Bob's Discount Furniture, Inc.

Previous wording

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide readers of our condensed consolidated financial statements with the perspectives of management. MD&A presents in narrative form information regarding our financial condition, results of operations, liquidity and certain other factors that may affect our future results. This is intended to allow the readers of this report to obtain a comprehensive understanding of our businesses, strategies, current trends and future prospects. MD&A should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this report on Form 10-Q and in the audited consolidated financial statements and thereto as of and for the year ended December 28, 2025 and the related Management's Discussion and Analysis of Financial Condition and Results of Operations, included in our 2025 Annual Report. Some of the information included in MD&A or set forth elsewhere in this Quarterly Report on Form 10-Q includes forward-looking statements that involve risks and uncertainties. You should review the “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors” sections included in our 2025 Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our actual results may differ materially from those contained in or implied by any forward-looking statements.

Current wording

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide readers of our condensed consolidated financial statements with the perspectives of management. MD&A presents in narrative form information regarding our financial condition, results of operations, liquidity and certain other factors that may affect our future results. This is intended to allow the readers of this report to obtain a comprehensive understanding of our businesses, strategies, current trends and future prospects. MD&A should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this report on Form 10-Q and in the audited consolidated financial statements and notes thereto as of and for the year ended December 28, 2025 and the related Management's Discussion and Analysis of Financial Condition and Results of Operations, included in our 2025 Annual Report. Some of the information included in MD&A or set forth elsewhere in this Quarterly Report on Form 10-Q includes forward-looking statements that involve risks and uncertainties. You should review the “Cautionary Note Regarding Forward-Looking Statements” section included in this Quarterly Report on Form 10-Q and the “Item 1A. Risk Factors” sections included in our 2025 Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our actual results may differ materially from those contained in or implied by any forward-looking statements.

Previous wording

Bob’s Discount Furniture is a rapidly growing, nationally proven omnichannel retailer of value home furnishings with 218 showrooms as of June 28, 2026 across 27 U.S. states. We offer quality, stylish products at everyday low prices below our value-oriented furniture competitors’ lowest promoted prices. Our value proposition is made possible by our curated merchandising strategy, with SKU counts approximately one-third narrower than value-oriented furniture competitors, longstanding sourcing relationships and efficient supply chains.

Current wording

Bob’s Discount Furniture is a rapidly growing, nationally proven omnichannel retailer of value home furnishings with 229 showrooms as of September 27, 2026 across 28 U.S. states. We offer quality, stylish products at everyday low prices below our value-oriented furniture competitors’ lowest promoted prices. Our value proposition is made possible by our curated merchandising strategy, with SKU counts approximately one-third narrower than value-oriented furniture competitors, longstanding sourcing relationships and efficient supply chains.

Previous wording

We have a proven, profitable and portable store model that has produced consistent financial returns across vintages, geographic regions and population densities. Nearly all of our stores were profitable on a four-wall basis in fiscal year 2025 and we expect new stores to achieve average unit volumes (“AUVs”) of $9.0 million, cash-on-cash returns exceeding 80% by their fifth year of operation, with returns exceeding 60% by year two and a payback period of approximately two years. We believe our business model and new store unit economics, plus the expansive and fragmented home furnishings industry, provides us with an opportunity to expand our store base in both existing and new geographies to over 500 stores by 2035. Our ability to open profitable new stores depends on multiple factors, including our ability to identify suitable markets and sites, negotiate leases with acceptable terms, support new locations with qualified managers and achieve brand awareness in new markets. For further information see “Item 1A. Risk Factors—Risks Related to Our Business”in our 2025 Annual Report.

Current wording

We have a proven, profitable and portable store model that has produced consistent financial returns across vintages, geographic regions and population densities. Nearly all of our stores remained profitable on a four-wall basis in the nine-months ended September 27, 2026 and we expect new stores to achieve average unit volumes (“AUVs”) of $9.0 million, cash-on-cash returns exceeding 80% by their fifth year of operation, with returns exceeding 60% by year two and a payback period of approximately two years. We believe our business model and new store unit economics, plus the expansive and fragmented home furnishings industry, provides us with an opportunity to expand our store base in both existing and new geographies to over 500 stores by 2035. Our ability to open profitable new stores depends on multiple factors, including our ability to identify suitable markets and sites, negotiate leases with acceptable terms, support new locations with qualified managers and achieve brand awareness in new markets. For further information see “Item 1A. Risk Factors—Risks Related to Our Business”in our 2025 Annual Report.

