A.K.A. BRANDS HOLDING CORP.
For the period ended Dec 31, 2025. Filed Mar 5, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 5, 2026
AKA$9.99-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-06.
0001865107-25-000016
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-05.
0001865107-26-000008
Item 7. 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 164 previous paragraphs and 155 current paragraphs.
115 unchanged; 24 reworded; 11 added; 19 removed; 6 previous and 5 current paragraphs rearranged.
Tables are not compared: 26 previous and 22 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 (11)
Current report
Gross profit increased by $16.6 million, or 5%, in 2025 compared to 2024. This increase was primarily driven by the 4% increase in net sales in 2025, as compared to 2024. Gross margin was flat compared to 2024 with improvements from a higher mix of retail stores, an improved inventory position, more full price selling and targeted price increases, offset by the impact of tariffs and duties net of duty drawback.
Current report
Marketing expenses decreased by $0.6 million, or 1%, in 2025 compared to 2024.
Current report
Provision for income tax decreased by $2.2 million, or 51%, in 2025 compared to 2024. This decrease was primarily due to establishment of a valuation allowance against certain deferred tax assets in the U.S. in 2024.
Current report
Provision for Income Tax
Current report
Amended and Restated Syndicated Facility
Current report
On October 14, 2025, we entered into an Amended and Restated Syndicated Facility Agreement (the “Amended and Restated Credit Agreement”), which amends and restates in its entirety the previous credit agreement. The Amended and Restated Credit Agreement amends and restates the Credit Agreement to, among other things, (i) establish revolving credit facility commitments in an aggregate principal amount of $35.3 million (ii) establish term loans in an aggregate principal amount of $85.0 million, (iii) adjust the pricing stepdowns related to the interest rate on the Term SOFR Loans, Base Rate Loans and BBSY Loans (each as defined in the Amended and Restated Credit Agreement) after delivery of a compliance certificate for the fiscal year ending December 31, 2025 and (iv) resize baskets within certain negative covenants based on a Consolidated EBITDA (as defined in the Amended and Restated Credit Agreement) of $35.2 million. As of December 31, 2025, we had $83.4 million in outstanding term loan borrowings, as well as $28.6 million outstanding under the revolving line of credit.
Current report
The Amended and Restated Credit Agreement extends the maturity date of the revolving credit facility commitments and the term loans to October 14, 2028. The Company is required to make mandatory amortization payments in respect of the term loans in an amount equal to (a) commencing with the fiscal quarter ending on December 31, 2025 and until the fiscal quarter ending on December 31, 2027, a principal amount of term loans equal to the aggregate outstanding principal amount of term loans made on the date of the execution of the Amended and Restated Credit Agreement, multiplied by 1.875% and (b) commencing with the fiscal quarter ending on March 31, 2028, a principal amount of term loans equal to the aggregate outstanding principal amount of term loans made on the date of the execution of the Amended and Restated Credit Agreement, multiplied by 2.50%. Borrowings under the Amended and Restated Credit Agreement accrue interest at Term SOFR plus an applicable margin dependent upon the Company’s net leverage ratio, as defined in the Amended and Restated Credit Agreement. The highest rate under the agreement occurs at a net leverage ratio of greater than 2.75x, yielding an interest rate of Term SOFR plus 3.75%.
Current report
The Amended and Restated Credit Agreement includes certain financial covenants requiring the Company to maintain a maximum total net leverage ratio and a minimum fixed charge coverage ratio, each tested as of the last day of every fiscal quarter. Specifically, the Company must maintain a maximum total net leverage ratio of 3.50 to 1.00 and a minimum fixed charge coverage ratio of 1.35 to 1.00 for 2025 and 2026,3.25 to 1.00 and 1.50 to 1.00 for 2027, and 3.00 to 1.00 and 1.75 to 1.00 for 2028, respectively. The agreement also includes a capital expenditure covenant limiting growth-related capital expenditures for new store development to$17.5 million for the period from October 14, 2025, through the first anniversary of that date, with annual limits of$20.0 million and$22.5 million in subsequent years. If the Company does not comply with these financial covenants, it may, subject to certain conditions and limitations, make direct or indirect equity contributions to cure such non-compliance. Additionally, the Company is required to make a mandatory prepayment of a portion of excess cash flow (as defined in the Credit Agreement) based on its net leverage ratio. A prepayment of 50% of excess cash flow is required if the net leverage ratio exceeds 2.0x, which is reduced to 25% if the ratio is less than or equal to 2.0x, and to no prepayment if the ratio is less than or equal to 1.0x. We were in compliance with all debt covenants as of December 31, 2025, and expect to be in compliance beyond the next 12 months, although our ability to meet these financial ratios and tests can be affected by the interpretation of certain provisions in our Amended and Restated Credit Agreement, macro-economic factors and the seasonality of our business. As of December 31, 2025, principal payments of our term loan for the next twelve months are anticipated to total $6.4 million.
