortment in Q3 and Q4 2026 to drive higher in-season revenue contributions, which would have a positive impact on overall return rates and new customer acquisition, such that we anticipate our total active customers to stabilize in the second half of this year. Starting in 2027, we expect the stronger product foundations and assortment productivity improvements established during 2026 increasingly support improved revenue trends, expanding profitability, and stronger adjusted EBITDA performance year over year. We're very excited about our current momentum and are looking forward to keeping you apprised of our progress. Turning to wholesale expansion. Our wholesale expansion continues, and I'm happy to report the following statistics. As of 2025, Q1 lasts 12 months. We shipped to four major accounts, and by 2026, Q1 lasts 12 months. That expanded to 10 major accounts. In 2026, Q1 lasts 12 months. Our overall wholesale revenue increased by 112%, and our same major account revenue was up 94% compared to 2025 Q1 last 12 months. As we have previously announced, Luluz is now available in all Nordstrom doors, and we also doubled our presence to 100 doors with our prom assortment at Dillard. The continued growth of our wholesale channel is validation that the Luluz brand resonates with our customers, who are also shopping in-store. Finally, let me walk through how we're leveraging technology to drive engagement and efficiency. Let me start with an update on our cost reduction initiatives. In the first quarter, we saw a 13% year-over-year decline in operating expenses, including an 8% reduction in fixed costs. One great example of how we achieve this is through our distribution center efficiency gains, which include increased efficiencies in inbound and returns processing, lower refurbishment costs, and improvements in our click-to-ship time and on-time delivery. These major performance improvements have supported our cost efforts, thanks to the great work of our operations teams. Deeply deserved kudos. On tariffs, uncertainty around rates, refunds, and timing is ongoing. As we discussed previously, we successfully managed incremental tariff impacts through a combination of vendor collaboration, strategic pricing, and assortment optimization. And as a result, we are not expecting large swings due to the potential refunds, which have not been factored into guidance to date. We continue to monitor market developments while progressing our sourcing diversification efforts, deepening strategic vendor relationships, managing product costs, and maintaining disciplined pricing and assortment strategy. We also remain mindful that ongoing freight cost variability and a value-conscious consumer may contribute to uneven demand patterns. However, our approach is centered on staying agile, protecting margins, and making measured adjustments as conditions evolve. We believe these actions enable us to navigate near-term volatility while continuing to reinforce a stronger and more resilient long-term margin profile. To that end, I'm happy to announce that our customers are now enjoying the benefits of having the option to return items via happy returns, without the need for shipping materials or printing label hassles. Our customers are adopting happy returns at high rates and are clearly appreciative of this service. Furthermore, the consolidated return shipping to our distribution centers will help offset the mentioned increases in fuel surcharges. A shout-out to the Happy Returns and Lulu's teams who, in a relatively short period of time, made this integration a reality with a smooth co-life and rollout. Lastly, we're also very happy about our updated complete-to-look functionality, which our customers love. We've not only revamped how we algorithmically merchandise its various looks, but we've also made the shopping experience

smoother and add-to-cars-y.

As our casual apparel and footwear assortments evolve and improve, we see this as an opportunity to further expand art economics and increase customer lifetime value. Taken together, these strategic focus areas reflect our deliberate and targeted approach to accelerating our path to growth in the year ahead. By repositioning and re-accelerating our underperforming but strategically important categories, expanding our brand presence through wholesale, managing our cost, and removing friction across the customer journey through targeted technology investments, we are strengthening our operational performance while reinforcing the long-term durability of our business model. I'll now pass it over to Heidi Crane, who is Chief Financial Officer, to provide more caller on our financial performance.

