AKA

As a reminder, this conference is being recorded. It is now my pleasure to introduce Emily Schwartz, Vice President of Investor Relations. Please go ahead.

Good afternoon. Thank you for joining a.k.a. Brands to discuss our first quarter 2026 results released this afternoon, which can be found on our website at ir.aka-brands.com. With me on the call today is Ciaran Long, Chief Executive Officer, and Kevin Grant, Chief Financial Officer. Before we get started, I'd like to remind you of the company's safe harbor language. Management may make forward-looking statements which refer to expectations, projections, and other characterizations of future events, including guidance and underlying assumptions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed. For a further discussion of risks related to our business, please see our filings with the SEC. Please note we assume no obligation to update any such forward-looking statements.

This call will also contain non-GAAP financial measures such as Adjusted EBITDA, Adjusted EBITDA margin, Adjusted gross margin, and constant currency net sales. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the release furnished to the SEC and available on our website. With that, I'll turn the call over to Ciaran.

Good afternoon, and thank you for joining us to discuss our first quarter 2026 results. We delivered a strong start to the year with net sales of $132.5 million, up 3%, and Adjusted EBITDA of $5.1 million ahead of expectations. More importantly, our results reflect significant gross margin expansion year-over-year as the structural improvements we've made to the business begin to take hold. Gross margin, excluding one-time adjustments related to tariffs and strategic charges primarily related to legacy streetwear inventory, reached 59%, which expanded by approximately 180 basis points year-over-year. The margin expansion was driven by improved inventory discipline, stronger full price sell-through, and the continued rollout of our test and repeat model. Importantly, the majority of that underlying gross margin expansion came from our streetwear brands.

For several years, the Culture Kings transition has been a priority strategic initiative, moving on to test and repeat, rebuilding the in-house brand portfolio, resetting inventory, and elevating product quality. This quarter, that work translated into financial performance, with streetwear delivering meaningful gross margin improvement year-over-year. We view this as the single clearest proof point that the structural changes are working. Over the past three years, we fundamentally repositioned a.k.a. Brands to improve profitability and durability. We've financial discipline across the business. I believe we're now just starting to see the payoff of that work, and 2026 will be a meaningful proof point in our trajectory. First, while we continue to grow our e-commerce presence, we've expanded beyond our historical direct-to-consumer roots into a diversified omni-channel model across retail, wholesale, and marketplaces.

Princess Polly now operates 13 stores across the U.S. and opened its first store in Australia at Bondi Beach in December, with more to come in both regions in 2026. We also launched with multiple wholesale partners in multiple countries and marketplace channels, which continue to exceed our expectations. These channels are now meaningful contributors and are expanding our total addressable market while improving brand visibility and customer acquisition. Second, we built the operational foundation and added team members in key functions to support this expansion, setting the stage for a scalable business model with strong profit flow through. We've brought inventory down by approximately $45 million over the past three years, primarily in our streetwear business. This achievement has transformed the structure of our operating model, delivering healthier inventory turns, stronger full-price selling, and the financial flexibility to invest aggressively in growth.

This disciplined inventory approach has also enabled us to accelerate our transition to a test and repeat merchandising model across our streetwear brands. As I mentioned, moving Culture Kings and mnml fully onto this model has been a multi-year effort, and the results are increasingly evident. Our year-over-year gross margin improvements directly reflects a more focused assortment that customers are positively reacting to and better buying discipline. Third, we accomplished a comprehensive transformation of our sourcing network in 2025, diversifying our sourcing across multiple geographies and vendors. It was a remarkable amount of work to have accomplished in such a short period of time, and I'm very grateful to the teams who delivered on the task. We now operate a sourcing network that is more flexible, more resilient, and better equipped to support our test and repeat model.

I'm confident we have the right sourcing structure to navigate the ongoing trade environment and our next phase of growth. Lastly, taken together, we've been able to strengthen our financial foundation, reducing our debt by 17% over the past three years, which positions us to accelerate our growth and profitability in the years ahead. Heading into the balance of the year, our focus remains on three priorities. Attracting and retaining customers through exclusive trend-driven product and innovative marketing across our direct-to-consumer channels. Expanding brand awareness and our total addressable market through continued investment in physical retail and strategic wholesale partners. Continuing to streamline our operations and strengthen our financial foundation. As discussed last quarter, we're also increasing our investment in AI across the platform. With early applications already improving product imagery, marketing efficiency, and inventory optimization.

While still early, we expect these initiatives to contribute meaningfully to margin expansion over time. Turning now to our brand highlights. Starting with Princess Polly, our largest brand, Princess Polly delivered strong performance in the quarter, driven by disciplined execution of its test and repeat model and consistent weekly newness, supporting strong full price sell-through. Dresses continued to drive volume tied to key seasonal moments, and swim was a standout category that continues to grow as we enter the second quarter. We're also seeing good traction in basics and knits, expanding share of wardrobe, and supporting a more consistent demand across categories. Key seasonal events, including Valentine's Day, festival, and graduation, drove meaningful growth with graduation delivering record performance across sales, inventory turns, and margins.

From a marketing standpoint, the team continued to scale its TikTok presence in the quarter, expanding paid investment and going live up to 100 hours per week. We're now leveraging thousands of affiliate and creator videos per month, and February and March were both record months on the platform. TikTok Shop also continues to drive new customer acquisition efficiently, and the team is scaling it with conviction heading into Q2. We're also seeing strong momentum in omni-channel expansion. We're excited to announce that Princess Polly will open a 1,000 square foot pop-up at The Grove in Los Angeles, which will run from the end of this month through the end of July. With eight new U.S. store leases fully executed, with four expected to open by year-end, I'm really confident in the momentum of the retail expansion.

The Bondi Beach store has also been very well received since opening in December, and the brand will open another Australian store at Pacific Fair, slated to open in the back half of the year, with more to come. Internationally, the U.K. distribution hub launched in March is off to a strong start with immediate sales acceleration driven by improved speed and customer experience, establishing a foundation for further growth in the back half and over the long term. Turning now to Petal & Pup. The brand continues to gain traction with its core customer, and the progress the team has made expanding the business across channels and geographies has been significant. Petal & Pup delivered solid performance in Q1, with event dressing remaining the highest growth category across all regions and channels, particularly for event dresses at accessible price points.

