A.K.A. BRANDS HOLDING CORP.

Previous wording

•Culture Kings, an Aust ralia-based premium online retailer of streetwear apparel, footwear, headwear and accessories. The brand targets male consumers between the ages of 18 and 35 who are fashion conscious, highly social and digitally focused.

Current wording

•Culture Kings, a premium online retailer of streetwear apparel, footwear, headwear and accessories. The brand targets male consumers between the ages of 18 and 35 who are fashion conscious, highly social and digitally focused.

Previous wording

•mnml, a Los Angeles-based streetwear brand that offers competitively priced on-trend wardrobe staples. The brand targets male consumers between the ages of 18 and 35.

Current wording

•mnml, a streetwear brand that offers competitively priced, on-trend wardrobe staples. The brand targets male consumers between the ages of 18 and 35.

Previous wording

The following table presents a reconciliation of Free Cash Flow to net cash (used in) provided by operating activities, the most directly comparable financial measure prepared in accordance with GAAP:

Current wording

The following table presents a reconciliation of Free Cash Flow to net cash used in operating activities, the most directly comparable financial measure prepared in accordance with GAAP:

Previous wording

For the nine months ended September 30, 2024, net cash (used in) provided by operating activities decreased by $24.4 million compared to net cash (used in) provided by operating activities for the nine months ended September 30, 2023. This was attributable primarily to more cash used to purchase inventory in the current period, as compared to the prior period, to support growth in the U.S., partially offset by timing of payments.

Current wording

For the three months ended March 31, 2025, net cash used in operating activities decreased by $5.8 million compared to net cash used in operating activities for the three months ended March 31, 2024. This was attributable primarily to more sell through of inventory in the current period, as compared to the prior period, as net sales grew by 10%.

Previous wording

For the nine months ended September 30, 2024, Free Cash Flow decreased by $26.6 million compared to Free Cash Flow for the nine months ended September 30, 2023. This was attributable primarily to more cash used to purchase inventory in the current year and additional capital expenditures related to new stores, as compared to the prior year, to support growth in the U.S., partially offset by the timing of payments.

Current wording

For the three months ended March 31, 2025, Free Cash Flow increased by $3.1 million compared to Free Cash Flow for the three months ended March 31, 2024. This was attributable primarily to more sell through of inventory in the current period, as compared to the prior period, partially offset by additional capital expenditures related to new stores, to support growth in the U.S.

Previous wording

The macroeconomic environment in which we operate impacts consumer behavior and may have a significant impact on our business. While positive conditions in the economy generally promote customer spending on our sites and in our stores, any economic weakness can result in a reduction of customer spending and have a significant negative impact on our results of operations. Macroeconomic factors that could cause significant negative impacts on our results of operations include, but are not limited to: inflationary pressures on consumers globally and on our supply chain; elevated interest rates; employment rates; business conditions; changes in the housing market; changes in stock markets; adverse developments affecting the financial services industry; the availability of credit, both for us and for our customers; foreign currency exchange rates; fuel, energy and raw materials costs; supply chain challenges; and wars and geopolitical tensions.