Previous wording

During the second quarter of fiscal year 2026, we continued to make progress to support our key long-term growth strategies. Accomplishments within the quarter include the following:

Current wording

During the third quarter of fiscal year 2026, we continued to make progress to support our key long-term growth strategies. Accomplishments within the quarter include the following:

Previous wording

•opening four new stores and expanding our footprint into South Carolina, our 27th state; and

Current wording

•opening 11 new stores and expanding our footprint into Tennessee, our 28th state;

Previous wording

•delivering comparable sales growth of 2.3% through increases in average order value (“AOV”) and conversion.

Current wording

•delivering comparable sales growth of 3.8% through increases in average order value (“AOV”) and eCommerce traffic; and

Previous wording

In February 2026, the U.S. Supreme Court ruled that many of the tariffs recently imposed by the U.S. Government exceeded its statutory authority, thereby invalidating many, but not all, of such tariffs. The U.S. presidential administration has indicated that it may seek to reinstate all or a portion of these tariffs under alternative legal authorities or mechanisms. These rulings have also introduced uncertainty regarding the timing and ultimate realization of potential refunds of tariffs previously paid, although U.S. Customs and Border Protection (“CBP”) has established a process to administer such refund claims. During the second quarter of fiscal year 2026, the Company received approval from the CBP for $45.1 million in

Current wording

In February 2026, the U.S. Supreme Court ruled that the tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) exceeded the President’s statutory authority. The ruling invalidated the affected IEEPA tariffs but did not invalidate tariffs imposed under other statutory authorities. The U.S. presidential administration has indicated that it may seek to reinstate all or a portion of these tariffs under alternative legal authorities or mechanisms. These developments have also introduced uncertainty regarding the timing and ultimate realization of potential refunds of tariffs previously paid, although U.S. Customs and Border Protection (“CBP”) has established a process to administer such refund claims. In the nine-month fiscal period ended September 27, 2026, the Company received approval from CBP for $46.4 million in IEEPA tariff refund claims. Of this amount, we recognized $4.9 million and $42.8 million of tariff refund claims related to inventory previously sold, which reduced costs of sales and favorably impacted gross profit in the three and nine-month fiscal periods ended September 27, 2026, respectively. Additionally, we recognized $1.5 million of related interest income in the nine-month fiscal period ended September 27, 2026. The tariff refunds and related interest income recognized during the three and nine-month fiscal periods ended September 27, 2026 materially affected the comparability of our results of operations relative to prior periods and are not indicative of future period results.

Previous wording

In April 2026, the President issued a proclamation that reduced the tariff rate on steel and aluminum derivative products from 50% to 25%, while modifying the duty application from applying only the metal content in metal-containing products to applying the duty to the full customs value of the imported product. The proclamation excluded certain products, including the Company's covered products from the Section 232 steel and aluminum duties; as a result, the Company's affected products became subject to the temporary 10% surcharge imposed under Section 122. Effective July 24, 2026, the Section 122 temporary surcharge expired and affected products are now subject to tariffs under Section 301 at rates generally ranging from 10% to 12.5%, depending on country of origin. We will continue to monitor developments related to trade policy, tariffs and tariff refund claims, evaluate their impact on the Company and make appropriate sourcing, pricing and other operational decisions as appropriate to manage the potential impact on our financial condition, results of operations and cash flows.

Current wording

In April 2026, the President issued a proclamation modifying tariffs imposed under Section 232 of the Trade Expansion Act of 1962, as amended (the “TEA”) on certain steel and aluminum derivative products, including changing the basis for calculating applicable duties to the full customs value of the imported product rather than solely the metal content. The proclamation excluded certain products, including the Company's covered products from the TEA Section 232 steel and aluminum duties; as a result, the Company's affected products became subject to the temporary 10% surcharge imposed under TEA Section 122. Effective July 24, 2026, the TEA Section 122 temporary surcharge expired and affected products became subject to applicable additional tariffs imposed under Section 301 of the TEA relating to forced labor, at rates generally ranging from 10% to 12.5%, depending on country of origin. The Company will continue to monitor developments in trade policy, including ongoing investigations that could result in additional tariffs or other trade measures affecting countries from which we source merchandise. The Company will evaluate these developments and make appropriate sourcing, pricing and other operational decisions as appropriate to manage the potential impact on our financial condition, results of operations and cash flows.