Customers also continue to expand into additional product categories as Petal & Pup grows the separates offering, with tops and bottoms now representing a meaningfully higher share of the mix. Wholesale momentum continues to build with strong performance at key partners and successful expansion into new accounts across both the U.S. and international markets. Nordstrom's performance remained strong through the quarter, with the brand well-established in Nordstrom's trend section across the dresses and casual styles. Von Maur launched in February with stores already chasing in the top-performing styles following strong initial sell-through. Dillard's completed its first store test shipment in Q1 and will go live across nine locations in the second quarter. Petal & Pup also opened a new showroom in Los Angeles during March market week and secured 13 new specialty accounts within the first month, ranging from independent boutiques to multi-location retailers.

The breadth of distribution Petal & Pup is building gives me a lot of confidence in the strength and trajectory of the brand. Turning now to our streetwear brands. Culture Kings continues to differentiate through its highly immersive retail experience and curated mix of in-house and third-party brands. A key focus with the team has been strengthening the in-house brand portfolio, including Loiter, 73Studio, Carré, and Saint Morta, evolving the merchandising approach, relaunching priority brands, and elevating product quality. That work is now delivering measurable results with full price mix and gross margin both improving materially year-over-year. 73Studio delivered a strong quarter anchored by launches across Marvel and Xbox, with the brand now established as one of the largest revenue contributors in the U.S.

Loiter also delivered a strong quarter, with the Marvel collection resonating well with customers and key styles already being reordered ahead of the upcoming Spider-Man and Avengers releases later this year. mnml also continued its positive trajectory, driven by disciplined execution of the test and repeat model and a more focused assortment. Brand activations and cultural partnerships remain an important driver of traffic and engagement. During the quarter, the team executed activations across NBA All-Star Weekend in Los Angeles, partnered with Atlassian Williams Racing around the Formula One Melbourne Grand Prix, and recently launched a WWE collaboration tied to WrestleMania in Las Vegas. These initiatives continue to reinforce Culture Kings' positioning at the intersection of streetwear and culture. On the stores front, the relocated Brisbane store in Australia continues to demonstrate the potential of the refined store model.

The store is now the strongest performing location in the Australia fleet, with gross margin, full price mix, and traffic all improving materially year-over-year. We're actively pursuing a second U.S. store location using the learnings from the Brisbane store, and I look forward to updating you on the progress. Looking ahead, Culture Kings has a strong pipeline of collaborations and activations tied to global events, including the World Cup, UFC, and Formula One, and the team remains focused on continuing to scale in-house brands, drive margin expansion, and further strengthen the overall model. In closing, the first quarter results and the progress across our brands demonstrate that the strategic work is translating into financial results, and I believe we are at a genuine inflection point in the trajectory of the business. The foundation is in place, the channels are scaling, and the brands are well-positioned for growth ahead.

I want to thank our teams for the continued hard work and commitment. Our recent performance is a direct reflection of their dedication to our brands and customers. With that, I'll turn it over to Kevin.

Thanks, Ciaran. We are pleased with our solid start to the year, with first quarter net sales and EBITDA coming in ahead of our expectations. Before turning to results, I want to provide more context on the tariff adjustment. As reflected in our filings, we paid $25.8 million in IEEPA tariffs since their inception, $18.6 million flowing through COGS, and the remaining $7.2 million capitalized in inventory. Following the Supreme Court's decision to overturn the tariffs and our successful refund submission to CBP, we recognize the benefit of this adjustment as a receivable in our first quarter results. As part of the IEEPA reversal, we also recognized approximately $2 million of charges related to the reversal of duty drawback benefits and other anticipated charges. As of yesterday, we've already received approximately $6 million of the $25.8 million of expected IEEPA refunds.

We also made a strategic decision to write off $12 million of legacy streetwear inventory as we finalized the transition to the test and repeat model. We view this as a one-time opportunity to reset the business and align inventory with our model, positioning us for improved margins and returns going forward. For the first quarter, net sales increased 3% to $132.5 million, slightly ahead of our outlook, driven by a 3.2% increase in U.S. sales. We're also pleased with our performance in Australia, with sales increasing 3.8% to $36.9 million. Total orders were 1.7 million, up to 4.2% year-over-year.

Trailing twelve-month active customers, excluding wholesale, increased 3.1% to 4.26 million compared to 4.13 million a year ago, and average order value was $77. Let me give more color on the Adjusted gross margin for the quarter. Starting from prior year gross margin of 57.2%, our underlying business delivered approximately 180 basis points of expansion to 59%, which, as Ciaran mentioned, was driven by improved inventory discipline, stronger full price sell-through, and the continued rollout of test and repeat in our streetwear brands. From there, the IEEPA tariff recovery added approximately 1,400 basis points. The legacy streetwear inventory write off was a 900 basis point headwind, and the duty drawback reversal and related charges were about for the run rate of the business.

Selling expenses were $41 million or 30.9% of net sales compared to 29.7% a year ago, resulting from an increase in store selling expenses as we grow our retail footprint. Marketing expenses were $16.8 million or 12.6% of net sales. General and administrative expenses were $30 million or 22.7% of net sales. G&A expenses increased year-over-year due to an increase in headcount to support our channel expansion strategy and technology investments. Our Adjusted EBITDA increased to $5.1 million compared to $2.7 million a year ago. Our Adjusted EBITDA margin grew 180 basis points to 3.9%. Turning to the balance sheet, we ended the quarter with $12.9 million in cash and cash equivalents.

The year-over-year decline primarily reflects continued investment in retail expansion and working capital optimization. Total debt at the end of the quarter was $109.6 million, down from $119.9 million a year ago, reflecting a continued progress in reducing our leverage and strengthening the financial foundation of the business. We ended the quarter with $67.7 million in inventory, down 28% from $94.4 million a year ago, reflecting the continued benefits of our disciplined buying approach and the inventory write-off. Turning now to our outlook. For fiscal 2026, we continue to expect net sales to be between $625 million-$635 million and Adjusted EBITDA between $30 million-$32 million. For the back half of the year, our outlook reflects tariff rates at the pre-Supreme Court ruling.

