a.k.a. Brands Holding Corp.

Greetings and welcome to the AKA Brands Holding Corp first quarter and fiscal 2026 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, please press star zero on your telephone keypad. As a reminder, the 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 AKA 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 Kiran 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. 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 Ciarán.

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 for $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've fundamentally repositioned AKA brands to improve profitability and durability. We've expanded distribution of our brands across stores, wholesale, and marketplace. We've strengthened our operational foundation, and we've instilled a greater level of 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 routes into a diversified omnichannel model across retail, wholesale, and marketplaces. Princess Polly now operates 13 stores across the US, 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 Minimal 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.