Previous wording

Since late February 2026, the conflict in Iran has resulted in heightened volatility in fuel prices and geopolitical uncertainty. Geopolitical events, increased fuel prices and geopolitical uncertainty, including changes in U.S. tariff policy, has in the past resulted in supply chain disruptions, increased costs and impacts on consumer spending. Such events could materially increase the cost and reduce or delay the supply of our products and impacted discretionary consumer spending, which may adversely affect our business, financial condition, results of operations, liquidity and stock price. See “Item 1A. Risk Factors” in our 2025 Annual Report, including the risk factor titled“Our business, results of operations and financial condition may be adversely affected by global economic conditions and the effect of economic pressures, including inflation, and other business factors on discretionary consumer spending and consumer preferences.” We will continue to monitor developments in, and the impacts of, such conflicts and geopolitical events and uncertainties and evaluate their impact on the Company, and make appropriate sourcing and pricing decisions in an effort to minimize any impacts on our financial condition and results of operations.

Current wording

Since late February 2026, the conflict in Iran has resulted in heightened volatility in fuel prices and geopolitical uncertainty. Geopolitical events, increased raw material costs, fuel prices and geopolitical uncertainty, including changes in U.S. tariff policy, have resulted in increased freight and distribution costs and have in the past resulted in supply chain disruptions and impacts on consumer spending. Ongoing geopolitical events may further materially increase the cost and reduce or delay the supply of our products and impact discretionary consumer spending, which may adversely affect our business, financial condition, results of operations, liquidity and stock price. See “Item 1A. Risk Factors” in our 2025 Annual Report, including the risk factor titled“Our business, results of operations and financial condition may be adversely affected by global economic conditions and the effect of economic pressures, including inflation, and other business factors on discretionary consumer spending and consumer preferences.” We will continue to monitor developments in and the impacts of such conflicts and geopolitical events and uncertainties, evaluate their impact on the Company, and make appropriate sourcing and pricing decisions in an effort to minimize any impacts on our financial condition and results of operations.

Previous wording

We consider a variety of performance and financial measures in assessing the performance of our business. In addition to our results determined in accordance with U.S. GAAP, we regularly review key performance indicators (“KPIs”) and certain non-GAAP financial measures, including adjusted gross profit, adjusted net income and adjusted earnings before interest, tax expense/(benefit), depreciation and amortization (“adjusted EBITDA”), to evaluate our business, measure our performance, identify trends in our business, prepare projections and make strategic decisions. We believe that these non-GAAP financial measures and KPIs are useful to our investors as they present an informative supplemental view of our results from period to period by removing the effect of non-recurring items. The non-GAAP financial measures and KPIs presented herein are specific to us and may not be comparable to similar measures disclosed by other companies because of differing methods used by other companies in calculating them. The key measures we use to determine how our business is performing are: net revenues, gross profit and gross margin, SG&A, operating income, net income, comparable sales growth, number of new stores, number of stores, adjusted gross profit, adjusted net income and adjusted EBITDA.

Current wording

We consider a variety of performance and financial measures in assessing the performance of our business. In addition to our results determined in accordance with U.S. GAAP, we regularly review key performance indicators (“KPIs”) and certain non-GAAP financial measures, including adjusted gross profit, adjusted net income and adjusted earnings before interest, tax expense/(benefit), depreciation and amortization (“adjusted EBITDA”), to evaluate our business, measure our performance, identify trends in our business, prepare projections and make strategic decisions. We believe that these non-GAAP financial measures and KPIs are useful to our investors as they present an informative supplemental view of our results from period to period by removing the effect of items not indicative of ongoing business operations and performance. The non-GAAP financial measures and KPIs presented herein are specific to us and may not be comparable to similar measures disclosed by other companies because of differing methods used by other companies in calculating them. The key measures we use to determine how our business is performing are: net revenues, gross profit and gross margin, SG&A, operating income, net income, comparable sales growth, adjusted comparable sales growth, number of new stores, number of stores, adjusted gross profit, adjusted net income and adjusted EBITDA.