For the second quarter, we expect net sales to be between $100 million and $164 million, reflecting a low single-digit growth rate. We expect Adjusted EBITDA to be between $8.5 million and $9 million in the second quarter. To give you some more color for modeling purposes in the second quarter, we expect gross margin around 60%. For modeling purposes for the full year, we anticipate fiscal 2026 stock-based compensation of approximately $6.5 million-$7 million, depreciation and amortization expense of roughly $20 million-$21 million, interest and other expense of approximately $16 million-$18 million, an effective tax rate of negative 10%, CapEx between $18 million-$20 million, and weighted average diluted share count of approximately 11 million.

In closing, our first quarter results demonstrate that the structural changes we've made to the business are translating into improved profitability and earnings power.

While the macro environment remains dynamic, we believe we are significantly better positioned today with a more flexible model, stronger margins and multiple growth levers to deliver sustainable long-term value. With that, we'll open the call for questions.

Thank you. We'll now be conducting a question-and-answer session. Thank you. Our first question is from Ryan Meyers with Lake Street Capital Markets.

Hey, guys. Thanks for taking my questions. First one for me, I just want to make sure I'm understanding this correctly. You know, Kevin, the commentary you just gave us on gross margin for the second quarter, that 60%, I assume that's Adjusted gross margin and there's none of the kind of tariff inventory related impacts that we saw in the first quarter here. Then if so, you know, what are the main drivers of that roughly 100 basis points or so that you're seeing here from Q1 to Q2?

Thanks for the question, Ryan. For the first quarter, just to recap that real quick, adjusted for all the one-time impacts of the IEEPA refund and the strategic inventory charge, it was a normalized 59% of gross margin. That's really the number I think we're trying to anchor on from a long-term perspective. That's where we think we can operate. For Q2, you're right. The guide is 60% and is a bit of a step up from that. What that reflects is really no IEEPA in the Q2, reflects the refund being taking effect as well as the current 10% Section 122 tariffs that are still in place.

It also reflects some headwinds we're seeing on inbound freight, impacting the margins as well. You know, that's kind of, you know, how you bridge from that 59%-60%. For the back half of the year, really no changes to what we previously discussed about gross margin. As mentioned in the prepared comments, we're assuming that those duty rates will get back to the Supreme Court levels, which is what the administration has talked about.

Okay. Got it. Just on the revenue side of the business, obviously performed well during the quarter and performing well enough to leave the guidance unchanged. I'm just curious what you guys are seeing across your customer base, and if you're seeing any impact from just the sort of volatile macro environment that we've seen here the past couple months.

Yeah, Ryan. I think, excuse me, we are seeing some, I would say, some pressure on the consumer, in U.S. and Australia. Look, I think as we look across the business, as of now, Princess Polly is having their best season from a graph perspective that they've had. We are delighted that, within a month of Petal & Pup opening their new showroom, they've 30 new accounts from a specialty retail perspective. I would say, really just the progress we've made in with all the changes of moving the streetwear businesses onto that test and repeat model, certainly seeing the best response we've ever seen from a product sell through and customer reaction there.

Look, I think we feel good about the progress we've made, really over the last number of years, opening up new channels, opening up stores, wholesale, increasing the overall TAM. You know, feel good about where we are from as we head into Q2 and the rest of the year from a guidance perspective.

Got it. Thanks for taking my questions.

Our next question is from Dana Telsey with Telsey Advisory Group.

Hi. Good afternoon, everyone. Nice to see the progress. As you think about the rising cost of energy, where is it impacting your business? What have you seen, how you're projecting going forward? For the first quarter, did you see any difference between the beginning of the quarter, the end of the quarter in terms of conversion or traffic or sales? Just U.S. and Australia, how did both the regions do in the first quarter? Just lastly, are your Princess Polly stores, how much better than your plan are they opening up? Is there any similarities by region or what you know better what to look for in terms of stores now, size or anything like that? Thank you.

Yeah. Thanks, Dana. Let me kind of go through them one by one. I think, look, from a, from a input costs, you know, I would say we're seeing just a little bit on synthetic materials for us, which is, look, a really, really small percentage of the business. We've seen a bit there recently with the change in energy costs. You know, we are also seeing increased air freight. You know, look, air freight for us being on a test and repeat model is core to the business. You know, we will continue to use air freight, but we certainly feel, you know, with the guidance that we've given, all of those, you know, costs are contemplated in there.

Look, with all of the work we've done from the sourcing perspective, you know, and super work from the team really over the last 18 months, we're well able to kind of navigate our way through those. You know, from a pacing as we went through the quarter, we certainly saw a little bit of softness, you know, late in March. That continued for us into April. We have seen improvements as we've gone, as we've moved into May and through May. Look, feel as we head into the back half of the quarter and the rest of the year, Really feel kind of product is in a good position and, you know, where we stand from a customer go-to-market perspective.

Look, I would say being able to navigate through all the tariff headwinds that we had last year, keep growing sales, keep growing EBITDA, pay down debt. We certainly feel in good shape. From a region perspective, look, I would say we saw better growth in the U.S. compared to Australia. Australia consumer probably a little bit more pressured than the U.S. You know, I feel the U.S. consumer is certainly for us, we feel quite resilient. Like I mentioned, a little bit of pressure in April, but, you know, got back at it pretty quickly. You know, I think we will manage through both regions well. From a store perspective, look, I'd say really happy with the performance at the Polly stores.

You know, they're all ahead of our payback periods for profitable, seeing really, you know, introducing us to new customers, you know, a halo effect to the online business where we're opening stores. I think we have learned a lot, you know, since we've been opening them on, you know, from a size perspective and also I would say just the kind of regional differences from a merchandising perspective. Look, I think we're continuing to, I suppose, refine how we go to market in each one of the stores. Learning a lot. I think still, you know, plenty opportunity for us to keep executing and upping the bar and getting more performance out of that channel for us.

Thank you. Our next question is from Ashley Owens with KeyBanc Capital Markets.

Hi. Great. Thanks for taking our questions. Maybe just to start on AOV really quickly. I know that stepped down, and it seems pretty consistent with what we're seeing across the broader apparel space. As you look at Q2 so far, anything you'd highlight in terms of promotional intensity in the market? Have you changed your own approach to promotions at all over the past few months?

