Reformation Inc.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our annual audited consolidated financial statements and the related notes thereto for the fiscal year ended December 27, 2025 contained in our final prospectus (the “IPO Prospectus”) filed with the Securities and Exchange Commission (the “SEC”) on July 30, 2026 pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the “Securities Act”). This discussion and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements, such as those relating to our plans, objectives, expectations, intentions and beliefs, which involve risks and uncertainties. Our actual results may differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q. Our historical results are not necessarily indicative of the results that may be expected for any period in the future, and our interim results are not necessarily indicative of the results we expect for the full fiscal year or any other period.
All references to the “Company,” “Reformation,” “we,” “our” and “us,” unless the context otherwise requires, are to Reformation Inc., a Delaware corporation, and its consolidated subsidiaries and all references to the “Issuer” are only to Reformation Inc.
Overview
Reformation is a premium sustainable womenswear brand built to challenge the conventional fashion model and reimagine how brands interact and engage with customers. Our goal is to have a positive impact on people and the planet while delivering both impressive financial and environmental results.
We believe we are the largest sustainable womenswear brand on the planet and we operate within the highly fragmented fashion industry. With approximately 1,204,000 Active Customers (as defined below) in the United States as of June 27, 2026, and an estimated 94 million women aged 18-60 in the United States, our implied penetration is approximately 1%, highlighting the large opportunity ahead. We believe we are well positioned to capture significant growth over the long term. Our path forward is clear: we intend to grow by increasing our distribution through both our direct-to-consumer (“DTC”) and wholesale channels, expanding our product assortment within existing and new product categories, growing in international markets, and driving operational excellence.
Initial Public Offering
On July 31, 2026, we completed our initial public offering (“IPO”) pursuant to which we issued and sold 9,478,821 shares of common stock, and the selling stockholders sold an aggregate of 4,583,679 shares of common stock at a price per share of $15.00. On September 1, 2026, an additional 229,546 shares of common stock were sold by the selling stockholders pursuant to the underwriters’ partial exercise of their option to purchase additional shares. We received aggregate proceeds of approximately $132.2 million from the IPO, after deducting the underwriting discount of $10.0 million.
Key Factors Affecting Our Performance
We measure our business using both financial and operating metrics. We believe that our performance and future success depend on a variety of factors that present significant opportunities for our business but also present risks and challenges that could adversely impact our growth and profitability, including those discussed below and in “Risk Factors.”
Overall Economic Trends
The overall economic environment and related changes in consumer behavior have a significant impact on our business. In general, positive conditions in the broader economy promote consumer spending across our channels, while economic weakness may have a negative effect. Macroeconomic factors that can affect consumer spending patterns, and thereby our results of operations, include employment rates, business conditions, changes in the housing market, the availability of credit, interest rates and inflation.
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All the products and materials that we import are subject to import taxes and duties, including tariffs. Since the beginning of 2025, the U.S. government has imposed incremental tariffs, including International Emergency Economic Powers Act (“IEEPA”) tariffs, at varying rates on certain imports. There has been significant volatility in U.S. tariff and customs policy, and trade negotiations between the United States and other countries are ongoing. If tariffs on countries from which we source products increase further, it may increase our cost of sales, and similar to all other potential cost increases, we may pass a portion of these costs through to customers. For additional information on related risks, please see “Risk Factors.”
We have undertaken, and continue to evaluate, a series of actions and initiatives intended to mitigate the impact of tariffs, including diversifying our supply chain, engaging in cost-sharing discussions with our vendors, optimizing our product import logistics, and selectively adjusting product pricing. These mitigation efforts may take significant investment and time to implement. Ultimately, these efforts may not yield the intended results or be as effective as tariff policy changes, and could have adverse impacts on our business, financial condition and results of operations.
Ability to Increase Brand Awareness
As a lifestyle brand operating primarily in e-commerce and physical retail environments, we seek to establish and expand a strong brand presence in a competitive market. We deploy a deliberate and disciplined approach to brand building and marketing investment that leverages a combination of direct marketing, digital media, new store openings, wholesale expansion and strategic partnerships to reach new audiences and brand positioning across regions.
