BED BATH & BEYOND, INC.
For the period ended Jun 30, 2026. Filed Aug 4, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 4, 2026
NXH$1.66-0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-04-27.
0001130713-26-000038
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-04.
0001628280-26-052744
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 109 previous paragraphs and 126 current paragraphs.
63 unchanged; 25 reworded; 36 added; 19 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 11 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (36)
Current report
The acquisition of SFV Services adds installation, renovation, construction and project-execution capabilities that further differentiate Bed Bath & Beyond from traditional retailers.
Current report
The Container Store acquisition (refer to Note 17—Subsequent Events) combines the best of organizing solutions, design services and expertise with the best of Bed Bath & Beyond's home essentials. The result is a more complete home destination that combines organization, essentials, decor and services in one convenient shopping experience.
Current report
Acquisition of SFV Services
Current report
On June 30, 2026, we completed the previously announced acquisition of SFV Services. SFV Services provides renovation, construction, demolition, facilities and project management services across residential and commercial markets. Core offerings include residential renovations and remodeling, commercial renovations and tenant improvements, demolition and white-box services, construction management, general contracting, facilities maintenance programs, franchise and multi-unit rollouts, program management, project management, and owner's representation.
Current report
Merger Agreement with Fathom Holdings
Current report
On June 16, 2026, we entered into a Merger Agreement and Plan of Reorganization (the “Fathom Merger Agreement”), by and among the Company, Fathom Merger Sub, Inc., a North Carolina corporation and wholly owned subsidiary of the Company (“FTHM Merger Sub”), and Fathom Holdings, Inc., a North Carolina Corporation (“FTHM”), pursuant to which, subject to the terms and conditions set forth therein, FTHM Merger Sub will merge with and into FTHM, with FTHM surviving such Merger as a wholly owned subsidiary of the Company.
Current report
Merger Agreement with F9
Current report
On July 23, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Beyond Home Services, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Purchaser”), F9 Merger Sub 1, Inc., a Delaware corporation and wholly owned subsidiary of Purchaser (“Merger Sub 1”), F9 Merger Sub 2, LLC, a Delaware limited liability company and wholly owned subsidiary of Purchaser (“Merger Sub 2”), F9 Investments, LLC, a Florida limited liability company (“Seller”), F9 Brands, Inc., a Delaware corporation (the “Target”), and, solely for the purposes of Sections 3.6, 3.7, 3.8 and 5.1 of the Merger Agreement, Tom Sullivan, the indirect owner of Seller (“Sullivan”), pursuant to which, subject to the terms and conditions set forth therein, Merger Sub 1 will merge with and into the Target (the “First Merger”), immediately followed by the merger of the Target with and into Merger Sub 2 (the “Second Merger” and, together with the First Merger, the “Mergers”), with Merger Sub 2 surviving as a wholly owned subsidiary of Purchaser.
Current report
Revenue for the three months ended June 30, 2026, was $361.2 million, compared to $282.3 million for the three months ended June 30, 2025, representing an increase of $78.9 million, or 28.0%. The increase was primarily due to the inclusion of The Brand House Collective. In other respects, revenue increased, largely driven by an increase in average order value, partially offset by a decrease in number of orders delivered.
Current report
Gross profit for three months ended June 30, 2026, was $96.7 million, or 26.8% of revenue, compared to $67.0 million, or 23.7% of revenue, for the three months ended June 30, 2025. This represents an increase of $29.7 million, or 44.4%. The increase in gross profit was primarily attributable to the acquisition of The Brand House Collective, including the effect of tariff refunds. Gross margin increased by 310 basis points year-over-year, primarily due to positive mix associated with the acquisition of The Brand House Collective, including the effect of tariff refunds.
Current report
Sales and marketing expenses were $43.1 million, or 11.9% of revenue, for the three months ended June 30, 2026, compared to $38.2 million, or 13.5% of revenue, for the three months ended June 30, 2025. This represents an increase of $4.9 million, or 12.8%. The increase was primarily driven by higher revenue and related performance marketing expenses, partially offset by improved marketing efficiency.
Current report
Technology expenses increased by $1.1 million for the three months ended June 30, 2026, compared to the prior period. The increase was primarily due to severance, driven by the workforce optimization as part of our technology transformation efforts, including the adoption of evolving technological advancements such as artificial intelligence.
Current report
General and administrative expenses increased by $43.4 million for the three months ended June 30, 2026, compared to the prior period. The increase primarily reflected the expansion of our physical retail footprint, including store labor, occupancy, distribution, and other operating costs associated with The Brand House Collective, as well as $7.3 million of acquisition‑related professional fees.
Current report
Customer service and merchant fees increased by $2.2 million for the three months ended June 30, 2026, compared to the prior period. The increase was primarily driven by an increase in credit card costs, primarily due to increased volume.