Yeah. Yeah. Thanks, Ashley, for the question. We saw AOV down a bit in the quarter, down 1%, which really is just a reflection of some of the mix dynamics there. You know, more importantly for us, we really saw a great customer, active customer growth over 3% in the quarter, and then orders growth of over 4% as well. We continue to see that strong order growth and customer growth continuing into Q2. You know, really not seeing too much of an impact on AOV as well. Kind of from a promotional perspective, we talked about the guide out there and gross margin that reflects the current market dynamics.

We feel good about that 60% reflects the current tariff rates in place as well as some of the impacts of the inbound freight. Nothing that I would remark, you know, in terms of, you know, significant changes to the overall promotional environment.

Got it. Okay. Maybe just as a follow-up, on TikTok and the spending there, just curious as to how that compares to your historical digital acquisition costs? As that continues to scale, you know, how are you thinking about marketing spend more broadly?

Yeah. I think, you know, TikTok has been a really interesting channel for us. You know, we are pretty active on it now across all four of the brands. I would say kind of all of them in slightly different stages. And look, that's across TikTok Live and TikTok Shop. As we talked about, you know, Princess Polly now doing about 100 hours a week on TikTok Live, mnml are also getting, you know, up there from that as well. I think what we see is, you know, it's really good from a reach perspective, right? We're certainly seeing it introduce us to more and more new customers.

You know, I think at the moment, a lot of that's staying within the TikTok platform and kind of people transacting either in a TikTok LIVE or on a TikTok Shop. I think we are working through how do we flex and bring them back to our own direct-to-consumer site. You know, I think, you know, it's early for us. We're learning a lot. We're continuing to lean into the platform, you know, I think, and we'll continue to do that across the group.

Great. Thank you.

Our next question is from Eric Beder with SCC Research.

Good afternoon. Congrats on a nice start to the year. Let's talk on wholesale a little bit. When we look at Petal & Pup, you know, what has been in terms of ability to expand categories beyond the core dresses? What are you seeing, and what are the opportunities going forward on that wholesale side to drive even further beyond the dress business?

Thanks, Eric. I think, look, it's really been super impressive for what the Petal & Pup team has done to leverage their direct-to-consumer business, the great product that they design and develop and open up all of these wholesale channels. I would say, really kind of, you know, are leading the group on what they're doing there. Not just Nordstrom, where they've been now for a while and are executing really well, but also moving into Von Maur, Dillard's, and now Nordstrom, where we've been in stores now for a 12-month period. The customers there are buying a different mix of assortment compared to the Petal & Pup direct-to-consumer websites.

You know, that Nordstrom customer buying more tops, bottoms, separates, so really into much more category breadth there. I think, look, it really shows us some of the opportunity we have as we move into these other wholesale accounts, but also just on the direct-to-consumer business itself. I think, look, the Petal team has done a great job and I think we see that there's just lots of opportunity as well to continue to build into that channel.

When you look at Princess Polly on the wholesale side, I know that's been a learning experience at Nordstrom. It looks like right now it's kind of getting to where it should have been, where you wanted it to be. You know, what is the opportunity there? You know, when you have a store that have their own retail, Princess Polly and Nordstrom, does that make a difference in terms of the ability, what you see in terms of performance there?

I think, you know, Polly is also, you know, like Petal, has been in Nordstrom now for 12 months and, you know, I think executing fantastically there. I think it's great as well, right, that both brands are in the trends section. They both have meaningful kind of floor presence, assortment breadth inside Nordstrom and doing well. You know, we have seen, you know, there is multiple locations where Polly have now opened stores where they are also in a Nordstrom inside in the same mall and, you know, I would say from our perspective that that's working well. Both places are introducing us to more and more new customers, right? Increasing the overall time of the brand. That's really what we're focused on, right?

We're, I would say, very early on in the growth opportunities we have in these brands and for us just, you know, getting our product in front of more customers wherever they are is really what we're all about.

Okay. You know, how should we be thinking about, and you mentioned about the opportunity with the D.C. in the U.K. I know that the whole rest of the world segment's been kind of a decliner because it really hasn't been the focus. Does this change the focus here? Is this now Do you look upon that as kind of an emerging growth opportunity going forward? Thank you.

Yeah. Look, we've been executing and into the U.K., Europe, and rest of world from our distribution sale center in the L.A. area. With that, obviously, you've kind of slightly longer lead times and, you know, taxes, duty, checkout complications for customers. We're delighted to get the D.C. open for Princess Polly first in the U.K., that opened in March. Look, we're seeing a really nice response from customers, better conversion rate, better repeat rate. Kinda early days there. We certainly see it as a, you know, the U.K., Europe, and rest of world as a growth opportunity.

You know, we're gonna lean into the direct-to-consumer side of it first but certainly would expect it to follow the same kind of you know, strategy as we've had in the U.S., but as of right now and for 2026, it's very much direct-to-consumer.

Okay. Thank you.

Thank you. That is all the time we have for questions today. This concludes today's conference. We thank you for your participation. You may disconnect your lines at this time.

Greetings. Welcome to a.k.a. Brands Holding Corp.'s Fourth Quarter and Fiscal 2025 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Emily Schwartz, Head of Investor Relations. Thank you, and you may begin.

Good afternoon. Thank you for joining a.k.a. Brands to discuss our fourth quarter and fiscal 2025 results released this afternoon, which can be found on our website at ir.aka-brands.com. With me on the call today is Ciaran Long, Chief Executive Officer; and Kevin Grant, Chief Financial Officer. Before we get started, I'd like to remind you of the company's safe harbor language. Management may make forward-looking statements, which refer to expectations, projections and other characterizations of future events, including guidance and underlying assumptions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed. For a further discussion of risks related to our business, please see our filings with the SEC. Please note, we assume no obligation to update any such forward-looking statements. This call will also contain non-GAAP financial measures such as adjusted EBITDA, adjusted EBITDA margin and constant currency net sales. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the release furnished to the SEC and available on our website. With that, I'll turn the call over to Ciaran.