We believe that continued investment in brand awareness can support customer acquisition and retention, which contributes to revenue growth. We invest in innovative marketing strategies and use data analytics to evaluate the effectiveness of these initiatives. Our goal is to establish our brand as a leader in the fashion industry, recognized for quality, style, sustainability, and commitment to making our customers look and feel good.
Customer Acquisition
Our growth will depend in part on our ability to cost-effectively attract new customers. To continue to grow profitably, we intend to acquire new customers, retain those customers, drive repeat purchases and ultimately increase Active Customers and DTC Net Revenue per Customer at a reasonable cost. As of June 27, 2026, our total Active Customer base was approximately 1.2 million compared to 1.0 million as of the second quarter of 2025, reflecting continued customer acquisition and retention.
We invest in brand building and marketing across a range of channels to acquire new customers. It is important that the cost of these efforts remain aligned with the net revenue and contribution margin we expect to generate from the customers acquired through such initiatives. We take an integrated approach to acquiring new customers, evaluating performance across channels to inform our marketing investments and optimize return.
Customer Retention and Repeat Purchase Rate
Our continued success depends in part on our ability to retain and drive repeat purchases from our returning customers. In addition to investments in brand and marketing, we invest in our products, merchandising, and overall customer experience to promote long-term customer retention and repeat purchases. We track the retention, spend, and repeat purchase behavior of new customers over time from their initial purchase. These metrics provide insights into the effectiveness of our retention strategies and help us to identify areas for improvement.
Sourcing and Supply Chain Management
Effective sourcing and supply chain management are central to our ability to deliver high-quality products to our customers in a timely manner. Our cost of goods is primarily comprised of the procurement of finished goods and raw materials, labor-related expenses, and associated import costs.
We have established strong relationships with a diversified network of suppliers, both domestically and internationally. We are committed to the highest levels of ethical sourcing and sustainable business practices throughout our supply chain and require adherence to our Preferred Partners Guide, which sets standards for environmental practices and labor conditions. By incorporating sustainable materials and processes into our product offerings, we aim to meet the growing consumer demand for sustainable fashion.
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We closely monitor key performance indicators related to our sourcing and supply chain management, including lead times, on-time rates, quality, and initial markups. These metrics provide valuable insights into the efficiency of our operations and help us identify areas for improvement. Production speed is important to our ability to respond to changing consumer demand. We utilize robust reporting and maintain close collaboration with our vendor partners to monitor development and production timelines, enabling disciplined execution.
Inventory Management
Effective inventory management is essential to our operations and plays a crucial role in our ability to meet customer demand while optimizing costs. As an apparel and accessories company operating primarily in our DTC channel, we recognize that maintaining the right balance of inventory is vital to our success. We utilize thorough inventory management systems and rigorous analytics to monitor inventory levels, sales trends, and customer preferences. This allows us to optimize our inventory mix, ensuring that we have the right products available at the right time. By analyzing historical sales data and market trends, we can make informed decisions about reordering and selling out of various styles. Accurate demand forecasting is central to minimizing excess inventory and stockouts. This proactive approach enables us to align our inventory levels with anticipated customer demand, reducing the risk of overstocking or understocking.
Seasonality
Our business does not exhibit the same seasonal patterns as traditional retailers, which typically generate a significant portion of net revenue in the holiday quarter. Historically, we have experienced increased sales during the early spring and summer months, resulting in higher net revenue in the second fiscal quarter compared to the first fiscal quarter. The third fiscal quarter typically sees a moderate increase in net revenue relative to the second fiscal quarter, given the timing of one of our twice-yearly promotional events beginning in August. We expect this seasonality to continue in future years, subject to the timing and structure of our promotional sales strategy, including our twice-yearly promotional sales event and our annual Black Friday Cyber Monday promotion. Our operating income has reflected these historical quarterly trends as a significant portion of our expenses are relatively fixed in the short term.