Previous wording

We recognize revenue when merchandise is transferred or services are provided to the customer. This primarily occurs when inventory is delivered and accepted by the customer and also occurs when inventory is purchased and picked up at a retail store or distribution center. The revenue from delivery and the sale of our third-party product protection plan, Goof Proof, net of costs, is recognized at the time of the delivery of the related merchandise to the customer. Net revenues are presented net of returns and sales tax.

Current wording

We recognize revenue when merchandise is transferred or services are provided to the customer. This primarily occurs when inventory is delivered and accepted by the customer and also occurs when inventory is purchased and picked up at a retail store or distribution center. The revenue from delivery and the sale of our third-party product protection plan, Goof

Previous wording

Adjusted net income is defined as net income less items that are not indicative of the operating performance of the business, including, but not limited to, IEEPA tariff refunds and related interest income, restructuring charges, insurance recoveries, gains on hedge accounting de-designation of interest rate cap, gains on sale of Connecticut income tax credits, gains and losses on disposal of fixed assets, impairment of long-lived assets, senior executive termination benefits, management fee and other expenses and income not indicative of ongoing business operations and performance.

Current wording

Adjusted net income is defined as net income less items that are not indicative of the operating performance of the business, including, but not limited to, IEEPA tariff refunds and related interest income, restructuring charges, insurance recoveries, gains on hedge accounting de-designation of interest rate cap, gains and losses on disposal of fixed assets, impairment of long-lived assets, senior executive termination benefits, management fee and other expenses and income not indicative of ongoing business operations and performance.

Previous wording

We define EBITDA as net income before interest expense, interest income, income tax expense/(benefit), and depreciation and amortization expenses. Adjusted EBITDA represents EBITDA as further adjusted for items that are not indicative of the operating performance of the business, including but not limited to, stock-based compensation expense, IEEPA tariff refunds, restructuring charges, insurance recoveries, gains on hedge accounting de-designation of interest rate cap, gains on sale of Connecticut income tax credits, gains and losses on disposal of fixed assets, impairment of long lived assets, senior executive termination benefits, management fee and other expenses or income not indicative of ongoing business operations and performance.

Current wording

We define EBITDA as net income before interest expense, interest income, income tax expense/(benefit), and depreciation and amortization expenses. Adjusted EBITDA represents EBITDA as further adjusted for items that are not indicative of the operating performance of the business, including but not limited to, stock-based compensation expense, IEEPA tariff refunds, restructuring charges, insurance recoveries, gains on hedge accounting de-designation of interest rate cap, gains and losses on disposal of fixed assets, impairment of long lived assets, senior executive termination benefits, management fee and other expenses or income not indicative of ongoing business operations and performance.

Previous wording

Adjusted net income and adjusted EBITDA are non-GAAP financial measures and should not be considered as alternatives to net income as a measure of financial performance or any other performance measure derived in accordance with GAAP, and they should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating adjusted net income and adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. There can be no assurance that we will not modify the presentation of adjusted net income and adjusted EBITDA, and any such modification may be material. Our presentation of adjusted net income and adjusted EBITDA should not be construed to imply that our future results will be unaffected by any such adjustments. In addition, other companies, including companies in our industry, may not calculate adjusted net income and adjusted EBITDA at all or may calculate adjusted net income and adjusted EBITDA differently and accordingly, are not necessarily comparable to similarly entitled measures of other companies, which reduces the usefulness of adjusted net income and adjusted EBITDA as tools for comparison.

Current wording

Adjusted net income and adjusted EBITDA are non-GAAP financial measures and should not be considered as alternatives to net income as a measure of financial performance or any other performance measure derived in accordance with GAAP, and they should not be construed as an inference that our future results will be unaffected by items not indicative of ongoing business operations and performance. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating adjusted net income and adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. There can be no assurance that we will not modify the presentation of adjusted net income and adjusted EBITDA, and any such modification may be material. Our presentation of adjusted net income and adjusted EBITDA should not be construed to imply that our future results will be unaffected by any such adjustments. In addition, other companies, including companies in our industry, may not calculate adjusted net income and adjusted EBITDA at all or may calculate adjusted net income and adjusted EBITDA differently and accordingly, are not necessarily comparable to similarly entitled measures of other companies, which reduces the usefulness of adjusted net income and adjusted EBITDA as tools for comparison.