Good afternoon, everyone. Thanks for joining us today to discuss our fourth quarter and full year 2025 results. I'm pleased to report that we delivered another year of growth, reflecting the continued strength of our brands and the power of our business model. Despite a dynamic environment, we executed on our strategic priorities, strengthened our foundation and entered 2026 positioned for accelerated growth and expanding margins. I want to thank our teams across the business for their focus and disciplined execution throughout the year. Their commitment and hard work were central to the progress we made and the momentum we carry into the year ahead. Let me start with a few highlights from the year. For the full year, we grew net sales 4.4% to $600 million, marking another consecutive year of growth. Our U.S. region, which remains our largest and fastest-growing market, delivered net sales growth of 7% to $394 million. On a 2-year stack, the U.S. is up 25%, further reinforcing our conviction in our U.S. expansion plans, and the U.S. now makes up 66% of the business. Princess Polly continued to deliver strong performance throughout the year, generating double-digit net sales growth and advancing its omnichannel expansion strategy. The brand opened 7 new stores in the U.S. in 2025 and launched its first location in Australia in the fourth quarter, ending the year with 14 stores globally. Wholesale continued to perform well across the portfolio, with our partnership at Nordstrom exceeding expectations with both Princess Polly and Petal & Pup delivering strong results. We also strengthened the leadership team, operations and go-to-market strategy within our streetwear brands. These actions improved merchandising discipline and inventory productivity, positioning Culture Kings and mnml for accelerated growth and stronger margin contribution in 2026. And importantly, we exited the year with inventory down 10% year-over-year, reflecting our continued disciplined approach to inventory management as we improve turns and transition our streetwear business to the test and repeat merchandising approach. In 2025, we also completed an important structural transformation of our supply chain. As discussed in prior quarters, given the rapidly evolving macro environment, we accelerated the diversification of our sourcing strategy to enhance long-term flexibility and resilience. That work is now substantially complete with approximately 50% of our U.S. sourcing from outside of China, in line with our targets, along with our ability to quickly move to different regions as necessary moving forward. Our test and repeat merchandising model and short lead times, while core to our agility and inventory efficiency, meant we couldn't prebuy inventory ahead of our elevated tariffs implemented in 2025. Despite the margin headwinds faced throughout the year as we source product at the higher tariff rates, we delivered 30 basis points of gross margin expansion to 57.3% for the year. We estimate that the tariff headwinds offset by our mitigation efforts negatively impacted fiscal 2025 gross margins by approximately 100 basis points. Looking ahead, we're better positioned to adapt quickly to any future trade policy changes while maintaining our competitive advantages in speed and inventory efficiency. The progress we've made over the past 2 years provides a strong foundation as we look ahead towards 2026 and beyond. In 2024, we stabilized the business and returned to growth. In 2025, we built on that momentum by growing the top line, strengthening our supply chain, expanding our omnichannel presence and continuing to invest in our brands. And as we enter 2026, we have improved operational discipline, stronger inventory health and a clear path to accelerating growth and expanding margins. I'm confident the momentum in our business is picking up with first quarter-to-date net sales growth of mid-single digits, driven by growth in our U.S. online channels. Our 2026 strategy remains focused on 3 core priorities: first, attracting and retaining customers through our direct-to-consumer channels with exclusive trend-driven merchandising and innovative marketing; second, expanding brand awareness and our total addressable market through physical retail and strategic wholesale partnerships; and third, we remain committed to streamlining our operations and strengthening our financial foundation. As part of this, we are actively embedding AI across the organization to enhance the customer experience and drive operational excellence. Our portfolio model and flexible asset-light technology stack enables us to rapidly test and refine solutions at the brand level, scale what works and unlock value across the entire platform. We're already seeing measurable impact in product imagery, marketing productivity and inventory and markdown optimization. These capabilities are already improving conversion, sharpening creative execution and enabling smarter, faster, data-driven decision-making across the business. We expect AI to be a meaningful driver of margin expansion in the coming years, and we're scaling these initiatives with discipline and speed. With that, I'll share highlights from each of our brands and the growth drivers for the coming year. Starting with Princess Polly, our largest brand, which comprises more than half of the portfolio. Princess Polly continues to resonate with next-generation customers through its trend-driven merchandising, authentic customer connections and disciplined social-first marketing approach. And I'm confident that there's tremendous runway ahead for continued global growth. As mentioned, in 2025, Princess Polly delivered double-digit net sales growth, driven by the success in both its direct-to-consumer business and its omnichannel expansion. The team continues to execute its test and repeat model with discipline, delivering consistent weekly newness that supports strong full price sell-through. Importantly, the improvements we made to our supply chain position the brand to operate with stronger in-stock levels and capture demand more efficiently in 2026. From a marketing standpoint, Princess Polly continues to meet its customers where they are, maintaining a presence across more than 20 social and digital platforms, complemented by in-store events and broader brand initiatives. TikTok remains an important demand generation channel. And in 2025, the brand increased its focus on TikTok Live, creator collaborations and search-driven discovery, driving stronger engagement and efficient customer acquisition. Beyond this online performance, Princess Polly continued to expand its retail footprint with results exceeding expectations from both a financial and brand awareness perspective. Princess Polly successfully opened 7 new stores in the U.S. in 2025, ending the year with a total of 13 stores in the U.S. And as mentioned, the brand opened its first store in Australia in Bondi Beach, Sydney in December. The Bondi store has been very well received and reinforces our confidence that Princess Polly's omnichannel strategy resonates well globally. Princess Polly's wholesale business also continued to perform well in the fourth quarter, further expanding brand reach and reinforcing our strategy of meeting customers wherever they choose to shop. Princess Polly will continue to expand and optimize its TikTok Shop and wholesale partnerships, ensuring strong brand presentation across key retail partners. Looking at 2026, Princess Polly has a clear runway for sustained global growth, supported by several strategic initiatives. The brand will continue to fuel e-commerce growth by refining its test and repeat strategy and reinforcing brand and product storytelling. Princess Polly will deliver consistent newness, focusing on proven best-selling party styles while also expanding its casual and basic categories to increase share of wallet. From a marketing perspective, the brand will prioritize influencer-led content and product storytelling across social platforms to drive engagement and full price demand. Princess Polly will continue expanding its U.S. retail footprint with 8 new store leases fully executed and additional locations expected to be announced throughout the year. As shared in our related press release today, store openings in the second half of 2026 include Houston and Frisco in Texas, Orlando, Florida; and Adena, Minnesota, and locations in Jacksonville and Boca Raton in Florida, Nashville, Tennessee; Charlotte, North Carolina planned for early 2027. While the existing fleet continues to meet our profitability and payback expectations, driving solid 4-wall profitability, each new opening provides an opportunity to further refine execution and enhance store productivity. And lastly, Princess Polly is beginning to lay the foundation for international growth to broaden reach and expand its global presence. Later this month, in partnership with a third-party logistics provider, Princess Polly would unlock distribution in the U.K., improving customer lead times and enhancing the overall experience in the region. This establishes the operational foundation for moderate growth in the U.K. in 2026 with further expansion in the coming years. Turning now to our other women's brand, Petal & Pup. The brand continues to resonate with its core customer through a curated assortment of trend-forward feminine occasion-driven styles at accessible price points. In 2025, Petal & Pup delivered solid performance, supported by continued strength in dresses and eventwear, while broadening its assortment to capture more everyday demand and repeat purchases. Brands growing wholesale presence, particularly at Nordstrom, exceeded expectations. Petal & Pup has established a meaningful presence within Nordstrom trend section across all categories, with particular strength in dresses and more casual styles, expanding brand awareness and introducing new customers to the brand. In the fourth quarter, Petal & Pup successfully launched on the rental platform, Nuuly, Nykaa Fashion in India and Australian department store, David Jones, with strong initial results out of the gates and plans to further expand on each of these platforms are already underway. Looking ahead to 2026, the focus remains on deepening product differentiation and strengthening brand equity. Petal & Pup will continue to expand its range with a clear emphasis on outfitting its core customer across every aspect of our life. This includes a stronger push in casual wear and elevated separates, particularly tops and knitwear to complement the brand's established strength in dresses. By building a more balanced and versatile assortment, the brand aims to drive increased repeat rate over time. This strategy will be underpinned by a continued commitment to enhance quality, compelling price points, effortless outfitting and trend-led perspective. Petal & Pup is also elevating its brand storytelling and community engagement, shifting beyond purely product-led campaigns towards more cohesive and authentic brand narratives. The recent refresh of its branding, website and visual identity supports this evolution alongside the launch of an evergreen brand campaign across social channels and key out-of-home placements this month. Omnichannel and international expansion also remains a key growth driver for Petal & Pup. In addition to continued expansion with Nordstrom, newly and existing partners, Petal & Pup will launch with Dillard's, Von Maur and select independent boutiques in 2026, further extending its reach and awareness in the U.S. market. I'm confident that Petal & Pup is well positioned for continued growth in 2026 as it strengthens its assortment and expands its reach. Turning now to our streetwear brands. Culture Kings remains one of the most distinctive experiential retail concepts in the market, blending global streetwear, music, sports and culture into a highly immersive customer experience. In 2025, the focus was on strengthening the fundamentals of the business in both the U.S. and Australia to position the brand for accelerated growth in 2026 and beyond. Culture Kings' exclusively designed in-house brands are a key differentiator and central to its growth strategy. In 2025, the company intensified its focus on this portfolio, including brands such as mnml, Loiter, 73 Studio, Carre, Saint Morta and American Thrift by evolving its merchandising approach, relaunching priority brands and elevating product quality. Investments in Loiter drove double-digit revenue and gross profit dollar growth in 2025, validating the strategy. Building on that momentum, 73 Studio and American Thrift were relaunched in the fourth quarter with a refined design direction and stronger go-to-market execution. Early sell-through and improved new style velocity from the refreshed brands has been encouraging, reinforcing confidence in the owned brand strategy heading into 2026. Owned brand penetration is expected to continue expanding, supported by faster product cycles, tighter assortment and a clear brand point of view. This more focused product strategy is designed to drive stronger full price sell-through and support margin expansion in the year ahead. In addition to the in-house brands, Culture Kings continues to enhance its third-party assortment from leading national headwear and footwear brands such as New Era, ASICS, Adidas and more to complete the streetwear outfit. Beyond its online channel, Culture Kings retail footprint and retailertainment ethos remains central to the model. The stores, including the Las Vegas flagship and 9 locations across Australia and New Zealand, serve as meaningful revenue drivers and powerful marketing engines. Each location delivers a differentiated and immersive experience that builds loyalty, drives customer acquisition and reinforces the brand authority in streetwear. In the fourth quarter, the team relocated the Brisbane store into a newly renovated 5,000 square foot format designed to serve as a more productive and repeatable model. While the store retains high-impact features such as the hot wall and hot basketball court, the format is being tested as a prototype for future U.S. expansion. Early results have been encouraging, and the learnings from Brisbane will directly inform the next phase of U.S. store growth. We're actively pursuing a location for the second U.S. store and we'll provide updates on future calls. Looking ahead to 2026, I'm confident that Culture Kings is set up for success with operational improvements in the rearview, a healthier inventory position, strong and accelerating performance at its in-house brands and more stores on the horizon. I'm encouraged by the progress and excited for the future. Before I turn it over to Kevin, I want to again express my gratitude to our incredible team. The past year acquired agility, resilience and an unwavering focus on execution. Our teams across all functions rose to the challenge, successfully navigating the supply chain transformation while continuing to deliver compelling products and experiences to our customers. I'm confident that we have the right operational foundation, the right team and the right strategic priorities to drive accelerating growth in 2026 and beyond. With that, I'll turn it over to Kevin.