Fiscal Calendar
We operate on a 52/53-week fiscal year convention whereby our fiscal year ends on the last Saturday in December of each year, such that each quarterly period will be 13 weeks in length, except during a 53-week year when the fourth quarter will be 14 weeks. Fiscal 2026 will end on December 26, 2026 and will be a 52-week year. Fiscal 2025 was a 52-week year and ended on December 27, 2025.
Key Operating Metrics
In addition to the measures presented in our condensed consolidated financial statements, we use the following key operating metrics to evaluate our business, measure our performance, develop financial forecasts and make strategic decisions. The following table summarizes our key operating metrics for the periods presented:
| 13 Weeks Ended | |||||||||||
| ($ in thousands except DTC Net Revenue per Customer) | June 27, 2026 | June 28, 2025 | |||||||||
Active Customers(1) (as of the end of period) | 1,204,000 | 980,000 | |||||||||
DTC Net Revenue per Customer(2) | $ | 417 | $ | 423 | |||||||
Store Count(3) (as of the end of period) | 70 | 53 | |||||||||
Gross margin(4) | 66.7 | % | 64.4 | % | |||||||
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(1)We define an Active Customer as a unique customer who has placed at least one order through our e-commerce platform or retail or outlet stores within the last rolling 12 months (excluding retail concession customers, employee orders, gift-card only orders, and face mask only orders, as purchased during the COVID-19 pandemic).
(2)We calculate DTC Net Revenue per Customer by dividing our DTC net revenue by the number of customers counted within the period in which an item in their purchase has shipped. As of June 27, 2026 and June 28, 2025, the number of customers was 1,202,000 and 978,000, respectively.
(3)We define Store Count as the total number of retail or outlet stores open at the end of a given period, excluding temporary store locations designated as pop-ups (which are typically open for one year or less) and our concession locations (“shop-in-shop”).
(4)We define gross margin as gross profit as a percentage of net revenue.
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Active Customers
The number of Active Customers is a key operating metric that we use to assess the reach of our direct channel, including both our e-commerce platform and physical stores, as well as the resonance of our brand and product offering. We define an Active Customer as a unique customer who has placed at least one order through our e-commerce platform or retail or outlet stores within the last rolling 12 months (excluding retail concession customers, employee orders, gift-card only orders, and face mask only orders, as purchased during the COVID-19 pandemic). While we devote effort to identify customers who may have created duplicate profiles and consolidate profiles, this number may still contain duplicate profiles and may include accounts utilized by multiple individuals in a single household.
The number of Active Customers has increased steadily over time as we attract new customers and retain returning customers. As of June 27, 2026, our total Active Customer base was approximately 1.2 million compared to 1.0 million as of the second quarter of 2025, an increase of 23%, as we continued to acquire and retain customers efficiently and expanded our store footprint from 53 stores to 70 stores over the same time period. This growth is a function of rising brand awareness driven by new store openings, international expansion, product category extension, continued marketing efforts, and the retention of returning customers.
DTC Net Revenue per Customer
DTC Net Revenue per Customer is a key operating metric that reflects our ability to grow the average value of our customers on a trailing 12-month basis, which is key to understanding broader revenue growth trends. This metric is calculated by dividing our DTC net revenue by the number of customers counted within the period in which an item in their purchase has shipped. As of the second quarter of 2026 and the second quarter of 2025, the number of customers was 1,202,000 and 978,000, respectively. We use DTC Net Revenue per Customer to evaluate trends in customer spending behavior, including the extent to which customers engage with our brand across our assortment and shop across our omnichannel platform, and to assess the effectiveness of our sales strategies, marketing efforts, and customer engagement initiatives.