Current report
Other operating expense (income), net increased by $8.5 million for the three months ended June 30, 2026, compared to the prior period. The increase reflects the $5.2 million loss from The Brand House Collective's impairment of leased assets due to store closures and the non-recurrence of the $5.0 million gain from the 2025 sale of Bed Bath & Beyond trademarks in Canada and the United Kingdom, partially offset by $2.2 million gains from lease termination.
Current report
Macroeconomic Trends
Current report
Revenue for the three months ended June 30, 2026, was $361.2 million, compared to $282.3 million for the three months ended June 30, 2025, representing an increase of $78.9 million, or 28.0%. The increase was primarily due to the inclusion of The Brand House Collective. In other respects, revenue increased, largely driven by an increase in average order value, partially offset by a decrease in number of orders delivered.
Current report
Revenue for the six months ended June 30, 2026, was $608.9 million, compared to $514.0 million for the six months ended June 30, 2025, representing an increase of $95 million or 18.5%. The increase was primarily due to the inclusion of The Brand House Collective. Bed Bath & Beyond revenue also increased, largely driven by an increase in average order value, partially offset by a decrease in number of orders delivered.
Current report
Gross profit for the three months ended June 30, 2026, was $96.7 million, or 26.8% of revenue, compared to $67.0 million, or 23.7% of revenue, for the three months ended June 30, 2025. This represents an increase of $29.7 million, or 44.4%. The increase in gross profit was primarily attributable to the acquisition of The Brand House Collective, including the effect of tariff refunds. Gross margin increased by 310 basis points year-over-year, primarily due to positive mix associated with the acquisition of The Brand House Collective, including the effect of tariff refunds.
Current report
Gross profit for the six months ended June 30, 2026, was $155.9 million or 25.6%, compared to $125.1 million, or 24.3% of revenue, for the six months ended June 30, 2025. This represents an increase of $30.8 million, or 24.6%. The increase in gross profit was primarily attributable to the acquisition of The Brand House Collective, including the effect of tariff refunds Gross margin increased by 130 basis points year-over-year, primarily due to positive mix associated with the acquisition of The Brand House Collective, including the effect of tariff refunds.
Current report
Sales and marketing expenses were $43.1 million, or 11.9% of revenue, for the three months ended June 30, 2026, compared to $38.2 million, or 13.5% of revenue, for the three months ended June 30, 2025. This represents an increase of $4.9 million, or 12.8%. The increase was primarily driven by higher revenue and related performance marketing expenses, partially offset by improved marketing efficiency.
Current report
Sales and marketing expenses were $75.4 million, or 12.4% of revenue, for the six months ended June 30, 2026, compared to $69.5 million, or 13.5% of revenue, for the six months ended June 30, 2025. The increase was driven by higher revenue and related performance marketing expenses, partially offset by improved marketing efficiency.
Current report
Technology expenses increased by $1.1 million for the three months ended June 30, 2026, compared to the prior period. The increase was primarily due to severance, driven by the workforce optimization as part of our technology transformation efforts, including the adoption of evolving technological advancements such as artificial intelligence.
Current report
General and administrative expenses increased by $43.4 million for the three months ended June 30, 2026, compared to the prior period. The increase primarily reflected the expansion of our physical retail footprint, including store labor, occupancy, distribution, and other operating costs associated with The Brand House Collective, as well as $7.3 million of acquisition‑related professional fees.
Current report
General and administrative expenses increased by $44.0 million for the six months ended June 30, 2026, compared to the prior period. The increase primarily reflects the expansion of our physical retail footprint, including store labor, occupancy, distribution, and other operating costs associated with The Brand House Collective, as well as $11.0 million of acquisition‑related professional fees.
Current report
Customer service and merchant fees increased by $2.2 million for the three months ended June 30, 2026, compared to the prior period. The increase was primarily driven by an increase in credit card costs, primarily due to increased volume.
Current report
Other operating (expense) income, net
Current report
Other operating expense (income), net increased by $8.5 million for the three months ended June 30, 2026, compared to the prior period. The increase reflects the $5.2 million loss from The Brand House Collective's impairment of leased assets due to store closures and the non-recurrence of the $5.0 million gain from the 2025 sale of Bed Bath & Beyond trademarks in Canada and the United Kingdom, partially offset by $2.2 million gains from lease termination.
Current report
Other operating expense (income), net increased by $8.8 million for the six months ended June 30, 2026, compared to the prior period. The increase reflects the $5.2 million loss from The Brand House Collective's impairment of leased assets due to store closures and the non-recurrence of the $5.0 million gain from the 2025 sale of Bed Bath & Beyond trademarks in Canada and the United Kingdom, partially offset by $2.2 million of gains from lease terminations.
Current report
During the three months ended June 30, 2026, we completed the acquisition of The Brand House Collective, Inc. (“TBHC”). In connection with the preliminary purchase price allocation, we recognized deferred tax liabilities primarily related to differences between the financial reporting carrying amounts and the tax bases of acquired assets.