Thanks, Ciaran. Turning to our financial results for the fourth quarter. Net sales increased 3.1% to $164 million, in line with our guidance. As we noted on our third quarter call, due to the accelerated supply chain transition, we entered October with meaningful out-of-stock positions in key best-selling styles, which limited sales in the early part of the quarter, but inventory levels stabilized as we moved through the quarter, and we ramped up our marketing engine to regain sales momentum. Net sales in Australia were also in line with expectations, increasing 1.6% to $58.1 million. As Ciaran mentioned, we entered 2026 with strong momentum with first quarter to-date net sales growth in the mid-single digits. As a reminder, as we continue expanding across channels, the shape of the P&L will continue to evolve, though we expect overall margin dollars to increase as we pursue the growth opportunity ahead of us. Total orders were $2.2 million, up 6.4% year-over-year. Trailing 12-month active customers, excluding wholesale, were 4.18 million compared to 4.07 million a year ago. And average order value was $76, down 2.6% year-over-year. Turning to our profitability metrics. Gross margin declined 30 basis points to 55.6% compared to 55.9% last year, reflecting the impact of the out-of-stocks and best sellers in October, partially offset by a higher mix of retail stores. Selling expenses were $51 million or 31% of net sales, reflecting the retail footprint expansion and onetime fulfillment charges. Marketing expense was $20.5 million or 12.5% of net sales. General and administrative expenses were $30.3 million or 18.5% of net sales. G&A expenses increased year-over-year primarily due to charges for a nonrecurring legal matter as well as an increase in headcount to support our channel expansion strategy. And we delivered adjusted EBITDA of $2.5 million or 1.5% of net sales. For the full year, net sales increased 4.4% to $600 million, in line with our expectations and compared to $574.7 million a year ago. On a constant currency basis, net sales increased 5%. Adjusted EBITDA for the year was $19.7 million or 3.3% of net sales compared to $23.3 million or 4.1% of net sales a year ago as tariffs and inventory disruptions pressured results. As Ciaran mentioned, the tariff headwinds, partially offset by our mitigation efforts, negatively impacted margin by approximately 100 basis points. Turning to the balance sheet. We ended the year with $20.3 million in cash and cash equivalents compared to $24.2 million at the end of the fourth quarter of 2024. Debt at the end of the quarter was $111.1 million compared to $111.7 million at the end of the fourth quarter of 2024. As a reminder, we successfully refinanced our debt in October and extended the maturity to 2028. As Ciaran mentioned, we're really pleased with the progress we've made improving the quality and quantity of our inventory. We ended the quarter with $86.2 million in inventory, down 10% compared to $95.8 million at the end of the fourth quarter of 2024. Turning now to our outlook. We are entering 2026 with momentum and a stronger operating foundation. Our outlook is based on the tariff rates in place exiting 2025 and does not include the impact of any potential refunds as a result of the Supreme Court's decision to overturn the IEEPA tariffs. For fiscal 2026, we expect net sales to be between $625 million to $635 million, representing growth of 4.2% to 5.8%. We expect adjusted EBITDA of between $27 million and $29 million. For modeling purposes, we anticipate fiscal 2026 stock-based compensation of approximately $6.5 million to $7 million, depreciation and amortization expense of roughly $20 million to $21 million, interest and other expense of approximately $16 million to $18 million an effective tax rate of negative 10%, CapEx between $18 million to $20 million and weighted average diluted share count of approximately 11 million. For the first quarter, as mentioned, quarter-to-date net sales growth is tracking mid-single digits with strength on our online channels in the U.S. As a reminder, in March of last year, Princess Polly and Petal & Pup launched across all Nordstrom stores, creating a more challenging wholesale comparison as we progress through the quarter. For the first quarter, we expect net sales to be between $130 million and $132 million, reflecting a low single-digit growth rate. For modeling purposes, for Q2 through Q4, we expect high single-digit growth on a 2-year stack. Due to the timing of tariff impacts, adjusted EBITDA comparisons will be more challenging in the first quarter before normalizing in the second quarter. We expect adjusted EBITDA between $1.5 million and $2 million in the first quarter. For modeling purposes, for Q2 and Q3, we expect an EBITDA margin expansion of about 100 basis points and a larger expansion in Q4 compared to the same period last year. In closing, entering 2026, the business is operating from a position of greater strength. The progress we made in 2025 across supply chain diversification, inventory discipline and omnichannel expansion has positioned the business to accelerate growth and improve profitability in the year ahead. As a result, we believe 2026 represents an inflection point for the company with clear drivers to support top line growth and margin expansion. With that, we'll open the call for questions.

