a.k.a. Brands Holding Corp.

Greetings. Welcome to AKA Brand Holding Corp's fourth quarter and fiscal 2025 earnings conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and the number zero on your telephone keypad. 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 AKA 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 Tyrone 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 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 Kiran.

Good afternoon, everyone. Thanks for joining us today to discuss our four-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 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 US region, which remains our largest and fastest growing market, delivered net sales growth of 7% to 394 million. On a two-year stack, the US is up 25%, further reinforcing our conviction in our UX expansion plans, and the US 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 seven new stores in the US 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 improve merchandising discipline and inventory productivity, positioning Culture Kings and Minimal for accelerated growth and stronger margin contribution in 2026. And importantly, we exit 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 US 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 were core to our agility and inventory efficiency, meant we couldn't pre-buy inventory ahead of our elevated tariffs implemented in 2025. Despite the margin headwinds faced throughout the year as we sourced 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 two years provides a strong foundation as we look ahead towards 2026 and beyond. In 2024, we stabilize the business and return to growth. In 2025, we've 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've 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 US online channels. Our 2026 strategy remains focused on three 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're 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 aid 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 omni-channel 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 positioned 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 its 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 seven new stores in the US in 2025, ending the year with a total of 13 stores in the US, 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 would 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 eight new store leases fully executed and additional locations expected to be announced throughout the year. As shared in a related press release today, store openings in the second half of 2026 include Houston and Frisco in Texas, Orlando, Florida, and Edina, 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 forward 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 will unlock distribution in the UK, improving customer lead times and enhancing the overall experience in the region. This establishes the operational foundation for moderate growth in the UK 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 event wear, while broadening its assortment to capture more everyday demand and repeat purchases. Brands growing wholesale presence, particularly at Nordstrom, exceeded expectations. Petal & Pop 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, Pedal & Pub successfully launched on the rental platform newly, Nike 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 & Pop 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 into 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 times. This strategy will be underpinned by a continued commitment to enhance quality, compelling price points, effortless outfitting, and trend-led perspective. Petal & Pop 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 & Pulp. In addition to continued expansion with Nordstrom, Nuuly and existing partners, Petal & Pulp will launch with Dillard's, Von Maurer and select independent boutiques in 2026, further extending its reach and awareness in the US market. I'm confident that Petal & Pulp 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 US 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 Minimal, Lloyder, 73 Studio, Carre, St. Morta, and American Thrift, by evolving its merchandising approach, relaunching priority brands, and elevating product quality. Investments in Lloyder 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 own brand strategy heading into 2026. Own brand penetration is expected to continue expanding, supported by faster product cycles, tighter assortment, and a clearer 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 Mort complete the streetwear outfit. Beyond its online channel, Culture King's retail footprint and retail attainment ethos remain central to the model. The stores, including the Las Vegas flagship and nine 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 hat wall and hat basketball court, the format is being tested as a prototype for future US expansion. Early results have been encouraging and the learnings from Brisbane will directly inform the next phase of US store growth. We're actively pursuing a location for the second US store and will 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 rear view, a healthier inventory position, strong and accelerating performance at its in-house brand, 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.