Current report
The deferred tax liabilities recognized in the acquisition provided a source of future taxable income that management considered in assessing the realizability of deferred tax assets. Based on this additional positive evidence, we released a portion of our valuation allowance during the second quarter of 2026. The release was recorded as a discrete income tax benefit in the period of the acquisition and reduced income tax expense for the three and six months ended June 30, 2026, by approximately $3.1 million.
Current report
On June 29, 2026 and in connection with the acquisition of TCS, the Company entered into a promissory note agreement with TCS in the amount of $7.5 million. The promissory note bears interest at 8.0% per annum and matures on July 31, 2026. The Company entered into the financing arrangement to provide additional short-term liquidity and support working capital needs. The note was repaid in full prior to its contractual maturity date.
Current report
For the six months ended June 30, 2026, financing activities resulted in a net cash inflow of $13.6 million, primarily due to $25.9 million from borrowings of revolving line of credits, $7.5 million proceeds from short-term debt, and $0.4 million purchases from ESPP, which was offset by $18.1 million repayments on revolving line of credits, purchase of treasury stock.
Current report
During the period we completed the acquisitions of TBHC and SFV Services, we allocated the fair value of purchase consideration to the tangible assets acquired and liabilities assumed. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Our valuation procedures include consultation with an independent adviser, as appropriate. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to inventories, fixed assets and operating right-of-use assets and lease liabilities. Critical estimates in valuing certain assets include but are not limited to projected future cash flows, comparable assets, and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates and changes could be significant. We expect to finalize these amounts during the one-year measurement period starting from the date of each acquisition.
Current report
Other estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed, as more fully discussed in Note 3—Business Combinations of our unaudited consolidated financial statements included elsewhere in this Quarterly Report.
Current report
As of June 30, 2026, there were no significant changes in the application of our critical accounting policies or estimation procedures from those presented in Annual Report on Form 10-K for the year ended December 31, 2025.
Removed paragraphs (19)
Previous report
Pursuant to the terms of the TCS Merger Agreement, the aggregate consideration to be delivered at closing is expected to be approximately $150 million (the “Purchase Price”), subject to certain adjustments and structural considerations as set forth in the TCS Merger Agreement. The consideration will consist of a combination of (i) senior convertible notes of the Company with an aggregate principal amount of at least $54.0 million, subject to adjustment, and (ii) shares of our common stock, subject to certain limitations, including an equity issuance cap. To the extent such equity issuance cap is exceeded, additional consideration will be delivered in the form of senior convertible notes. The Merger Consideration (as defined in the TCS Merger Agreement) may be paid to TCS equityholders or, under certain circumstances, to TCS lenders in satisfaction of outstanding indebtedness.
Previous report
The completion of the TCS Merger is subject to customary closing conditions, including, among others, (i) the absence of legal restraints, (ii) receipt of required lender approvals or the completion of an alternative restructuring transaction, (iii) the receipt of specified financing, (iv) the delivery of audited financial statements of TCS, and (v) the accuracy of representations and warranties and compliance with covenants by the parties.
Previous report
In connection with the TCS Merger Agreement, we also entered into related agreements, including a transaction support agreement with certain equityholders and lenders of TCS, a put agreement with certain lenders, and commitments to provide up to $30.0 million of incremental financing to TCS prior to closing, subject to specified conditions.
Previous report
The TCS Merger Agreement may be terminated under certain circumstances, including by either party if the transaction has not been completed by July 31, 2026 (subject to extension in certain circumstances), or upon certain breaches, mutual consent, or the occurrence of legal restraints. The transaction is expected to close in the third quarter of 2026.
Previous report
Revenue for the three months ended March 31, 2026, was $247.8 million, compared to $231.7 million for the three months ended March 31, 2025, representing an increase of $16.0 million, or 6.9%. The increase was primarily due to a 5.8% or $11.15 increase in average order value, which resulted in a revenue increase of approximately $13.4 million, and a 1.1% increase in the number of orders delivered, which resulted in a revenue increase of approximately $2.6 million. The increase in average order value was largely driven by orders mixing into categories with higher average unit retail price. The increase in orders delivered was driven by higher website visits influenced by improved marketing efficiency.
Previous report
Gross profit for three months ended March 31, 2026, was $59.2 million, or 23.9% of revenue, compared to $58.1 million, or 25.1% of revenue, for the three months ended March 31, 2025. This represents an increase of $1.1 million, or 1.8%. The increase in gross profit was primarily attributable to higher revenue, which increased gross profit by approximately $3.9 million, partially offset by a decreased gross margin that contributed $2.9 million of the gross profit decline. Gross margin decreased by 120 basis points year-over-year, primarily due to approximately 150 basis points from loyalty points breakage in the prior year, partially offset by rationalized discounting of approximately 20 basis points as compared to the prior year period.