We continuously monitor our DTC Net Revenue per Customer and analyze trends over time to identify opportunities for improvement. DTC Net Revenue per Customer for the second quarter of 2026 was $417, compared to $423 in the second quarter of 2025, a decrease of 1.4%. The expansion of our customer base through new customer acquisition will have a dilutive impact on our total DTC Net Revenue per Customer in the year in which they are acquired. New customers typically have a lower initial spend compared to our returning customers. As customer cohorts mature, we generally observe increases in customer spend and purchase frequency over time. As we continue to refine our strategies to enhance DTC Net Revenue per Customer, we are focused on the following initiatives:
•Scaling our channel distribution both domestically and internationally to offer customers an omni-experience and increased access to interact and shop with our brand;
•Expanding our product offerings across occasions and categories, through growth of existing categories, launching new categories and offering exclusive collections and collaborations that resonate with our target audience; and
•Increasing customer retention and order frequency through loyalty initiatives, personalized shopping experiences and other tailored marketing strategies.
By focusing on increasing DTC Net Revenue per Customer, we aim to improve our overall financial performance and create long-term value for our shareholders. We believe that a strong emphasis on customer engagement, product quality and breadth, and personalized experiences will position us for sustainable growth in the competitive apparel and accessories market.
Store Count
Store Count is a key growth lever that reflects the scale of our owned, physical retail presence and our ability to reach consumers across markets. We define Store Count as the total number of retail or outlet stores open at the end of a given period, excluding temporary store locations designated as pop-ups (which are typically open for one year or less) and our concession locations (“shop-in-shop”). As of the second quarter of 2026, we had 67 full-price stores and three outlets. We regularly review the productivity of our stores and from time to time may decide to close a store due to, among other factors, underperformance, shift in consumer traffic trends, performance of retail hub in which a store is a part of or
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changes in local customer and other retail demographics. Our results of operations have been, and will continue to be, affected by the timing and number of stores that we operate. The following chart represents our Store Count.
| 26 Weeks Ended | |||||||||||
| June 27, 2026 | June 28, 2025 | ||||||||||
Beginning of Period | 64 | 50 | |||||||||
New Store Openings | 6 | 4 | |||||||||
| Store Closures | - | 1 | |||||||||
| End of Period | 70 | 53 | |||||||||
Our store locations remain a key part of our growth strategy, and we view them as a valuable tool in helping us build our brand awareness as well as enabling our omnichannel capabilities. Our stores serve as valuable marketing vehicles for introducing new customers to our brand and driving repeat purchases and, in turn, positively impact Active Customers and DTC Net Revenue per Customer.
Gross Margin
We define gross margin as gross profit as a percentage of net revenue. Gross profit is equal to our net revenue less cost of goods sold. Cost of goods sold consists of all material, labor, and overhead costs incurred to manufacture or purchase merchandise sold to customers. Cost of goods sold also includes import duties, other taxes, inbound freight costs, storage costs during the manufacturing process, inventory valuation adjustments, shrinkage, and other miscellaneous costs.
Gross margin is impacted by the average price and volume of the products that we sell through our two channels and the impact of our twice-yearly promotional sales events and Black Friday Cyber Monday event.
Certain of our competitors and other retailers define cost of goods sold differently than we do. As a result, the reporting of our gross profit and gross margin may not be comparable to other companies.
Other Items
The following table provides a summary of our other items from continuing operations and the related favorable (unfavorable) impact on our gross margin ratio and selling, general, and administrative (“SG&A”) ratio:
| 13 Weeks Ended | 26 Weeks Ended | |||||||||||||||||||||
| ($ in thousands) | June 27, 2026 | June 28, 2025 | June 27, 2026 | June 28, 2025 | ||||||||||||||||||
| Gross margin | ||||||||||||||||||||||
Tariffs(1) | $ | - | $ | (5,599) | $ | - | $ | (5,712) | ||||||||||||||
Tariff refund(2) | - | - | 10,154 | - | ||||||||||||||||||
| Total Other Items | $ | - | $ | (5,599) | $ | 10,154 | $ | (5,712) | ||||||||||||||
Impact on gross margin ratio | - | % | (4.5) | % | 3.8 | % | (2.7) | % | ||||||||||||||
| Selling, general, and administrative expenses | ||||||||||||||||||||||
Los Angeles Distribution Center costs(3) | $ | (406) | $ | (1,943) | $ | (862) | $ | (3,801) | ||||||||||||||
IPO-related executive bonuses and CFO transition expenses(4) | (150) | (753) | (600) | (953) | ||||||||||||||||||
Department store customer bankruptcy(5) | (15) | (139) | 90 | (581) | ||||||||||||||||||
| Total Other Items | $ | (571) | $ | (2,835) | $ | (1,372) | $ | (5,335) | ||||||||||||||
Impact on SG&A ratio | (0.4) | % | (2.3) | % | (0.5) | % | (2.5) | % | ||||||||||||||
(1)Represents costs related to IEEPA tariffs imposed on imported goods. This does not reflect potential future tariffs that may be implemented as a result of various policy proposals currently under consideration by the President.
