Good afternoon and welcome to Lulu's Third Quarter 2026 Earnings Conference Call. At this time, I'd like to turn the conference over to Lulu's General Counsel and Corporate Secretary, Naomi Beckman-Straus. Thank you. You may begin.

Good afternoon, everyone, and thank you for joining us to discuss Lulu's Third 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, including negotiations regarding additional financing. 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 ended December 28, 2025, and quarterly reports on Form 10-Q for the fiscal quarters ended June 28th, 2026 and September 27th, 2026, which can be found on our website at investors.lulus.com. During our call today, we will also reference 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 gap to non-gap 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 filings. We also use certain key operating metrics, including growth 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 filings. Joining me on the call today are our CEO, Crystal Landsem, our CFO, Heidi Crane, and our President and CIO, Mark Vos. 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 third quarter, we continued to prioritize our assortment reset and strengthening the fundamentals of the business through disciplined merchandising, inventory management, and operational efficiency. While revenue performance remained pressured due to the impact of historical assortment decisions on customer engagement and repeat purchasing, We saw tangible progress in the areas we believe are more important to rebuilding the business over time. Revenue comparisons reflect assortment decisions from prior product year cohorts with the most notable headwinds from lower reorder sales volume from 2025 styles. More specifically, we underestimated the impact of our underperforming new product introductions from last year and the related impact to our current reorder funnel driven not only from fewer reorder products in the reorder pipeline, but also from fewer opportunities for color additions on winning styles and fewer evolutions of bestsellers. The impact of these drove the majority of the revenue declines in the quarter, which Mark will speak to in more detail. That being said, 2026 new product launches continued to demonstrate improved productivity and reorder eligibility, inventory became fresher and more balanced, and we maintained a disciplined approach to managing costs and working capital. These efforts contributed to a 230 basis point expansion in growth margin and a 17% year-over-year reduction in inventory. Let me now take a few minutes to highlight several key areas where we saw encouraging progress during the third quarter, and more importantly, that give us greater confidence in the underlying trajectory of the business. The clearest evidence of progress continues to come from the composition and performance of our assortment. We achieved another quarter of skew productivity improvements, with a significantly higher percentage of new styles introduced in 2026 reaching reorder thresholds in the third quarter versus the prior year. Separates saw the most significant improvement, where eligibility more than doubled compared to the prior year, illustrating the meaningful progress our team has made driving a cleaner and more focused assortment with improved productivity, customer relevance, and profitability. Full price new products ready to wear sales inflected positive in the quarter as expected, though total comps were still negative driven by less revenue from markdown sales. This momentum is continuing through early Q4. While we are working to fully align our inventory and reorder funnel, we are very encouraged by the response to the newer assortment across both our core occasion wear and casual apparel businesses. Year-to-date new product introductions are converting into reorder eligible styles at rates well ahead of our internal targets reinforcing the confidence that the assortment reset is working and building a stronger reorder funnel for future periods. As these styles build into our reorder revenue base, we expect them to become an increasingly meaningful contributor to sales over time. We are also seeing better productivity within the reorder business. While overall true reorder sales remained below last year, productivity of reorder SKUs, including first-time reorders, increased despite a significantly lower reorder SKU count. We believe these trends demonstrate that we are becoming more effective at identifying productive styles and creating a stronger pipeline of proven products that can support the business over time. We also significantly reduced markdown sales this quarter. Overall markdown sales declined 28% compared to the third quarter of 2025 as we reduced both the number of SKUs requiring markdowns and the depth of discounting. Markdown sales from new products declined 52% and Markdown sales across our total casual apparel category declined 48%. Markdown activity is becoming more balanced across our assortment with newer products showing healthier full-price selling and requiring fewer markdowns. While this transition continues to create a near-term headwind to revenue comparisons, we believe it represents an important improvement in the underlying health and profitability of our business. We expect Markdown comparisons to remain challenging through the first quarter of 2027 with improving regular price sales performance increasingly offsetting this pressure as we move through the year. In casual apparel and footwear, we are continuing to drive improved productivity, customer relevance, and profitability supported by a cleaner and more focused assortment as we continue to reduce lower performing inventory and are selectively investing behind top performing styles. In the third quarter, inventory for these categories ended significantly lower year over year down 27% in casual apparel and 47% in footwear, with markdown exposure also meaningfully