Achieved the first profitable fourth quarter and positive comparable sales year since fiscal 2021, driven by 18 consecutive weeks of positive momentum.

Attributed top-line recovery to a comprehensive merchandise assortment overhaul and the successful clearance of aged, excess inventory.

Evolved digital marketing and social media engagement, specifically via TikTok, to reverse previous declines in active customer loyalty program membership.

Realized significant product margin expansion through the implementation of a new price optimization tool and reduced markdown activity.

Improved operational efficiency in distribution centers following the mid-2024 deployment of new warehouse management software.

Transitioned from a store-closure posture to a disciplined growth strategy as unit economics now support selective new openings.

Maintained sales growth in the fourth quarter despite operating with a net reduction of 17 stores compared to the prior year.

Anticipates Q1 comparable net sales growth between 16% and 22%, supported by a strong 20.1% increase observed in February.

Plans to open four to six new stores in fiscal 2026, marking a shift toward strategic portfolio expansion after a period of optimization.

Estimates that an annualized comparable sales increase of 8% to 9% is required to achieve full-year profitability for fiscal 2026.

Expects continued product margin improvements, particularly in the first half of the year, as inventory remains current and healthy.

Scheduled deployment of an AI-driven merchandise allocation tool and RFID technology in late fiscal 2026 to enhance inventory accuracy and labor efficiency.

Closed 21 total stores during fiscal 2025 as part of a significant portfolio optimization effort to eliminate underperforming locations.

Identified four known store closures scheduled for late in the first quarter of fiscal 2026, with no further significant closures currently expected.

Maintained a full noncash valuation allowance on deferred tax assets, resulting in a near-zero effective income tax rate for the Q1 outlook.

Acknowledged potential macro headwinds in discretionary spending as a primary risk to sustaining double-digit comparable sales growth.

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Management noted that growth is broad-based across all categories, genders, and the kids' department, rather than being driven by a single trend.

The acceleration was supported by high-teens double-digit increases in conversion rates and improving traffic in both physical stores and e-commerce.

Higher full-price selling and healthier inventory levels compared to the previous year's off-price dependency were cited as key margin drivers.

The company plans to 'walk before we run' with 4-6 openings this year, with the potential for more aggressive expansion in 2027 if productivity continues to recover.

Fiscal 2026 capital expenditures are expected to remain between $8,000,000 and $9,000,000, consistent with recent years.

Management aims to recover lost sales per square foot, which ended fiscal 2025 at approximately $260, well below historical peaks.

Profitability targets rely on an 'efficiency journey' including AI allocation tools and RFID to reduce manual inventory counting by 80% to 90%.

Management expects SG&A to grow at a lower rate than comparable sales due to back-end fulfillment and store labor efficiency projects.

Product margin improvements are expected to be most significant in Q1 and Q2 before moderating in the second half of the year.

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