(2)Represents refunds submitted for IEEPA tariffs imposed on finished goods.
(3)Represents incremental costs incurred in connection with the transition of our company-operated distribution center to a larger leased facility, both located in Vernon, California, including the temporary overlapping rent and labor costs resulting from operating both facilities during the transition period.
(4)Represents incremental, one-time costs associated with IPO-related bonuses and Chief Financial Officer transition expenses.
(5)Reflects the expense arising from the bankruptcy of a significant department store customer, which is outside the Company’s normal credit loss experience and reflects a customer-specific event.
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Components of Results of Operations
Net Revenue
We generate revenue through selling our wide array of apparel and accessories, including clothing, shoes, and bags. The Company recognizes net revenue for the sale of a product at the point in time when its performance obligation has been satisfied and control of the product has transferred to the customer. A customer is deemed to have control once they are able to direct the use and receive substantially all of the benefits of the product, which occurs generally upon shipment of the goods for wholesale or e-commerce customers and upon purchase by retail customers.
Net revenue transactions are generally comprised of a single performance obligation for each individual product sold to customers through direct-to-consumer, and wholesale channels. Net revenue is measured based on a transaction price, which is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods to the customer.
DTC represents net revenue primarily from the Company’s website and direct product sales made from retail stores located in the US, United Kingdom, Canada, and France. The Company manages and considers Online sales and Retail store sales as one collective DTC channel. Although sales data is captured separately at the transaction level, the Company reviews DTC channel performance on a combined basis for purposes of allocating resources and assessing customer behavior and business strategy. Wholesale and Other net revenue consists of sales made to third-party retailers such as department stores, online retailers and other wholesale partners, and other miscellaneous revenues such as sample sales and sales to distributors.
Net revenue in our DTC channel is driven by growth in the number of Active Customers and DTC Net Revenue per Customer. Net revenue in our Wholesale and Other channel is driven by the number of wholesale partners we sell to, the number of stores we are present in with each partner, and the average revenue per store.
Our focus on customer engagement drives our business and shapes how we evaluate net revenue performance. We measure our success through increases in Active Customer count and the depth of their spend, as measured by DTC Net Revenue per Customer. Because we manage a diverse array of products with thousands of SKUs at a broad range of price points, we believe analyzing volume and price does not provide a meaningful reflection of how we actively manage growth.
Shipping and Handling Fees and Costs
Shipping and handling fees charged to customers are included in net revenues. Revenue is recognized and cost is accrued when control is transferred to the customer. Freight costs associated with shipping merchandise to and from customers are recorded within selling, general and administrative expenses.
Cost of Goods Sold
Cost of goods sold includes all material, labor, import-related costs, and overhead costs incurred to manufacture or purchase the inventory. Cost of goods sold also includes other taxes, inbound freight costs, warehouse storage costs, inventory valuation adjustments, shrinkage, and other miscellaneous costs.
We expect our cost of goods sold to fluctuate as a percentage of net revenue primarily due to product mix from customer preferences, fluctuations in landed costs, and resulting demand and management of our inventory and merchandise mix. As we continue to grow, we expect our cost of goods sold to increase with revenue due to an increased number of orders and higher input costs, including the impact of tariffs. However, we maintain a geographically diverse supply chain that enables us to quickly adjust to optimize our cost of goods.