Previous report
Sales and marketing expenses were $32.3 million, or 13.0% of revenue, for the three months ended March 31, 2026, compared to $31.3 million, or 13.5% of revenue, for the three months ended March 31, 2025. This represents an increase of $1.0 million, or 3.3%. The increase was primarily driven by increased performance marketing expenses of $2.0 million, partially offset by a $0.6 million reduction in staff-related expenses and a $0.4 million reduction in brand advertising.
Previous report
General and administrative expenses increased by $0.5 million for the three months ended March 31, 2026, compared to the prior period. The increase was primarily due to a one-time $3.7 million acquisition‑related professional fees, partially offset by a $2.5 million reduction in staff-related expenses.
Previous report
Other operating income, net decreased by $0.3 million for the three months ended March 31, 2026, compared to the prior period. The decrease was not material.
Previous report
Additional commentary related to macroeconomic trends
Previous report
Revenue for the three months ended March 31, 2026, was $247.8 million, compared to $231.7 million for the three months ended March 31, 2025, representing an increase of $16.0 million, or 6.9%. The increase was primarily due to a 5.8% or $11.15 increase in average order value, which resulted in a revenue increase of approximately $13.4 million, and a 1.1% increase in the number of orders delivered, which resulted in a revenue increase of approximately $2.6 million. The increase in average order value was largely driven by orders mixing into categories with higher average unit retail price. The increase in orders delivered was driven by higher website visits influenced by improved marketing efficiency.
Previous report
Gross profit for three months ended March 31, 2026, was $59.2 million, or 23.9% of revenue, compared to $58.1 million, or 25.1% of revenue, for the three months ended March 31, 2025. This represents an increase of $1.1 million, or 1.8%. The increase in gross profit was primarily attributable to higher revenue, which increased gross profit by approximately $3.9 million, partially offset by a decreased gross margin that contributed $2.9 million of the gross profit decline. Gross margin decreased by 120 basis points year-over-year, primarily due to approximately 150 basis points from loyalty points breakage in the prior year, partially offset by rationalized discounting of approximately 20 basis points as compared to the prior year period.
Previous report
Sales and marketing expenses were $32.3 million, or 13.0% of revenue, for the three months ended March 31, 2026, compared to $31.3 million, or 13.5% of revenue, for the three months ended March 31, 2025. This represents an increase of $1.0 million, or 3.3%. The increase was primarily driven by increased performance marketing expenses of $2.0 million, partially offset by a $0.6 million reduction in staff-related expenses and a $0.4 million reduction in brand advertising.
Previous report
Technology expenses decreased by $5.5 million for the three months ended March 31, 2026, compared to the prior period. The decrease was primarily due to a reduction in staff-related expenses of $2.7 million, a $1.5 million reduction in depreciation and amortization and a $1.3 million reduction in third-party expenses driven by our technology transformation efforts, including the adoption of evolving technological advancements such as artificial intelligence.
Previous report
General and administrative expenses increased by $0.5 million for the three months ended March 31, 2026, compared to the prior period. The increase was primarily due to a one-time $3.7 million acquisition‑related professional fees, partially offset by a $2.5 million reduction in staff-related expenses.
Previous report
Other operating income, net
Previous report
Other operating income, net decreased by $0.3 million for the three months ended March 31, 2026, compared to the prior period. The decrease was not material.
Previous report
For the three months ended March 31, 2026, financing activities resulted in a net cash outflow of $0.6 million, primarily due to $1.0 million for payment of taxes withheld upon vesting of employee stock awards.
Previous report
The preparation of our financial statements requires that we make estimates and judgments. We base these on historical experience and on other assumptions that we believe to be reasonable. Except as disclosed in Note 2—Summary of Significant Accounting Policies, in the Notes to Unaudited Consolidated Financial Statements included in Item 1, Part I, Financial Statements (Unaudited) of this Quarterly Report on Form 10-Q, there have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in Critical Accounting Policies and Estimates, included in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations and in Note 2—Accounting Policies and Supplemental Disclosures, included in Part II, Item 8, Financial Statements and Supplementary Data, of our Annual Report on Form 10-K for the year ended December 31, 2025.
Reworded paragraphs (25)
Previous wording
The following discussion provides information that we believe to be relevant to an understanding of our unaudited consolidated financial condition and results of operations. The statements in this section regarding industry outlook, our expectations regarding the performance of our business and any other non-historical statements are forward-looking statements. Our actual results and outcomes may differ materially from those contained in or implied by any forward-looking statements contained herein. These forward-looking statements are subject to numerous risks, uncertainties, and other important factors, including, but not limited to, those described in "Special Cautionary Note Regarding Forward Looking Statements" and in Part II, Item 1A, "Risk Factors" included in this Quarterly Report on Form 10-Q. You should read the following discussion together with our unaudited consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and with the sections entitled "Special Cautionary Note Regarding Forward-Looking Statements," Part I, Item 1A, "Risk Factors," and our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 24, 2026.