Thank you, Mark. In the first quarter, net revenue was $57.5 million, a decrease of 10% year-over-year, driven by a 15% decrease in total orders placed and the impact of higher return rates, partially offset by a 4% increase in average order value and an increase in wholesale revenue. Most margin for the quarter was 45.1% of 480 basis points year-over-year due to a shift in the sales mix to higher margin categories, as well as improved outbound shipping costs due to freight rate savings, partially offset by increased markdowns in casual apparel and footwear. On the expense side, selling and marketing expenses in the first quarter totaled $14 million, down $1.9 million year-over-year due to lower marketing costs and merchant processing fees. General and administrative expenses decreased $2.6 million to $15.5 million in Q1, a 14.3% decline year-over-year, primarily due to ongoing cost control initiatives, including a decrease in variable labor and benefits associated with lower sales volume and enhanced productivity realized from our distribution center consolidation efforts, a decrease in equity-based compensation expense, and a decrease in fixed labor and benefit costs. due to a reduction in six head caps. Our net loss for the first quarter improved to $4.1 million from an $8 million loss in the same period last year. Adjusted EBITDA in Q1 was a loss of $1.5 million compared to a $4.7 million loss in Q1 2025, a $3.1 million improvement year over year. Adjusted EBITDA margin was negative 2.7% versus negative 7.3% in the prior year period. Interest expense in Q1 totaled $394,000 versus $577,000 in Q1 2025. Deleted loss per share for the quarter was $1.44 compared to a diluted loss per share of $2.86 in Q1 2025. For the first quarter, net cash provided by operating activities was $6.9 million compared to $8.3 million in the same period last year, with the year-over-year variance negatively impacted by $2.2 million related to a large prior-year income tax refund. Year-over-year, net cash provided by operating activities excluding income tax refunds improved by $800,000 in the first quarter. Free cash flow in the first quarter was $6.5 million compared to free cash flow of $7.8 million in the same period last year. Total debt decreased by $1.1 million to $13.3 million, and net debt decreased by $5.8 million to $5.9 million during the first quarter. Our inventory balance at quarter end was $33.1 million, a decrease of $6.6 million, or 17% year-over-year. We remain focused on strengthening the foundation of our business, prioritizing higher quality demand, and disciplined order economics. We also continue to realign our casual apparel and footwear assortment to better meet customer demand and margin optimization. We are taking targeted actions to work through the remaining slower-moving inventory and reposition or assortment, and prioritizing ongoing cost optimizations. With that in mind, we feel confident in the positive momentum we are seeing year-over-year with our disciplined execution, which positions us well as we prepare for the upcoming peak selling periods. As such, we expect positive adjusted EBITDA in the second quarter of 2026 to outperform results for the same period of last year. We remain focused on improving profitability and strengthening our financial position with improvements to our balance sheet and cash generation. For the full year of fiscal 2026, we continue to expect adjusted EBITDA to inflect a positive compared to negative $1.2 million in 2025 and the net revenue growth trend to improve year over year compared to a decrease of 11% in 2025. We also continue to expect capital expenditures to be between $2 million and $2.5 million inclusive of capitalized software, which is comparable to 2025. And now, I'll turn it back over to Crystal for closing remarks.

Thank you, Heidi. Overall, we are encouraged by the progress and momentum we saw in the first quarter as we execute against our strategic priorities and continue strengthening the foundation of the business. While there is still important work ahead as we optimize portions of the assortment through the balance of the year, we believe the actions we have taken are creating a structurally stronger business, improving operational discipline, enhancing customer alignment, and positioning Lulu for more sustainable, profitable, long-term growth. We remain excited about the opportunities ahead, including expanding our presence across wedding-related occasions and event-adjacent categories, deepening customer engagement with the Lulus brand, and continuing to scale wholesale as both a growth driver and a customer acquisition engine. Most importantly, none of this would be possible without the passion, resilience, and commitment of our team. I want to sincerely thank the entire LULU's organization for their hard work, their dedication, and also thank our shareholders for their continued support and confidence in our long-term vision.

This concludes today's teleconference. You may disconnect your lines at this time, and we thank you for your participation.