reduced. Gross margins expanded by 230 basis points to 44.9%, supported by our efforts around inventory management, merchandising, assortment optimization, and cost reduction initiatives. We continue to build brand awareness and strengthen customer engagement through efficient deployment of brand marketing spend, prioritizing high-impact marketing, and Experiential Initiatives throughout the quarter. This quarter we celebrated Lulu's 30th anniversary, a milestone we shared through launching a campaign across integrated storytelling, social content, creator partnerships and consumer activations, focused on connecting with our customers and being a part of their meaningful moment for three decades. Our Mall of America pop-up, which will run through the end of November, continued to drive awareness while giving customers the opportunity to experience our brand in person complementing our wholesale and e-commerce businesses. We continue driving brand awareness through our strategic partnerships with influencers and ambassadors, supporting our brand campaigns and reinforcing the importance of growing awareness of the Lulu's brand across both digital and physical touchpoints. Wholesale continued to gain momentum in the third quarter with revenue growing high double digits during the quarter versus the previous year period. Our expansion into Macy's and Bloomingdale's marked another important step in building the channel providing new opportunities for customers to discover and experience the Lulu's brand while generating meaningful media interest and broader brand visibility. As we expand our presence with leading retail partners, we believe wholesale can play an increasingly important role in extending our reach, introducing Lulu's to new audiences, and complementing our D2C business. We continue to view wholesale as a strategic and capital efficient avenue for driving profitable brand awareness and incremental customer acquisition. Inventory composition continued to meaningfully improve during the quarter, down 17% versus the prior year. The improvement was led by lower levels of slower turning markdown inventory alongside a more balanced base of reorder inventory, partially offset by a larger mix of higher price point product classes driven from lower ready-to-wear and footwear assortment on hand. We believe the progress reflects the strength of our newer assortment and inventory planning improvements, resulting in a healthier mix of newness and established winners allowing for greater flexibility to respond to customer demand. Additionally, we saw a significant improvement in aging inventory in the quarter versus the prior year period, reducing the impact of aging inventory drag. This improvement in freshness gives us a better foundation from which to manage the assortment, react to customer demand, and support more REG price selling. In summary, product continues to get better with productivity and unit economics improving, Inventory is getting healthier and the brand continues to reach customers in new ways. While our results continue to reflect the residual impact of past assortment decisions and the runoff of older products, we're encouraged by what we are seeing beneath the surface. In response to lower reorder performance of products introduced in fiscal 25 and the expected impact on future reorder revenue and as part of our ongoing cost reduction efforts, we implemented workforce reductions across the organization in October. We expect this workforce reduction to generate annualized cost savings of approximately $5 million. These savings are reflected in our preliminary fiscal 2027 outlook, which Heidi will discuss shortly. We continue to see considerable opportunities to expand Lulu's relevance across more occasions and life's moments, particularly within event wear and adjacent categories where the brand resonates most. As we pursue these opportunities, our focus remains on strengthening our connection with our customers and delivering the style, quality and experience they have come to love from Lulu's. Finally, as previously announced, our board is evaluating strategic alternatives available to us to maximize stockholder value. We do not intend to comment further on this process unless and until additional disclosure is appropriate. With that, I'd like to turn the call over to Mark Vos, 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 now share an update on our strategic priorities, focusing on the highest impact drivers of the business, including improving order economics, expanding our wholesale channel, and leveraging technology to enhance engagement and operational efficiency. Starting with improving order economics, in our last quarter's earnings, I mentioned that we expected that new assortment introductions in casual apparel and footwear would normalize in the back half of 2026. While we made progress against that objective in the third quarter, new product introductions remained below our targets. While we introduced 27% more new casual apparel and footwear products and 28% more new occasionwear products in Q3 2026 versus the first and second quarter of 2026, The overall level of new product introductions remained below plan. Looking ahead, we expect to continue building on this progress, although Q4 is seasonally a lower volume period for new product launches, and therefore will have a more limited impact on second-half performance. Q3 year-over-year, we launched 23% fewer casual apparel and footwear products and 14% fewer occasionwear products, an improvement from the first and second quarters of 2026, but still below our targets. Importantly, the productivity of our newly launched products remained strong. Askew productivity in the casual apparel and footwear categories continued to strengthen year over year with a very encouraging 39% increase in units transacted per new product launched in Q3 2026 compared to Q3 2025. Kudos to our merchandising team for connecting