[Operator Instructions] Our first question comes from Ryan Meyers with Lake Street Capital.

First off, just thinking about the EBITDA guide for 2026, obviously, a pretty significant step up here from what you guys reported in 2025. Can you just walk us through kind of the key drivers of that? Is most of that coming from the gross margin side? Are we seeing any operating expense leverage? And then are there any lower nonrecurring costs? Just kind of bridge that gap for us would be helpful.

Yes. Thanks, Ryan, for the question. Yes, we're coming out of the quarter with good momentum. That strong performance for the year, over 4% growth, 5% on a constant currency basis. We've mentioned we've seen mid-single-digit growth so far in Q1. The guide for the year on the top line is that sort of mid-single digits. And then from a profit perspective, we mentioned EBITDA, we expect over the entire year about 120 basis points of EBITDA expansion. I would say the bulk of that, Ryan, comes from gross margin. We mentioned the headwind of 100 basis points in gross margin in FY '25. So we'll be moving past that in the year. We're finishing inventory in a really strong position, down 10% year-over-year and down 10% sequentially. So we're feeling great about that. We'll have some channel mix impact in the gross margin as well. The balance of the EBITDA improvement will come across the rest of the operating expense lines. As mentioned, we'll continue to see the shape of the P&L move, as the channels change shape of the P&L. But overall, I feel really good about that guidance. And then on the nonrecurring charges, no, not really anything of note for the guide for FY '26.

Okay. Got it. And then just switching to the retail business. Can you guys tell us what percentage of the revenue mix now does come from retail? Obviously, pretty significant store openings in 2025, expected again here in 2026. Is that starting to become a more meaningful percentage of the overall revenue mix? And then how should we think about the growth of the stores or the revenue growth at the stores relative to the direct-to-consumer business? Is the growth outpacing that there? Just any more details on that as it's becoming a larger portion of the business?

Yes, Ryan, this is Ciaran. We are really happy with the store performance. And I think for us, seeing really good productivity on a square foot in the Princess Polly stores also really strong 4-wall profitability and I think really feel good about the opportunity that we have to continue to lean into stores. We've now 13 open in the U.S., which is great progress. As we mentioned, signed 8 more leases. And I would say kind of 4 to 5 of them will open in FY '26. So we're going to continue to lean into the opportunity that we have at the stores. I think tremendous growth. It's also great for us bringing in new customers. We're also seeing a nice halo effect from the online business or to the online business from the stores. So I think just kind of more and more ahead of us.