Previous wording

Net revenues increased $50.0 million or 8.8%, in the three months ended June 28, 2026 compared to the corresponding prior year period. Our retail channel increased $29.2 million, or 6.0%, and our eCommerce channel increased $20.8 million, or 24.1% for the three months ended June 28, 2026 compared to the corresponding prior year period. The increase in total net revenues was primarily due to non-comparable sales of $41.0 million and comparable sales growth.

Current wording

Net revenues increased $63.5 million or 10.3%, in the three months ended September 27, 2026 compared to the corresponding prior year period. Our retail channel increased $37.5 million, or 7.2%, and our eCommerce channel increased $26.0 million, or 27.8% for the three months ended September 27, 2026 compared to the corresponding prior year period. The increase in total net revenues was primarily due to non-comparable sales of $52.7 million and comparable sales growth.

Previous wording

Comparable sales increased 2.3% in the three months ended June 28, 2026, predominately driven by increases in AOV and higher conversion, partially offset by lower in-store traffic.

Current wording

Comparable sales increased 3.8% in the three months ended September 27, 2026, predominately driven by higher AOV and increased eCommerce traffic. These improvements were partially offset by lower in-store traffic.

Previous wording

Gross profit increased $74.6 million or 14.9% in the six months ended June 28, 2026 compared to the corresponding prior year period, primarily driven by $37.9 million in IEEPA tariff refunds and the impact of higher net revenues partially offset by higher freight costs.

Current wording

Gross profit increased $32.2 million or 11.3% in the three months ended September 27, 2026 compared to the corresponding prior year period. This increase was primarily driven by the impact of higher net revenues and $4.9 million in IEEPA tariff refunds, partially offset by higher inventory and fuel-related costs and increased tariffs.

Previous wording

Gross margin increased to 51.5% in the three months ended June 28, 2026, which is inclusive of $37.9 million in IEEPA tariff refunds discussed above. Excluding the tariff refunds, adjusted gross margin was 45.4% compared to 46.4% in the corresponding prior year period. The decrease was primarily due to higher freight costs as discussed above, partially offset by favorable product mix shift into the “Better” product category and, to a lesser extent, the “Best” product category relative to historical levels, as well as higher protection plan and delivery margins.

Current wording

Gross margin increased to 46.4% in the three months ended September 27, 2026, which is inclusive of $4.9 million in IEEPA tariff refunds discussed above. Excluding the tariff refunds, adjusted gross margin was 45.7% compared to 46.0% in the corresponding prior year period. The decrease was primarily due to higher inventory and fuel-related costs and increased tariffs, partially offset by favorable product mix shift into the “Best” product category relative to historical levels, higher delivery margins and selective pricing actions.

Previous wording

SG&A increased $39.5 million or 9.2% in the six months ended June 28, 2026 compared to the corresponding prior year period, primarily due to increases in payroll-related expenses of $11.5 million related to new store growth, higher occupancy costs of approximately $11.4 million related to new stores and increases in rent in existing stores, growth in marketing spend of $10.8 million, and an increase in depreciation expense of $3.6 million. Additionally contributing to higher SG&A was a $2.0 million fee associated with the termination of our advisory agreement with Bain Capital upon consummation of our IPO.

Current wording

SG&A increased $17.7 million or 7.6% in the three months ended September 27, 2026 compared to the corresponding prior year period, primarily due to increases in payroll-related expenses of $6.1 million related to new store growth, higher occupancy costs of approximately $5.4 million related to new stores and increases in rent in existing stores, growth in marketing spend of $5.4 million and an increase in depreciation expense of $1.8 million, partially offset by lower incentive compensation compared to elevated levels in the prior-year period.

Previous wording

SG&A as a percentage of revenue of 37.9% in the three months ended June 28, 2026 increased slightly compared to 37.7% in the corresponding prior year period. The increase was primarily driven by incremental marketing and occupancy expense associated with new store growth, particularly greenfield expansion, and was partially offset by efficiencies at existing stores.

Current wording

SG&A as a percentage of revenue of 36.7% in the three months ended September 27, 2026 decreased compared to 37.7% in the corresponding prior year period. The decrease was primarily driven by broad-based expense leverage on higher sales performance and lower incentive compensation as discussed above, partially offset by higher occupancy expense for existing stores and the timing of new store openings in the current year, as well as incremental marketing spend associated with greenfield market expansion.