Gross Profit and Gross Margin
Gross profit represents net revenue less cost of goods sold. Gross margin is gross profit expressed as a percentage of net revenue. Over the past five years we have maintained an average gross margin above 60%. However, gross margin may fluctuate in the future based on a number of factors, including the average price and volume at which we sell our products through our two channels, level of discounting, and cost at which we can obtain, transport and manufacture our inventory, including the impact of tariffs.
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Marketing Expenses
Marketing expenses consist of brand and performance marketing, including digital content, editorial content, public relations, customer insights, as well as other marketing and advertising costs. We expect our marketing expenses to increase in absolute dollars over time and to fluctuate as a percentage of net revenue depending on the timing of major marketing campaigns and the anticipated growth of our business.
Selling, General and Administrative Expenses
Selling, general, and administrative (“SG&A”) expenses primarily consist of employee-related costs including salaries, benefits, bonuses, and stock-based compensation for our corporate and store employees, costs associated with shipping merchandise to our stores and customers, information technology, credit card processing fees, lease and other operating costs for stores and corporate facilities, legal, a portion of depreciation of property and equipment, amortization of intangible assets, and other administrative costs associated with operating the business. We expect our SG&A to increase in absolute dollars over time and to fluctuate as a percentage of net revenue due to the anticipated growth of our business and additional costs associated with being a public company. Additionally, in the event of a change of control, we will recognize accelerated stock-based compensation expenses related to our RSUs. For further information, see the section titled “—Critical Accounting Policies and Estimates.”
Interest Expense
Interest expense primarily consists of interest expense associated with our Credit Agreement.
Interest Income
Interest income consists primarily of interest generated from our cash and cash equivalents balances, and is recognized as earned. We expect our interest income to fluctuate based on our future bank balances and fluctuating interest rates.
Other Income, Net
Other income, net, consists primarily of realized and unrealized gains and losses from foreign currency transactions and other income and expenses that are not part of our core operations. We expect our other income, net, to fluctuate primarily based on changes in the prevailing exchange rates between the U.S. dollar and the currencies of our international markets.
Income Tax Provision
Income tax provision consists of income taxes related to foreign and domestic federal and state jurisdictions in which we conduct business, adjusted for allowable credits, deductions, and valuation allowance against deferred tax assets.
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Results of Operations
Comparison of the Thirteen Weeks Ended June 27, 2026 and June 28, 2025
The following tables set forth our consolidated statements of operations data for the periods presented and as a percentage of net revenue.
| 13 Weeks Ended | Change | |||||||||||||||||||||||||||||||||
(in thousands except percentages) | June 27, 2026 | June 27, 2026 | June 28, 2025 | June 28, 2025 | $ | % | ||||||||||||||||||||||||||||
| Net revenue | $ | 155,233 | 100.0 | % | $ | 125,073 | 100.0 | % | $ | 30,160 | 24.1 | % | ||||||||||||||||||||||
| Cost of goods sold | 51,761 | 33.3 | 44,507 | 35.6 | 7,254 | 16.3 | ||||||||||||||||||||||||||||
Gross profit | 103,472 | 66.7 | 80,566 | 64.4 | 22,906 | 28.4 | ||||||||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||||||||
Marketing expenses | 14,490 | 9.3 | 11,250 | 9.0 | 3,240 | 28.8 | ||||||||||||||||||||||||||||