so well with our customers and curating the products that they are seeking. As a quick reminder, casual apparel and footwear are important components of our assortment strategy, helping us engage with customers beyond event-driven purchases and creating opportunities for more frequent and repeat interaction with the Lulus brand throughout the year. These categories have the potential to contribute to stronger order economics and greater marketing efficiency, given their historically lower return rates. We continue to see growth opportunities in these product categories, specifically in casual dresses and dressy separates, as well as footwear assortment that completes the look and improves add-to-cart metrics. Turning to the primary driver of our Q3 sales headwind. I want to spend a few minutes on the impact of our reorder pipeline and how it is affecting the business today. Our business model is centered on identifying products that resonate with customers and then scaling those winners over time through reorders and repeat demand. While new product performance contributes to the current period results, its greater value comes from building the core assortment that can generate recurring revenue over time. Given the improvements we are seeing in new SKU productivity and therefore reorder eligibility, we are encouraged that the product cohorts being built today have the potential to become meaningful contributors to future growth. The inverse has also been true. The more limited number of successful and enduring new product launches in the latter half of 2024 and throughout much of 2025 resulted in lower reorder eligibility from those cohorts. which has pressured revenue throughout 2026. Stronger color ad performance from older spring and summer assortment helps offset that pressure in the first half of the year, but as that benefit moderated into the fall selling season, the impact was most pronounced in Q3. Because successful reorder products can contribute over multiple years, we expect some of this pressure to carry into 2027, moderating as newer products become a larger share of our mix. While we incorporated the expected shortfall in reorder revenue from these earlier cohorts into our revenue and EBITDA outlook, where we underestimated the impact was in the secondary revenue opportunities that are also created by successful reorder products. Specifically, a smaller base of reorder eligible products means and more. These downstream effects were underestimated in our modeling. In Q3 alone, we estimate the lack of color and fabrication additions associated with the smaller reorder base represented approximately 9.8 million negative Transactive Revenue Impact. Importantly, stronger new product performance today cannot immediately replace the revenue contribution from a mature reorder base. Reorder revenue volume is typically greatest in the year following a product's launch, with contributions continuing into the second year and tapering thereafter. This is why the stronger new product performance we are seeing in 2026 so important to the trajectory of the business in 2027 and beyond. The 2026 product cohort has the potential to contribute not only through reorders in 2027 and 2028, but also through additional colors, fabrications, and evolutions of new styles inspired by those winners, creating multiple avenues of revenue contribution from a successful initial product launch. Now turning to our wholesale expansion. We continued to gain traction expanding our wholesale channel, and I'm pleased to highlight a few key indicators of that improvement. We expanded from eight non-specialty wholesale partners in Q3 2025 LTM to nine in Q3 2026 LTM. Overall, wholesale revenue for Q3 2026 LTM increased 112%. and we continue to see healthy growth trends across our current accounts with non-specialty same account revenue being up 35% compared to 2025 Q3 LTM. We are also very pleased to have launched Lulu's at Macy's and Bloomingdale's stores in Q3 and are excited about how both new and existing Lulu's customers will be able to engage with our brand in stores across the USA and to Shop Loose in a nationwide multi-channel manner. Last, let me walk through how we're leveraging technology to drive engagement and efficiency. From a performance marketing perspective, we continued to see encouraging results across both established and newer channels in Q3. Billiard marketing remained strong, producing 55% traffic and 70% sales growth year-over-year. We launched open AI ads, leading to significant increases in sessions and sales for the platform year over year. Of course, from a small base, but with incremental ROAS analysis showing continual improvement opportunity for future growth. And the combined discount and marketing spend as a percent of full price revenue came in at 26.3%, down from 26.9% last year. Taken together, These marketing outcomes demonstrate our ability to test and scale new channels while maintaining discipline around the overall cost of marketing and discounts. Lastly, we continue to develop new tools to drive customer engagement. We recently introduced the ability to issue certain types of store credit with expiration dates, giving us greater flexibility in how we design targeted customer promotions. In addition to supporting customer goodwill, This capability creates opportunities to drive time-sensitive engagement while better managing our store credit liability. Collectively, these priorities underscore our focused strategy for driving sustainable growth by revitalizing key categories with significant long-term potential, expanding our reach through wholesale partnerships, maintaining cost discipline, and enhancing the customer experience through targeted technology initiatives, we are improving operational execution and further strengthening the resilience of our business model. I'll now hand you over to Heidi Crane, Blue's CFO, to provide more color on our financial performance.