Current wording
The following discussion provides information that we believe to be relevant to an understanding of our unaudited consolidated financial condition and results of operations. The statements in this section regarding industry outlook, our expectations regarding the performance of our business and any other non-historical statements are forward-looking statements. Our actual results and outcomes may differ materially from those contained in or implied by any forward-looking statements contained herein. These forward-looking statements are subject to numerous risks, uncertainties, and other important factors, including, but not limited to, those described in "Special Cautionary Note Regarding Forward Looking Statements" and in Part II, Item 1A, "Risk Factors" included in this Quarterly Report on Form 10-Q. You should read the following discussion together with our unaudited consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and with the sections entitled "Special Cautionary Note Regarding Forward-Looking Statements," Part I, Item 1A, "Risk Factors," and our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025 and with the sections entitled "Special Cautionary Note Regarding Forward-Looking Statements," Part II, Item 1A, "Risk Factors" included in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026.
Previous wording
We are an e-commerce-focused retailer with an affinity model that owns or has ownership interests in various brands, offering a comprehensive array of products and services that enable its customers to enhance everyday life through quality, style, and value. In addition, we also offer an increasing number of add-on services across our platforms, including warranties, shipping insurance, and installation services. Our customer engagement and retention are bolstered by our welcome rewards+ membership program, enhancing the overall value proposition for our customers. We currently own Bed Bath & Beyond, Overstock, buybuy BABY, and now the Kirkland's and Kirkland's Home brands, among other brands. As used herein, "Bed Bath & Beyond," "the Company," "we," "our" and similar terms include Bed Bath & Beyond, Inc. and its controlled subsidiaries, unless the context indicates otherwise.
Current wording
We are an omni-channel-focused retailer with an affinity model that owns or has ownership interests in various brands, offering a comprehensive array of products and services that enable its customers to enhance everyday life through quality, style, and value. In addition, we also offer an increasing number of add-on services across our platforms, including warranties, shipping insurance, and installation services. Our customer engagement and retention are bolstered by our welcome rewards+ membership program, enhancing the overall value proposition for our customers. We currently own Bed Bath & Beyond, Overstock, buybuy BABY, the Kirkland's and Kirkland's Home brands, SFV Services, and now The Container Store, among other brands. As used herein, "Bed Bath & Beyond," "the Company," "we," "our" and similar terms include Bed Bath & Beyond, Inc. and its controlled subsidiaries, unless the context indicates otherwise.
Previous wording
On April 2, 2026, we completed the previously announced acquisition of The Brand House Collective, Inc. pursuant to the Agreement and Plan of Merger, dated as of November 24, 2025 (the “TBHC Merger Agreement”), by and among the Company, Knight Merger Sub II, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Knight Merger Sub”), and TBHC. Pursuant to the TBHC Merger Agreement, upon the terms and subject to the conditions set forth therein, Knight Merger Sub merged with and into TBHC, with TBHC surviving as a wholly owned subsidiary of the Company. We believe the acquisition of TBHC will allow us to strengthen our presence in key categories of home décor and seasonal merchandise, while providing a flexible store base that can be integrated into our broader platform.
Current wording
On April 2, 2026, we completed the previously announced acquisition of The Brand House Collective, Inc. (“TBHC” or “The Brand House Collective”) pursuant to the Agreement and Plan of Merger, dated as of November 24, 2025 (the “TBHC Merger Agreement”), by and among the Company, Knight Merger Sub II, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Knight Merger Sub”), and TBHC. Pursuant to the TBHC Merger Agreement, upon the terms and subject to the conditions set forth therein, Knight Merger Sub merged with and into TBHC, with TBHC surviving as a wholly owned subsidiary of the Company. We believe the acquisition of TBHC will allow us to strengthen our presence in key categories of home décor and seasonal merchandise, while providing a flexible store base that can be integrated into our broader platform.
Previous wording
Merger Agreement with The Container Store Holdings, LLC
Current wording
Acquisition of The Container Store Holdings, LLC
Previous wording
On April 2, 2026 (the “Effective Date”), we entered into an Agreement and Plan of Merger (the “TCS Merger Agreement”) by and among the Company, Falcon Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“TCS Merger Sub”) and The Container Store Holdings, LLC, a Delaware limited liability company (“TCS”), pursuant to which, subject to the terms and conditions set forth therein, TCS Merger Sub will merge with and into TCS (the “TCS Merger”), with TCS surviving such TCS Merger as a wholly owned subsidiary of the Company (the “Surviving Entity”).
Current wording
On July 8, 2026 we completed the previously announced acquisition of The Container Store Holdings, LLC, a Delaware limited liability company (“TCS”), pursuant to the Agreement and Plan of Merger (the “TCS Merger Agreement”), date April 2, 2026, by and among the Company, Falcon Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“TCS Merger Sub”) and TCS. Pursuant to the Merger Agreement, upon the terms and subject to the conditions set forth therein, Merger Sub merged with and into TCS, with TCS surviving as a wholly owned subsidiary of the Company (the “Merger”).