Previous wording

Pre-opening expenses increased $1.9 million in the six months ended June 28, 2026 compared to the corresponding prior year period driven by the timing of new store openings in the current year.

Current wording

Pre-opening expenses increased $0.1 million in the three months ended September 27, 2026 compared to the corresponding prior year period driven by the timing of new store openings, partially offset by lower pre-opening expenses associated with new distribution centers.

Previous wording

Interest income in the three months ended June 28, 2026 increased $1.4 million compared to the corresponding prior year period, primarily related to interest earned on duties previously paid under IEEPA.

Current wording

Interest income in the three months ended September 27, 2026 decreased $0.2 million compared to the corresponding prior year period, primarily related to income earned on lower balances in our money market funds.

Previous wording

Income tax expense in the three months ended June 28, 2026 increased $9.2 million compared to the corresponding prior year period, primarily due to higher pre-tax earnings. The effective income tax rate of 27.3% for the three months ended June 28, 2026 increased from 26.2% in the corresponding prior year period, primarily due to higher state tax costs and an increase in non-deductible executive compensation expense resulting from the Company's transition to a publicly traded company in 2026 and the application of the executive compensation deduction limitations under applicable U.S. tax laws.

Current wording

Income tax expense in the three months ended September 27, 2026 increased $3.3 million compared to the corresponding prior year period, primarily due to higher pre-tax earnings. The effective income tax rate of 27.1% for the three months ended September 27, 2026 decreased from 27.3% in the corresponding prior year period, primarily driven by an increase in research and development tax credits, partially offset by an increase in non-deductible executive compensation expense resulting from the Company's transition to a publicly traded company in 2026 and the application of the executive compensation deduction limitations under applicable U.S. tax law.

Previous wording

Net revenues increased $95.4 million or 8.7% in the six months ended June 28, 2026 compared to the corresponding prior year period. Our retail channel increased $63.4 million, or 6.8%, and our eCommerce channel increased $32.0 million, or 18.9% for the six months ended June 28, 2026 compared to the corresponding prior year period. The increase in total net revenues was primarily due to non-comparable sales of $84.3 million and comparable sales growth discussed below.

Current wording

Net revenues increased $158.9 million or 9.2% in the nine months ended September 27, 2026 compared to the corresponding prior year period. Our retail channel increased $100.9 million, or 6.9%, and our eCommerce channel increased $58.0 million, or 22.1% for the nine months ended September 27, 2026 compared to the corresponding prior year period. The increase in total net revenues was primarily due to non-comparable sales of $137.0 million and comparable sales growth discussed below.

Previous wording

Comparable sales increased 1.8% in the six months ended June 28, 2026, predominately driven by higher AOV and conversion, partially offset by lower in-store traffic.

Current wording

Comparable sales increased 2.5% in the nine months ended September 27, 2026, predominately driven by higher AOV and increased eCommerce traffic. These improvements were partially offset by lower in-store traffic.

Previous wording

Gross margin increased to 48.1% in the six months ended June 28, 2026, which is inclusive of $37.9 million in IEEPA tariff refunds. Excluding the tariff refunds, adjusted gross margin was 44.9% compared to 45.4% in the corresponding prior year period. The decrease was primarily due to higher freight costs, partially offset by customer preference for the “Better” product category mix relative to historical levels, as well as higher protection plan and delivery margins.

Current wording

Gross margin increased to 47.5% in the nine months ended September 27, 2026, which is inclusive of $42.8 million in IEEPA tariff refunds. Excluding the tariff refunds, adjusted gross margin was 45.2% compared to 45.6% in the corresponding prior year period. The decrease was primarily due to higher inventory and fuel-related costs and increased tariffs, partially offset by customer preference for the “Best” product category mix relative to historical levels, as well as higher protection plan and delivery margins and selective pricing actions.

Previous wording

SG&A increased $20.0 million or 9.3% in the three months ended June 28, 2026 compared to the corresponding prior year period, primarily due to increases in payroll-related expenses of $5.6 million related to new store growth, higher occupancy costs of approximately $5.4 million related to new stores and increases in rent in existing stores, and growth in marketing spend of $6.0 million.