Current wording

The macroeconomic environment in which we operate impacts consumer behavior and may have a significant impact on our business. While positive conditions in the economy generally promote customer spending on our sites and in our stores, any economic weakness can result in a reduction of customer spending and have a significant negative impact on our results of operations. Specifically, many of our products may be viewed as discretionary items rather than necessities. Consequently, our results of operations tend to be sensitive to changes in the macroeconomic environment that impact consumer discretionary spending. Macroeconomic factors that could cause significant negative impacts on our results of operations include, but are not limited to: inflationary pressures on consumers globally and on our supply chain; elevated interest rates; employment rates; business conditions; changes in the housing market; changes in stock markets; adverse developments affecting the financial services industry; the availability of credit, both for us and for our customers; foreign currency exchange rates; fuel, energy and raw materials costs; supply chain challenges; wars and geopolitical tensions; and the effects of tariffs and other trade policies. For example, since February 2025, the U.S. administration has increased the aggregate tariff and duty levels for imported Chinese goods to greater than 150%, subject to certain exceptions, and additional tariff and/or duty increases could be imposed as trade tensions between the two countries continue to heighten. Tariffs on Chinese goods have an acute effect on our cost of goods sold, as a substantial majority of our products are imported from China. While we are currently evaluating measures to mitigate the effect of the tariffs and duties on our results of operations, including sourcing products from sources located outside of China and proportional increases to the prices of our products, there are countervailing considerations that may prevent us from mitigating the effects, such as the cost of goods from sources located outside of China and customer attraction and retention considerations. Further, sourcing products from new suppliers will result in significant expenses, including brokerage fees, the purchase prices for designs owned by our existing suppliers and termination fees for our arrangements with our existing suppliers, and may result in higher costs of goods, all of which could reduce our gross margin and otherwise materially and adversely affect our results of operations. Additionally, the products we purchase from our new suppliers may be of lesser quality as compared to the products we purchase from our current suppliers and shipping times may be longer, each of which may have a material and adverse effect on our operations and, therefore, our results of operations. We may experience inventory shortages while we identify, transition to and onboard new suppliers, which may lead to decreased sales and ma…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Our international operations have provided and are expected to continue to provide a significant portion of our Company’s net sales and operating income. As a result, our Company’s net sales and operating income will continue to be affected by changes in the U.S. dollar against international currencies, predominantly against the Australian dollar. In order to provide a framework for assessing the performance of our underlying business, excluding the effects of foreign currency rate fluctuations, we compare the percent change in the results from one period to another period in this Quarterly Report on Form 10-Q using a constant currency methodology wherein current and comparative prior period results for our operations reporting in currencies other than U.S. dollars are converted into U.S. dollars at constant exchange rates (i.e., the rates in effect on December 31, 2023, which was the last day of our prior fiscal year) rather than the actual exchange rates in effect during the respective periods. Such disclosure throughout our Management’s Discussion and Analysis of Financial Condition and Results of Operations will be described as “on a constant currency basis.” Volatility in currency exchange rates may impact the results, including net sales and operating income, of the Company in the future.

Current wording

Our international operations have provided and are expected to continue to provide a significant portion of our Company’s net sales and operating income. As a result, our Company’s net sales and operating income will continue to be affected by changes in the U.S. dollar against international currencies, predominantly against the Australian dollar. In order to provide a framework for assessing the performance of our underlying business, excluding the effects of foreign currency rate fluctuations, we compare the percent change in the results from one period to another period in this Quarterly Report on Form 10-Q using a constant currency methodology wherein current and comparative prior period results for our operations reporting in currencies other than U.S. dollars are converted into U.S. dollars at constant exchange rates (i.e., the rates in effect on December 31, 2024, which was the last day of our prior fiscal year) rather than the actual exchange rates in effect during the respective periods. Such disclosure throughout our Management’s Discussion and Analysis of Financial Condition and Results of Operations will be described as “on a constant currency basis.” Volatility in currency exchange rates may impact our results, including net sales and operating income, in the future.

Previous wording

Net sales increased by $9.1 million, or 6%, for the three months ended September 30, 2024 compared to the same period in 2023. The increase in net sales was primarily driven by a 6% increase in the number of orders we processed in the three months ended September 30, 2024 compared to the same period in 2023, which was primarily driven by growth in the U.S. across all sales channels. On a constant currency basis, net sales and average order value for the three months ended September 30, 2024 would have increased 5% and decreased 1%, respectively, compared to the same period in 2023.

Current wording

Net sales increased by $11.8 million, or 10%, for the three months ended March 31, 2025 as compared to the same period in 2024. The increase in net sales was primarily driven by a 9% increase in the number of orders we processed in the three months ended March 31, 2025 compared to the same period in 2024, which was primarily driven by growth in the U.S. across all sales channels, and a 1% increase in average order value in the three months ended March 31, 2025 compared to the same period in 2024. On a constant currency basis, net sales and average order value for the three months ended March 31, 2025 would have increased 12% and 3%, respectively, compared to the same period in 2024.

Previous wording

Cost of sales increased by $3.6 million, or 2%, for the nine months ended September 30, 2024 compared to the same period in 2023. This increase was primarily driven by the 5% increase in net sales in 2024, as compared to 2023, and the effect of growing wholesale and marketplace initiatives, partially offset by the impact from more full price selling and improved inventory position. The decrease in cost of sales as a percentage of net sales was primarily due to the impact from more full price selling and improved inventory position, partially offset by the effect of growing wholesale initiatives, as well as growing marketplace initiatives, which have a higher return rate than direct-to-consumer sales.