Previous wording
Consolidated cash and cash equivalents decreased from $175.3 million as of December 31, 2025, to $135.8 million as of March 31, 2026, a decrease of $39.5 million, primarily as a result of disbursement for notes receivable of $26.2 million with $20.0 million to TBHC, and net cash outflows from operating activities of $11.8 million.
Current wording
Consolidated cash and cash equivalents decreased from $175.3 million as of December 31, 2025, to $99.5 million as of June 30, 2026, a decrease of $75.8 million, primarily as a result of disbursement for notes receivable of $20.0 million to TBHC, and net cash outflows from operating activities of $50.0 million.
Previous wording
(3) Orders delivered represents the total number of orders delivered in any given period, including orders that may eventually be returned. As we ship a large volume of packages through multiple carriers, actual delivery dates may not always be available, and in those circumstances, we estimate delivery dates based on historical data. We view orders delivered as a key indicator of our growth.
Current wording
(3) Orders delivered represents the total number of orders fulfilled in any given period, including orders that may eventually be returned. As we ship a large volume of packages related to e-commerce orders through multiple carriers, actual delivery dates for e-commerce orders may not always be available, and in those circumstances, we estimate delivery dates based on historical data. Typically, brick and mortar store orders will be fulfilled on-site at the time of the order. We view the orders delivered metric as a key indicator of our growth.
Previous wording
Comparisons of Three Months Ended March 31, 2026 to Three Months Ended March 31, 2025
Current wording
Comparisons of Three Months Ended June 30, 2026 to Three Months Ended June 30, 2025, and Six Months Ended June 30, 2026 to Six Months Ended June 30, 2025
Previous wording
Our revenue related to merchandise sales is recognized upon delivery to our customers. As we ship high volumes of packages through multiple carriers, it is not practical for us to track the actual delivery date of each shipment. Therefore, we use estimates to determine which shipments are delivered and, therefore, recognized as revenue at the end of the period. Our delivery date estimates are based on average shipping transit times. We review and update our estimates on a quarterly basis based on our actual transit time experience. However, actual shipping times may differ from our estimates, which can be further impacted by uncertainty, volatility, and any disruption to our carriers caused by certain macroeconomic conditions, such as supply chain challenges, trade barriers including tariffs, inflation, rising interest rates, climate and weather events, or geopolitical events.
Current wording
Our revenue related to merchandise sales is recognized upon delivery to our customers. Typically, brick and mortar store orders will be fulfilled on-site at the time of the order. As we ship a large volume of packages related to e-commerce orders through multiple carriers, it is not practical for us to track the actual delivery date for each of those shipments. We use estimates to determine which shipments are delivered and, therefore, recognized as revenue at the end of the period. Our delivery date estimates are based on average shipping transit times. We review and update our estimates on a quarterly basis based on our actual transit time experience. However, actual shipping times may differ from our estimates, which can be further impacted by uncertainty, volatility, and any disruption to our carriers caused by certain macroeconomic conditions, such as supply chain challenges, trade barriers including tariffs, inflation, rising interest rates, climate and weather events, or geopolitical events.
Previous wording
Our overall gross margins fluctuate based on factors such as competitive pricing; product costs; discounting; product mix of sales; advertising revenue and our marketing allowance program; and operational and fulfillment costs which include costs incurred to operate and staff warehouses, including rent and depreciation expense associated with these facilities, and costs to receive, inspect, pick, and prepare customer order for delivery, all of which we include as costs in calculating gross margin.
Current wording
Our overall gross margins fluctuate based on factors such as competitive pricing; product costs including the effect of tariffs; discounting; product mix of sales; advertising revenue and our marketing allowance program; and operational and fulfillment costs which include costs incurred to operate and staff warehouses, including rent and depreciation expense associated with these facilities, and costs to receive, inspect, pick, and prepare customer order for delivery, all of which we include as costs in calculating gross margin.
Previous wording
Gross margins for the past five quarterly periods and fiscal year ending 2025 were:
Current wording
Gross margins for the past six quarterly periods and fiscal year ending 2025 were:
Previous wording
Technology expenses decreased by $5.5 million for the three months ended March 31, 2026, compared to the prior period. The decrease was primarily due to a reduction in staff-related expenses of $2.7 million, a $1.5 million reduction in depreciation and amortization and a $1.3 million reduction in third-party expenses driven by our technology transformation efforts, including the adoption of evolving technological advancements such as artificial intelligence.
Current wording
Technology expenses decreased by $4.4 million for the six months ended June 30, 2026, compared to the prior period. The decrease was primarily due to a reduction in staff related expenses, and a reduction in depreciation and amortization, driven by our technology transformation efforts, including the adoption of evolving technological advancements such as artificial intelligence.
Previous wording
Customer service and merchant fees decreased by $0.3 million for the three months ended March 31, 2026, compared to the prior period. The decrease was primarily driven by a $1.1 million decrease in customer service outsourced labor, partially offset by a $0.8 million increase in credit card costs, primarily due to increased order volume.