Thank you, Mark. In the third quarter, net revenue was $58.6 million, a decrease of 20% year over year, driven by a decrease in total orders placed and the impact of higher return rates, partially offset by an increase in wholesale revenue. Gross margin for the quarter was 44.9% of 230 basis points year over year due to a shift in the sales mix to higher margin products and ongoing efforts to drive efficiency across the business. On the expense side, selling and marketing expenses in the third quarter totaled received $15.5 million, down $1.4 million year-over-year due to a decrease in marketing costs and merchant processing fees. General and administrative expenses decreased $1.6 million to $14.7 million in the third quarter, a 10% decline year-over-year primarily due to a decrease in variable labor and benefit costs associated with lower sales volumes and a decrease in fixed labor and benefit costs driven by reduced fixed headcount partially offset by an increase in other general and administrative expenses primarily attributable to non-recurring costs related to the strategic alternative process totaling approximately $500,000 in the quarter. Our net loss for the third quarter was $4.3 million compared to a net loss of $2.3 million in the same period last year. Adjusted EBITDA in Q3 was a loss of $1.8 million compared to a positive 0.4 million in Q3 2025. Adjusted EBITDA margin was negative 3.1% versus positive 0.5% in the prior year period. Interest expense in Q3 totaled $370,000 versus $544,000 in Q3 2025. Diluted loss per share for the quarter was for the third quarter, net cash used in operating activities was $2.1 million compared to $1.8 million used in the same period last year. Free cash flow in the third quarter was negative $2.3 million compared to free cash flow of negative $2.4 million in the same period last year. Year-to-date, free cash flow was positive and favorable year over year. As of the quarter ended September 27, 2026, total debt increased by $0.9 million to $15.3 million as compared to $14.4 million at the end of fiscal year 2025. Net debt decreased by $2.9 million to $8.8 million versus $11.7 million as of the end of fiscal year 2025. Our inventory balance at quarter end was $31.9 million, a decrease of 6.5 million or 17% year over year. As it relates to additional financing efforts, we are in active negotiations with our existing lender as well as potential new lenders regarding additional financing that will help support our liquidity needs. These discussions are ongoing and we have not yet entered into a definitive agreement and will provide an update as appropriate. Turning to the full year 2026 outlook. We are revising our previously issued fiscal 2026 financial outlook to reflect the greater than anticipated impact of historical assortment decisions on revenue performance, including lower reorder activity and fewer opportunities to expand successful prior year styles through additional colors, Fabrications, and Product Evolutions. While we continue to see encouraging improvements in the productivity and reorder eligibility of products introduced in 2026, the impact of weaker prior year product cohorts became more pronounced in the second half of the year, and we do not expect meaningful improvement in that trend before year end. Accordingly, we now expect continued year-over-year revenue pressure in the fourth quarter Thank you. Thank you. inclusive of capitalized software favorable to our prior outlook and 2025 levels. Looking ahead to fiscal 2027, we expect the year-over-year rate of revenue decline to moderate as the improving performance of products introduced in 2026 contributes more meaningfully to reorder activity and helps offset the continued impact of weaker historical product cohorts. We also expect continued growth in our wholesale channel to support overall revenue performance. A healthier sales mix, the significant full-year benefit of cost reduction initiatives implemented in late 2026, and improved inventory productivity are expected to drive a meaningful improvement in profitability. We believe these recent operational improvements and structural cost reductions represent a significant step towards strengthening financial performance and establishing a foundation for long-term sustainable profitability. And now I'll turn it back over to Crystal for closing remarks.

Thank you, Heidi. We remain focused on strengthening our business and improving the health and productivity of our inventory with a focus towards sustainable, profitable growth. We continue to drive operational efficiencies while maintaining the customer experience that differentiates Lulu's

which we believe is the key to building a solid foundation for the future of the brand.

Thank you to our team for their continued dedication and to our stockholders for their ongoing support. We remain committed to building on our progress and positioning Lulu's for long-term success.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines and have a wonderful day.