Current wording

Cost of sales increased by$3.8 million, or 7%, for the three months ended March 31, 2025 compared to the same period in 2024. This increase was primarily due to the 10% increase in net sales for the three months ended March 31, 2025, as compared to the same period in 2024, and the impact of growing wholesale initiatives, partially offset by the impact from incremental full price selling and improved inventory position. The decrease in cost of sales as a percentage of net sales was primarily due to the impact from incremental full price selling and improved inventory position, partially offset by the effect of growing wholesale initiatives.

Previous wording

Gross profit increased by $9.0 million, or 11%, for the three months ended September 30, 2024 compared to the same period in 2023. This increase was primarily due to the 6% increase in net sales for the three months ended September 30, 2024 and the impact from more full price selling and improved inventory position, partially offset by the effect of growing wholesale initiatives. Gross margin increased due to the impact from more full price selling and improved inventory position, partially offset by the effect of growing wholesale initiatives.

Current wording

Gross profit increased by $8.0 million, or 12%, for the three months ended March 31, 2025 compared to the same period in 2024. This increase was primarily due to the 10% increase in net sales for the three months ended March 31, 2025, as compared to the same period in 2024, and the impact from incremental full price selling and improved inventory position, partially offset by the effect of growing wholesale initiatives. Gross margin increased due to the impact from incremental full price selling and improved inventory position, partially offset by the effect of growing wholesale initiatives.

Previous wording

Selling expenses increased by $5.2 million, or 14%, for the three months ended September 30, 2024 compared to the same period in 2023. This increase was driven by the opening of additional stores, as well as the 6% increase in net sales for the three months ended September 30, 2024. The increase in selling expenses as a percentage of net sales was primarily due to the opening of additional stores.

Current wording

Selling expenses increased by $4.0 million, or 12%, for the three months ended March 31, 2025, as compared to the same period in 2024. This increase was driven by the opening of additional stores, as well as the 10% increase in net sales for the three months ended March 31, 2025, as compared to the same period in 2024. The increase in selling expenses as a percentage of net sales was primarily due to the opening of additional stores.

Previous wording

Marketing expenses increased by 4% for the three months ended September 30, 2024 compared to the same period in 2023. Marketing expenses as a percentage of net sales were flat in the third quarter compared to last year.

Current wording

Marketing expenses increased by 2% for the three months ended March 31, 2025, as compared to the same period in 2024, due to increased marketing spend compared to the same period in 2024. Marketing expenses as a percentage of net sales decreased due to higher net sales compared to last year.

Previous wording

General and administrative expenses increased by $3.2 million, or 13%, for the three months ended September 30, 2024 compared to the same period in 2023. This increase, as well as the increase in general and administrative expenses as a percentage of net sales, was primarily due to a $2.0 million accrual for a legal matter and higher incentive compensation expense.

Current wording

General and administrative expenses increased by $3.0 million, or 13%, for the three months ended March 31, 2025, as compared to the same period in 2024. This increase, as well as the increase in general and administrative expenses as a percentage of net sales, was primarily due to a $1.8 million increase in wages and incentive compensation expense, a $0.5 million increase in non-routine legal matters and a $0.4 million increase in professional fees.

Previous wording

Total other expense, net increased by $0.1 million, or 4%, for the three months ended September 30, 2024 compared to the same period in 2023, primarily due to the impact of changes in foreign currency exchange rates and lower interest expense from a reduction in our long-term debt balance.

Current wording

Total other expense, net increased by $0.1 million, or 5%, for the three months ended March 31, 2025 compared to the same period in 2024, primarily due to higher interest expense from an increase in our long-term debt balance.

Previous wording

As of September 30, 2024, our principal sources of liquidity were cash and cash equivalents totaling $23.1 million, our revolving line of credit and our term loan accordion provision.

Current wording

As of March 31, 2025, our principal sources of liquidity were cash and cash equivalents totaling $26.7 million, our revolving line of credit and our term loan accordion provision.