Current wording
Customer service and merchant fees increased by $1.9 million for the six months ended June 30, 2026, compared to the prior period. The increase was primarily driven by a $3.0 million increase in credit card costs, primarily due to increased order volume, partially offset by a $1.1 million decrease in customer service outsourced labor.
Previous wording
The $17.6 million favorable change in other income (expense), net for the three months ended March 31, 2026, as compared to the same period in 2025, was primarily attributable to a $14.7 million decrease in loss recognized from our equity method securities and a $2.8 million gain recognized on a loan commitment to TBHC. The decrease in loss recognized from our equity method securities reflects the change from a recognized loss on equity method securities of $17.1 million for the three months ended March 31, 2025 to a recognized loss on equity method securities of $2.4 million for the three months ended March 31, 2026. The gain recognized on the loan commitment was driven by the fact that TBHC had drawn the entire available balance from the Delayed Draw Loan Commitment.
Current wording
The $25.2 million favorable change in other income (expense), net for the six months ended June 30, 2026, as compared to the same period in 2025, was primarily attributable to a $21.2 million decrease in loss recognized from our equity method securities, a gain of $2.8 million gain recognized on the loan commitment in 2026, and a $0.7 million non-recurring loss recognized from TBHC convertible promissory notes in 2025. The decrease in loss recognized from our equity method securities reflects the change from a recognized loss on equity method securities of $23.6 million for the six months ended June 30, 2025 to a recognized loss on equity method securities of $2.4 million for the six months ended June 30, 2026. The gain recognized on the loan commitment was driven by the fact that The Brand House Collective had drawn the entire available balance from the Delayed Draw Loan Commitment.
Previous wording
Our provision for income tax for the three months ended March 31, 2026 and 2025 was $0.2 million and $0.2 million, respectively. The effective tax rate for the three months ended March 31, 2026 and 2025 was (1.5)% and (0.5)%, respectively.
Current wording
Our provision for income tax for the three months ended June 30, 2026 and 2025 was $2.5 million benefit and $0.3 million expense, respectively. The effective tax rate for the three months ended June 30, 2026 and 2025 was 6.0% and (1.5)%, respectively. Our provision for income tax for the six months ended June 30, 2026 and 2025 was $2.3 million benefit and $0.5 million expense, respectively. The effective tax rate for the six months ended June 30, 2026 and 2025 was 3.9% and (0.8)% benefit, respectively. Our tax provision and rate differs from the statutory federal income tax rate of 21% primarily due to year-to-date losses on our retail operations for which tax benefits are limited and the release of a portion of our valuation allowance.
Previous wording
We are subject to taxation in the United States and multiple state and foreign jurisdictions. Tax years beginning in 2020 are subject to examination by taxing authorities, although net operating loss and credit carryforwards from all years are subject to examinations and adjustments for at least three years following the year in which the attributes are used. We are under audit by the Internal Revenue Service ("IRS") for the calendar year 2023. The IRS has not indicated or communicated any deficiencies. We expect the audit to continue during 2026.
Current wording
We are subject to taxation in the United States and multiple state and foreign jurisdictions. Tax years beginning in 2020 are subject to examination by taxing authorities, although net operating loss and credit carryforwards from all years are subject to examinations and adjustments for at least three years following the year in which the attributes are used.
Previous wording
Our principal sources of liquidity are existing cash and cash equivalents and accounts receivable, net. At March 31, 2026, we had $135.8 million of cash and cash equivalents and $24.0 million of accounts receivable, net of allowance for credit losses.
Current wording
Our principal sources of liquidity are existing cash and cash equivalents and accounts receivable, net. At June 30, 2026, we had $99.5 million of cash and cash equivalents and $29.8 million of accounts receivable, net of allowance for credit losses.
Previous wording
During the three months ended March 31, 2026, the Company entered into standby letter of credits with BMO Bank N.A. valued at $9.5 million. The letter of credits were issued in favor of the Company's payment processors as a financial guarantee in connection with ongoing payment processing operations.
Current wording
During the six months ended June 30, 2026, the Company entered into standby letter of credits with BMO Bank N.A. valued at $9.5 million. The letter of credits were issued in favor of the Company's payment processors as a financial guarantee in connection with ongoing payment processing operations.
Previous wording
We entered into a Sales Agreement dated June 10, 2024 with JonesTrading, under which we have conducted and may in the future conduct "at the market" public offerings of our common stock. Under the Sales Agreement, JonesTrading, acting as our sales agent or principal, may offer our common stock in the market on a daily basis or otherwise as we request from time to time. At March 31, 2026, we had $16.0 million available under our "at the market" sales program. We have no obligation to sell additional shares under the Sales Agreement, but we may do so from time to time. Under the agreement, we will pay JonesTrading up to a 2% sales commission on all sales. For the three months ended March 31, 2026, we did not sell any shares of our common stock pursuant to the Sales Agreement.