Selling, general, and administrative expenses | 69,958 | 45.1 | 56,728 | 45.4 | 13,230 | 23.3 | ||||||||||||||||||||||||||||
Total operating expenses | 84,448 | 54.4 | 67,978 | 54.4 | 16,470 | 24.2 | ||||||||||||||||||||||||||||
| Income from operations | 19,024 | 12.3 | 12,588 | 10.1 | 6,436 | 51.1 | ||||||||||||||||||||||||||||
| Other (expense) income | ||||||||||||||||||||||||||||||||||
Interest expense | (3,543) | (2.3) | (4,035) | (3.2) | 492 | (12.2) | ||||||||||||||||||||||||||||
Interest income | 185 | 0.1 | 414 | 0.3 | (229) | (55.3) | ||||||||||||||||||||||||||||
Other income, net | 1,439 | 0.9 | 308 | 0.2 | 1,131 | 367.2 | ||||||||||||||||||||||||||||
| Total other (expense) income | (1,919) | (1.2) | (3,313) | (2.6) | 1,394 | (42.1) | ||||||||||||||||||||||||||||
| Income (loss) before income taxes | 17,105 | 11.0 | 9,275 | 7.4 | 7,830 | 84.4 | ||||||||||||||||||||||||||||
Income tax provision | 4,697 | 3.0 | 2,360 | 1.9 | 2,337 | 99.0 | ||||||||||||||||||||||||||||
Net income | $ | 12,408 | 8.0 | % | $ | 6,915 | 5.5 | % | $ | 5,493 | 79.4 | % | ||||||||||||||||||||||
Net Revenue
| 13 Weeks Ended | Change | |||||||||||||||||||||
($ in thousands) | June 27, 2026 | June 28, 2025 | $ | % | ||||||||||||||||||
| Direct-to-consumer (DTC) | $ | 135,324 | $ | 111,682 | $ | 23,642 | 21.2 | % | ||||||||||||||
| Wholesale and Other | 19,909 | 13,391 | 6,518 | 48.7 | ||||||||||||||||||
Net revenue | $ | 155,233 | $ | 125,073 | $ | 30,160 | 24.1 | % | ||||||||||||||
Net revenue increased $30.2 million, or 24.1%, for the thirteen weeks ended June 27, 2026, compared to the thirteen weeks ended June 28, 2025. This increase was driven by an increase in DTC net revenue of $23.6 million, or 21.2%, and an increase in Wholesale and Other net revenue of $6.5 million, or 48.7%.
DTC net revenue grew 21.2% for the thirteen weeks ended June 27, 2026, compared to the thirteen weeks ended June 28, 2025. The increase was driven by an increase in Active Customers during the quarter of 22.9%, partially offset by a reduction of DTC Net Revenue per Customer of 1.4%. The growth in Active Customers was driven by an increase in customer retention and an increase in new customers. DTC Net Revenue per Customer declined primarily as a result of the increase in newly acquired customers that typically enter the brand at initially lower spend levels.
Wholesale and Other net revenue grew 48.7% for the thirteen weeks ended June 27, 2026, compared to the thirteen weeks ended June 28, 2025, driven by increased demand from our existing wholesale partners.
Cost of Goods Sold, Gross Profit, and Gross Margin
($ in thousands) | 13 Weeks Ended | Change | ||||||||||||||||||||
| June 27, 2026 | June 28, 2025 | $ | % | |||||||||||||||||||
| Cost of goods sold | $ | 51,761 | $ | 44,507 | $ | 7,254 | 16.3 | % | ||||||||||||||
| Gross profit | $ | 103,472 | $ | 80,566 | $ | 22,906 | 28.4 | % | ||||||||||||||
Gross margin | 66.7 | % | 64.4 | % | 2.3 | % | ||||||||||||||||
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Cost of goods sold increased by $7.3 million, or 16.3%, for the thirteen weeks ended June 27, 2026, compared to the thirteen weeks ended June 28, 2025. The increase in dollar terms was primarily due to increased sales volume offset by reduced product costs as a result of a lower tariff environment.
Gross profit increased by $22.9 million, or 28.4%, for the thirteen weeks ended June 27, 2026, compared to the thirteen weeks ended June 28, 2025. The increase was driven by an increase in revenue and lower product acquisition costs.
Gross margin, expressed as a percentage and calculated as gross profit divided by net revenue, increased from 64.4% for the thirteen weeks ended June 28, 2025, to 66.7% for the thirteen weeks ended June 27, 2026. The increase was primarily driven by lower average tariff rates and higher average unit retail, partially offset by accelerated growth in the wholesale channel.