Current wording

SG&A increased $57.3 million or 8.6% in the nine months ended September 27, 2026 compared to the corresponding prior year period, primarily due to increases in payroll-related expenses of $17.7 million related to new store growth, higher occupancy costs of approximately $16.8 million related to new stores and increases in rent in existing stores, growth in marketing spend of $16.1 million, and an increase in depreciation expense of $5.3 million.

Previous wording

SG&A as a percentage of revenue increased slightly to 39.3% in the six months ended June 28, 2026 compared to 39.1% in the corresponding prior year period due to incremental marketing and occupancy expense associated with new stores, particularly greenfield market expansion, and the $2.0 million termination fee associated with the advisory agreement with Bain Capital, substantially offset by efficiencies at existing stores.

Current wording

SG&A as a percentage of revenue decreased to 38.3% in the nine months ended September 27, 2026 compared to 38.6% in the corresponding prior year period due to broad-based expense leverage on higher sales performance, partially offset by incremental marketing and occupancy expense associated with greenfield market expansion.

Previous wording

In the first quarter of fiscal year 2025, the Company identified efficiencies to optimize overhead costs resulting in workforce reductions at the corporate headquarters. Restructuring costs of $0.3 million were recognized in the six month fiscal period ended June 29, 2025 for these workforce reductions. No significant restructuring actions were initiated during the six-month fiscal period ended June 28, 2026.

Current wording

In the first quarter of fiscal year 2025, the Company identified efficiencies to optimize overhead costs resulting in workforce reductions at the corporate headquarters. Restructuring costs of $0.3 million were recognized in the nine-month fiscal period ended September 28, 2025 for these workforce reductions. No significant restructuring actions were initiated during the nine-month fiscal period ended September 27, 2026.

Previous wording

In the six-month fiscal periods ended June 28, 2026 and June 29, 2025, the Company received $0.7 million and $4.5 million, respectively, in insurance recoveries for lost profits associated with an information technology system outage and the related interruption of our business that occurred at the end of September 2024.

Current wording

In the nine-month fiscal periods ended September 27, 2026 and September 28, 2025, the Company received $0.7 million and $4.5 million, respectively, in insurance recoveries for lost profits associated with an information technology system outage and the related interruption of our business that occurred at the end of September 2024.

Previous wording

Interest expense in the six-month fiscal period ended June 28, 2026 increased $15.1 million compared to the corresponding prior year period driven by the acceleration of $10.7 million in debt issuance costs in connection with the pay down of the Term Loan and interest expense associated with higher average outstanding borrowings, partially offset by a lower weighted average interest rate.

Current wording

Interest expense in the nine-month fiscal period ended September 27, 2026 increased $15.6 million compared to the corresponding prior year period driven by the acceleration of $10.7 million in debt issuance costs in connection with the pay down of the Term Loan, interest expense associated with higher average outstanding borrowings, and higher finance lease interest resulting from an expanded transportation fleet and financing costs associated with a distribution center, partially offset by a lower weighted average interest rate.

Previous wording

Interest income in the six-month fiscal period ended June 28, 2026 increased $1.2 million compared to the corresponding prior year period, primarily related to interest earned on duties previously paid under IEEPA.

Current wording

Interest income in the nine-month fiscal period ended September 27, 2026 increased $0.9 million compared to the corresponding prior year period, primarily related to interest earned on duties previously paid under IEEPA, partially offset by income earned on lower balances in our money market funds.

Previous wording

Other income, net in the six-month fiscal period ended June 28, 2026 increased $0.7 million compared to the corresponding prior year period, primarily due a bankruptcy settlement associated with a former vendor, partially offset by the absence of income earned on our interest rate cap which matured in the third quarter of fiscal year 2025.

Current wording

Other income, net in the nine-month fiscal period ended September 27, 2026 decreased $0.3 million compared to the corresponding prior year period, primarily due to costs associated with a litigation settlement and the absence of income earned on our interest rate cap which matured in the third quarter of fiscal year 2025, partially offset by a bankruptcy settlement associated with a former vendor.