Current wording
We entered into a Sales Agreement dated June 10, 2024 with JonesTrading, under which we have conducted and may in the future conduct "at the market" public offerings of our common stock. Under the Sales Agreement, JonesTrading, acting as our sales agent or principal, may offer our common stock in the market on a daily basis or otherwise as we request from time to time. At June 30, 2026, we had $16.0 million available under our "at the market" sales program. We have no obligation to sell additional shares under the Sales Agreement, but we may do so from time to time. Under the agreement, we will pay JonesTrading up to a 2% sales commission on all sales. For the six months ended June 30, 2026, we did not sell any shares of our common stock pursuant to the Sales Agreement.
Previous wording
The $11.8 million of net cash used in operating activities during the three months ended March 31, 2026, was primarily due to loss from operating activities of $16.4 million, net of the impact from non-cash items such as depreciation and amortization, non-cash operating lease costs, stock-based compensation, and loss from equity method securities of $4.3 million offset by cash provided by changes in operating assets and liabilities of $0.3 million.
Current wording
The $50.0 million of net cash used in operating activities during the six months ended June 30, 2026, was primarily due to loss from operating activities adjusted for non-cash items of $38.1 million and cash used by changes in operating assets and liabilities of $11.9 million.
Previous wording
The $50.9 million of net cash used in operating activities during the three months ended March 31, 2025, was primarily due to loss from operating activities of $39.9 million, net of the impact from non-cash items such as depreciation and amortization, non-cash operating lease costs, stock-based compensation, and loss from equity method securities of $23.6 million and cash used by changes in operating assets and liabilities of $34.6 million including $15.0 million used for the purchase of inventory and the remainder primarily due to timing of partner and marketing payments.
Current wording
The $35.1 million of net cash used in operating activities during the six months ended June 30, 2025, was primarily due to loss from operating activities adjusted for non-cash items of $25.3 million and cash used by changes in operating assets and liabilities of $9.8 million.
Previous wording
For the three months ended March 31, 2026, investing activities resulted in a net cash outflow of $27.3 million, primarily due to disbursement of notes receivable of $26.2 million with $20.0 million to TBHC.
Current wording
For the six months ended June 30, 2026, investing activities resulted in a net cash outflow of $39.4 million, primarily due to $27.2 million for the disbursement of notes receivable, $6.0 million related to the acquisitions of business, $4.6 million expenditures for property and equipment, and $1.6 million purchases of intangible assets.
Previous wording
For the three months ended March 31, 2025, investing activities resulted in a net cash outflow of $13.1 million, primarily due to $8.0 million for purchases of equity securities, $5.2 million for purchases of intangible assets, and $1.2 million of expenditures for property and equipment, offset by $1.3 million of proceeds received from the sale of intangible assets.
Current wording
For the six months ended June 30, 2025, investing activities resulted in a net cash outflow of $20.2 million, primarily due to $8.0 million for purchases of equity securities, $5.2 million for disbursement of notes receivable to Kirkland's, $5.2 million for purchases of intangible assets, and $3.0 million of expenditures for property and equipment, offset by $1.3 million of proceeds received from the sale of intangible assets.
Previous wording
For the three months ended March 31, 2025, financing activities resulted in a net cash inflow of $19.5 million, primarily due to $19.5 million in net proceeds from the sales of our common stock pursuant to our "at the market" public offering, net of offering costs.
Current wording
For the six months ended June 30, 2025, financing activities resulted in a net cash inflow of $16.7 million, primarily due to $24.2 million in net proceeds from the sales of our common stock pursuant to our "at the market" public offering, net of offering costs, offset by $6.5 million payments on short-term debt.
Previous wording
We expect to fund the ongoing operations, capital requirements, and working capital needs of TBHC and TCS, if the TCS Merger is completed, through existing cash balances, cash flows from operations, and available credit facilities.
Current wording
We expect to fund the ongoing operations, capital requirements, and working capital needs of TBHC, TCS, and SFV Services through existing cash balances, cash flows from operations, and available credit facilities.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Through our Kirkland's and Kirkland's Home brands acquisition, we believe this addition strengthens our presence in key categories that drive both traffic and margin, while providing a flexible store base that can be integrated into our broader platform.
Current report — wording carried from elsewhere
The $7.6 million favorable change in other income (expense), net for the three months ended June 30, 2026, as compared to the same period in 2025, was primarily attributable to a $6.6 million decrease in loss recognized from our equity method securities and a $0.7 million loss from TBHC promissory convertible notes.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Customer service and merchant fees decreased by $0.3 million for the three months ended March 31, 2026, compared to the prior period. The decrease was primarily driven by a $1.1 million decrease in customer service outsourced labor, partially offset by a $0.8 million increase in credit card costs, primarily due to increased order volume.
Previous report — wording carried elsewhere
Our tax provision and rate differs from the statutory federal income tax rate of 21% primarily due to year-to-date losses on our retail operations for which tax benefits are limited.