Previous wording

In connection with our initial public offering (the “IPO”), we entered into a senior secured credit facility comprised of a $100.0 million term loan and a $50.0 million revolving line of credit, with an option of up to $50.0 million in an additional term loan through an accordion provision. We used borrowings under this credit facility, together with a portion of the proceeds from the IPO, to repay our previous debt in full. As of September 30, 2024, we owed a combined $91.2 million in term loan and accordion borrowings, as well as $21.5 million borrowed under the revolving line of credit. The term loan requires us to make amortized annual payments of 5.0% during the first and second years, 7.5% during the third and fourth years and 10.0% during the fifth year with the balance of the loan due at maturity. Borrowings under the term loan accrue interest at Term SOFR (as defined in the credit agreement for the senior secured credit facility (the “Credit Agreement”)) plus an applicable margin dependent upon our net leverage ratio, as defined in the Credit Agreement. The revolving line of credit, when used, also accrues interest at Term SOFR plus an applicable margin dependent upon our net leverage ratio. The highest interest rates under the Credit Agreement for both the term loan and the revolving line of credit occur at a net leverage ratio of greater than 2.75x, yielding an interest rate of a benchmark rate plus 3.25%. The accordion provision allows us to borrow additional amounts of term loan at terms to be agreed upon at the time of issuance, but on substantially the same basis as the original term loan. As of September 30, 2024, principal payments of our term loan and accordion for the next twelve months are anticipated to total $6.3 million, which reflects the impact of the prepayments made in 2024.

Current wording

In connection with our initial public offering of common stock in September 2021 (the “IPO”), we entered into a senior secured credit facility comprised of a $100.0 million term loan and a $50.0 million revolving line of credit, with an option of up to $50.0 million in an additional term loan through an accordion provision. We used borrowings under this credit facility, together with a portion of the proceeds from the IPO, to repay our previous debt in full. As of March 31, 2025, we owed a combined $87.0 million in term loan and accordion borrowings, as well as $33.5 million borrowed under the revolving line of credit. The term loan requires us to make amortized annual payments of 5.0% during the first and second years, 7.5% during the third and fourth years and 10.0% during the fifth year with the balance of the loan due at maturity. Borrowings under the term loan accrue interest at Term SOFR, as defined in the credit agreement for the senior secured credit facility (the “Credit Agreement”), plus an applicable margin dependent upon our net leverage ratio, as defined in the Credit Agreement. The revolving line of credit, when used, also accrues interest at Term SOFR plus an applicable margin dependent upon our net leverage ratio. The highest interest rates under the Credit Agreement for both the term loan and the revolving line of credit occur at a net leverage ratio of greater than 2.75x, yielding an interest rate of a benchmark rate plus 3.25%. The accordion provision allows us to borrow additional amounts of term loan at terms to be agreed upon at the time of issuance, but on substantially the same basis as the original term loan. As of March 31, 2025, principal payments of our term loan and accordion for the next twelve months are anticipated to total $7.0 million.

Previous wording

Net cash (used in) provided by operating activities consists primarily of net income (loss) adjusted for certain non-cash items, including depreciation, amortization, equity-based compensation, the effect of changes in working capital and other activities.

Current wording

Net cash from operating activities consists primarily of net income (loss) adjusted for certain non-cash items, including depreciation, amortization, equity-based compensation, the effect of changes in working capital and other activities.

Previous wording

During the nine months ended September 30, 2024, net cash used in investing activities increased by $2.2 million, as compared to the same period in 2023. This was attributable to additional capital expenditures related to new stores compared to the prior year.

Current wording

During the three months ended March 31, 2025, net cash used in investing activities increased by $2.7 million, as compared to the same period in 2024. This was attributable to additional capital expenditures related to new stores compared to the prior year.

Previous wording

During the nine months ended September 30, 2024, net cash provided by (used in) financing activities increased by $54.5 million, as compared to the same period in 2023. This was primarily attributable to the $18.2 million in net proceeds from our senior secured credit facility in 2024, as well as the net repayment of $37.3 million in 2023 of borrowings under our senior secured credit facility.

Current wording

During the three months ended March 31, 2025, net cash provided by financing activities decreased by $1.3 million, as compared to the same period in 2024. This was primarily attributable to additional repayment of amounts owed under our senior secured credit facility in 2025, as compared to the prior period.

Previous wording

During the three months ended September 30, 2024, we repurchased 3,380 shares of our common stock under the Share Repurchase Program for $0.1 million, at an average price of $24.66 per share. During the nine months ended September 30, 2024, we repurchased 120,579 shares of our common stock under the Share Repurchase Program for $1.3 million, at an average price of $10.57 per share.

Current wording

During the three months ended March 31, 2025, we repurchased 15,910 shares of our common stock under the Share Repurchase Program for $0.3 million, at an average price of $16.15 per share.