Previous wording

Income tax expense increased $4.3 million for the six-month fiscal period ended June 28, 2026, compared to the corresponding prior year period, primarily due to higher pre-tax income. The effective tax rate of 26.2% for the six-month fiscal period ended June 28, 2026 remained flat when compared to the corresponding prior year period, primarily driven by an increase in state tax costs and an increase in non-deductible executive compensation resulting from the Company's transition to a publicly traded company in 2026 and the application of the executive compensation deduction limitations under applicable U.S. tax laws, offset by a larger excess tax benefit from stock-based compensation and an increase in research and development tax credits.

Current wording

Income tax expense increased $7.6 million for the nine-month fiscal period ended September 27, 2026, compared to the corresponding prior year period, primarily due to higher pre-tax income. The effective tax rate of 26.6% for the nine-month fiscal period ended September 27, 2026 remained flat when compared to the corresponding prior year period, primarily driven by an increase in research and development tax credits and a larger excess tax benefit from stock-based compensation, offset by an increase in non-deductible executive compensation resulting from the Company's transition to a publicly traded company in 2026 and the application of the executive compensation deduction limitations under applicable U.S. tax laws.

Previous wording

(1)Represents the IEEPA tariff refunds recognized in the three and six-month fiscal periods ended June 28, 2026. See “Note 2, Summary of Significant Accounting Policies” for further information on IEEPA tariff refunds.

Current wording

(1)Represents the IEEPA tariff refunds recognized in the three and nine-month fiscal periods ended September 27, 2026. See “Note 2, Summary of Significant Accounting Policies” for further information on IEEPA tariff refunds.

Previous wording

(1)Represents the IEEPA tariff refunds and $1.5 million in related interest income recognized in the three and six-month fiscal periods ended June 28, 2026. See “Note 2, Summary of Significant Accounting Policies” for further information on IEEPA tariff refunds.

Current wording

(1)Represents the IEEPA tariff refunds and related interest income recognized in the three and nine-month fiscal periods ended September 27, 2026. Interest income related to the IEEPA tariff refund claims was not material for the three-month fiscal period ended September 27, 2026. Interest income related to the IEEPA tariff refund claims was $1.5 million in the nine-month fiscal period ended September 27, 2026. See “Note 2, Summary of Significant Accounting Policies” for further information on IEEPA tariff refunds.

Previous wording

(2)Represents the acceleration of debt issuance costs in connection with the repayment of the Term Loan in the six-month fiscal period ended June 28, 2026. See “Note 3, Long-Term Debt” for further information on the Term Loan.

Current wording

(2)Represents the acceleration of debt issuance costs in connection with the repayment of the Term Loan in the nine-month fiscal period ended September 27, 2026. See “Note 3, Long-Term Debt” for further information on the Term Loan.

Previous wording

(3)Represents management fees paid in accordance with our Advisory Agreement with our controlling stockholder, which terminated in connection with the IPO. Included in the activity for the six-month fiscal period ended June 28, 2026 is a termination fee of $2.0 million. See “Item 13. Certain Relationships, Related Transactions and Director Independence—Advisory Agreement” in the 2025 Annual Report for further information on the Advisory Agreement.

Current wording

(3)Represents management fees paid in accordance with our Advisory Agreement with our controlling stockholder, which terminated in connection with the IPO. Included in the activity for the nine-month fiscal period ended September 27, 2026 is a termination fee of $2.0 million. See “Item 13. Certain Relationships, Related Transactions and Director Independence—Advisory Agreement” in the 2025 Annual Report for further information on the Advisory Agreement.

Previous wording

(5)Other (income) expenses, net represents income and costs that are not indicative of ongoing business operations and performance, including, but not limited to, third-party professional fees related to the IPO, litigation matters outside the ordinary course of business, bankruptcy settlements, and senior executive termination benefits.

Current wording

(5)Other expenses, net represents income and costs that are not indicative of ongoing business operations and performance, including, but not limited to, third-party professional fees related to the IPO, a litigation settlement, bankruptcy settlements, and senior executive termination benefits.

Previous wording

(6)Represents the IEEPA tariff refunds excluding interest income recognized in the three and six-month fiscal periods ended June 28, 2026. See “Note 2, Summary of Significant Accounting Policies” for further information on IEEPA tariff refunds.

Current wording

(6)Represents the IEEPA tariff refunds excluding interest income recognized in the three and nine-month fiscal periods ended September 27, 2026. See “Note 2, Summary of Significant Accounting Policies” for further information on IEEPA tariff refunds.