Operating Expenses
($ in thousands) | 13 Weeks Ended | Change | ||||||||||||||||||||
| June 27, 2026 | June 28, 2025 | $ | % | |||||||||||||||||||
| Marketing expenses | $ | 14,490 | $ | 11,250 | $ | 3,240 | 28.8 | % | ||||||||||||||
| Selling, general, and administrative expenses | 69,958 | 56,728 | 13,230 | 23.3 | ||||||||||||||||||
Total operating expenses | $ | 84,448 | $ | 67,978 | $ | 16,470 | 24.2 | % | ||||||||||||||
| As a percentage of net revenue | 54.4 | % | 54.4 | % | ||||||||||||||||||
Total operating expenses increased by $16.5 million, or 24.2%, during the second quarter of 2026 when compared to the second quarter of 2025. The increase in total operating expenses was primarily driven by increases in selling, general and administrative expenses.
Marketing expenses
Marketing expenses increased $3.2 million, or 28.8%, for the thirteen weeks ended June 27, 2026, compared to the thirteen weeks ended June 28, 2025. As a percentage of net revenue, marketing expenses increased from 9.0% of net revenue for the thirteen weeks ended June 28, 2025 to 9.3% of net revenue for the thirteen weeks ended June 27, 2026, due to timing of spend in partnership campaigns and events.
Selling, general, and administrative expenses
SG&A expenses increased $13.2 million, or 23.3%, for the thirteen weeks ended June 27, 2026, compared to the thirteen weeks ended June 28, 2025. The increase was driven primarily by increased selling and shipping expenses of $6.1 million due to higher sales volume. Additionally, compensation and related benefits increased by $2.4 million due to increased corporate payroll and new store additions.
As a percentage of net revenue, SG&A expenses were approximately 45.1% and 45.4% for the thirteen weeks ended June 27, 2026 and June 28, 2025, respectively. The 30 basis points of SG&A improvement was the result of leverage on payroll expense and the lapping of costs associated with the relocation of our LA distribution center. The other items identified earlier in this section were approximately 0.4% and 2.3% for the thirteen weeks ended June 27, 2026 and June 28, 2025, respectively.
Interest Expense
($ in thousands) | 13 Weeks Ended | Change | ||||||||||||||||||||
| June 27, 2026 | June 28, 2025 | $ | % | |||||||||||||||||||
| Interest expense | $ | (3,543) | $ | (4,035) | $ | 492 | (12.2) | % | ||||||||||||||
Interest expense decreased by $0.5 million, or 12.2%, for the thirteen weeks ended June 27, 2026, compared to the thirteen weeks ended June 28, 2025. The decrease in interest expense was primarily due to lower average borrowings outstanding under the Existing Credit Facilities.
31
Interest Income
($ in thousands) | 13 Weeks Ended | Change | ||||||||||||||||||||
| June 27, 2026 | June 28, 2025 | $ | % | |||||||||||||||||||
| Interest income | $ | 185 | $ | 414 | $ | (229) | (55.3) | % | ||||||||||||||
Interest income decreased $0.2 million, or 55.3%, for the thirteen weeks ended June 27, 2026, compared to the thirteen weeks ended June 28, 2025. The decrease was driven by lower interest income due to lower average cash and cash equivalents balance during the quarter.
Other (Expense) Income, Net
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-09-01 | Aflalo Yael indirect | Director | Sell | -60,298 | $13.95 | -$841,157 |
| 2026-07-29 | Aflalo Yael indirect | Director | Sell | -1,204,029 | $13.95 | -$16,796,205 |
Source: SEC Form 4 filings.
Recent SEC filings
- 2026-09-11 10-Q Quarterly Report
- 2026-09-10 8-K Earnings Release; Financial Statements and Exhibits
- 2026-08-03 8-K Bylaws/Articles Amended; Other Events; Financial Statements and Exhibits
- 2026-07-29 S-8 Employee Benefit Plan Registration
- 2026-07-23 S-1/A Registration Statement (Amended)
- 2026-07-20 S-1/A Registration Statement (Amended)
- 2026-06-25 S-1 Registration Statement