The next question comes from the line of Dana Telsey with Telsey Group.

As you think about the Princess Polly business and the opening of the 8 stores, how do you envision the business retail versus wholesale, your direct online? What do you want the complexion to look like? And can you talk about what the gross margin differential is between?

Yes. Sure, Dana. Look, I think there is tremendous opportunity. And just as a reminder, Princess Polly is about half the revenue for the group at the moment, 13 stores open, also a great presence in Nordstrom across all Nordstrom doors in the U.S., just like the Petal & Pup brand has and seeing really good response rate really across all of the channels for new and existing customers. I think, look, from a long-term perspective, we're going to continue to grow the online business. We think we are -- still have a lot of opportunity there. But obviously, from a wholesale and stores perspective, we are extremely early. I think as it relates to those, I would see the more focus from the Polly team is on opening stores and building out that store footprint. I would say on the Petal team, they're more focused on the wholesale opportunity in front of them. And we mentioned a few of the new partners that they have this year and coming in 2026. From a margin perspective, I would say, look, it's all -- they're all profitable channels. They're all bringing new customers. We do see gross margins a little bit higher in the stores than online as the stores are a little bit less promotional at this stage. Obviously, gross margins lower in the wholesale channel, but very limited selling expenses, marketing in those channels as well. So kind of on a contribution profit basis, pretty similar across the mall and really gives us confidence to kind of our ability to push into the mall and that they'll all be margin accretive.

Got it. And just lastly, the shaping of the year, how are you thinking of the cadence of top line and adjusted EBITDA given the lapping of tariffs and the supply chain transition that you had?

Yes, Dana. So from a top line perspective, we've talked about that sort of mid-single-digit growth for the full year and the guide for FY '26. As you alluded to, there's definitely a lot of disruption with the tariffs and supply chain issues in FY '25 that sort of disrupts our normal cadence. So that's why we're guiding from a top line perspective the growth from Q2 through Q4 on a 2-year stack, it's sort of that high single-digit perspective. We mentioned EBITDA over the balance of the year expanding about 120 basis points with that really picking up in Q2. So Q2 and Q3 look very similar and will be about 100 basis points higher than FY '25 with a little bit of a larger impact in Q4.

The next question comes from the line of Eric Beder with SCC Research.

Can you talk a little bit -- I know a little bit about the inventories here. So that's a really nice number, down 10%. I'm assuming given the tariffs and the SKU count, that's down even more. Is that something that -- what we should be thinking about that going forward for this year given the kind of ups and downs in the tariffs last year?

Yes, Eric, I think really good to see kind of inventory down 10% and doing that in a period where we're growing the overall business up 4.4% for the year and in a period when such progress on diversifying our sourcing last year as well. I would say a big driver of that change in inventory is just the progress we've made at the Culture Kings business and moving them on to test and repeat. It's a slow build to change that and kind of such a transformational difference for the group. But I think the leadership team that's been in there now for 12 months and longer have just made huge progress, and that's a big driver of the inventory change. Look, I think philosophically, we always want to have lower inventory growth and sales growth, and that's how we're looking to go through this year.

Okay. And Australia and New Zealand, 4 quarters of growth here. Is this market back? And how can you leverage that even more now that pretty much the inventories have been cleaned up and some of the other positives have rolled through there?

Yes. It is great to see 4 quarters in a row of growth in the Australia region. And I think, look, Petal & Pup and Princess Polly have been doing well there because they have been on that test and repeat model. I think now that Culture Kings is and the new leadership and kind of ways of working that the team has there, we're really seeing progress there. We're seeing real improvements in productivity for new products and new SKUs that we're bringing in. So I think back to growth there is great. Also, as we talked about, we opened -- we relocated a store in Brisbane for Culture Kings down at a 5,000 square foot kind of size. It's a new model that we can -- testing there, we can do that quickly and then leverage the rollout in the U.S. I think for us, we are expecting moderate growth in Australia, but I think glad that it's back to growth and will be consistently there.

And just a follow up on that. What is the average size of the Culture Kings stores outside of the Brisbane store in Australia and New Zealand?

Yes. Traditionally, they were more in that kind of 80,000 square foot size. And as a reminder, the Vegas store in the U.S. bigger again. So for us, really figuring out as we look to scale in the U.S., how do we retain those key aspects of the retail payment that is just core to Culture Kings, sets it apart from anybody else out there and is really the opportunity for us to show off the great 1P brands that we have in that business. So look, we're fortunate that you can test a bit quicker down in Australia from the store side and also being the off-season there does give us a good view into what should be best sellers in the U.S. going forward.

Our last question comes from Ashley Owens with KeyBanc Capital Markets.

So maybe to start, and correct me if I'm wrong, but I believe I heard that the 1Q quarter-to-date growth has been mid-single digits. Could you just provide more detail as to what's shaping the key assumptions driving deceleration from current trends in the quarter and maybe from a brand perspective, where that moderation is coming from? Or if this is just general conservatism built in?

Ashley, yes, good observation. Yes, we've seen strong mid-single-digit growth so far in the quarter, and that's largely coming from the U.S. online business, which is great to see. Just as a reminder, we launched in all the Nordstrom doors for both Polly and Petal in March of '25. And that's what's driving kind of that more difficult comp as we move through the quarter and kind of explains where we're guided for Q1.

Okay. That's super helpful. And then maybe just to follow up, thinking about some of the other drivers of growth in 2026, how we should break this down or balance between order growth and AOV as the primary drivers. I know AOV was declining in through the first half of the year, and then we're also lapping really strong order volume in 2Q and then a little bit in 3Q as well. So just any insight there would be helpful.

Yes, for sure. From a -- we're pleased really to see in the year that growth in our active customers as well as that strong growth in orders. Q4 order growth was over 6%, and that's really what drove the top line performance. Listen, like with our evolving channel mix, we're going to see some up and down in the AOV, and we've got channels like wholesale will drive the AOV up. We've got other channels like TikTok and new categories that will drive the opposite. We've modeled AOV flat for FY '26 with the top line growth really coming from growth in orders.

Ladies and gentlemen, this now concludes our question-and-answer session and does conclude today's conference as well. Thank you for your participation. Please disconnect your lines, and have a wonderful day.