Current report
The obligations under the Amended and Restated Credit Agreement continue to be (a) jointly and severally guaranteed by the guarantors under the senior secured credit facility, including the Company, and any future subsidiaries that execute a joinder to the guaranty and related collateral agreements and (b) secured by a first priority lien on substantially all of our assets, subject to certain customary exceptions. In addition, the Amended and Restated Credit Agreement contains customary non-financial covenants limiting, among other things, mergers and acquisitions; investments, loans and advances; affiliate transactions; changes to capital structure and the business; additional indebtedness; additional liens; the payment of dividends; and the sale of assets, in each case, subject to certain customary exceptions. The Amended and Restated Credit Agreement contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, defaults under other material debt, events of bankruptcy and insolvency, failure of any guaranty or security document to be in full force and effect, and a change of control of the business.
Current report
In 2025, net cash provided by operating activities increased by $15.8 million. This increase was attributable primarily to more sell through of inventory in 2025, as compared to 2024, as net sales grew by 4%, as well as an increase in lease incentive payments received.
Current report
Net Cash (Used in) Provided by Financing Activities
Removed paragraphs (19)
Previous report
•Reduced our net loss to$26.0 million from$98.9 million
Previous report
•Increased Adjusted EBITDA to$23.3 million from$13.8 million, representing 69% year-over-year growth
Previous report
1 Non-routine legal matters include a $2.0 million accrual in 2024 in connection with the legal matter described in Part I, Item 3, “Legal Proceedings” of this Annual Report on Form 10-K.
Previous report
Cost of sales decreased by $28.5 million, or 10%, in 2023 compared to 2022. This decrease was primarily driven by an 8% decrease in the total number of orders in 2023, as compared to 2022, a decrease in our average order value of 2% and lower inbound air freight costs, partially offset by a higher merchandise return rate. While cost of sales as a percent of net sales was flat in 2023 compared to 2022, cost of sales as a percent of net sales would have increased due to targeted discounting in Culture Kings Australia and a higher merchandise return rate if not offset by lower inbound air freight costs.
Previous report
Gross profit decreased by $37.0 million, or 11%, in 2023 compared to 2022. This decrease was primarily driven by the 11% decrease in net sales, as well as a higher merchandise return rate. These impacts were partially offset by lower air freight expense. While gross margin was flat in 2023 compared to 2022, gross margin would have decreased due to targeted discounting in Culture Kings Australia and a higher merchandise return rate, if not offset by lower inbound air freight costs.
Previous report
Selling expenses decreased by $16.8 million, or 10%, in 2023 compared to 2022. This decrease was driven by the 8% decrease in the number of orders shipped in 2023 compared to 2022, and operational efficiencies in distribution, fulfillment and outbound shipping.
Previous report
Marketing expenses increased by $2.2 million, or 3%, in 2023 compared to 2022. The increase in marketing expenses was driven by additional marketing spend due to reduced marketing effectiveness, particularly in Australia. The increase in marketing expenses as a percentage of net sales was primarily due to lower net sales in 2023 compared to 2022.
Previous report
General and administrative expenses decreased by $5.7 million, or 6%, in 2023 compared to 2022. The decrease was primarily driven by a $2.7 million decrease in intangible amortization, a $2.1 million decrease in wages and benefits and a $1.5 million decrease in insurance costs. A $1.2 million increase in professional fees partially offset these decreases. The increase in general and administrative expenses as a percentage of net sales resulted primarily from lower net sales in 2023 compared to 2022.
Previous report
Goodwill Impairment
Previous report
Other expense, net increased by $5.0 million in 2023 compared to 2022 primarily due to $4.1 million in additional interest expense from rising interest rates on our variable rate debt.
Previous report
Seasonality
Previous report
Due to our operations being concentrated in two distinct geographies (Australia and the United States), our business has experienced seasonality that may differ from that of other retailers. The first quarter has historically been our lowest sales quarter, and that trend is likely to continue as we continue to expand into the U.S. market.
Previous report
The following table presents quarterly net sales as a percentage of total annual net sales:
Previous report
Our business is directly affected by the behavior of consumers. Economic conditions and competitive pressures can significantly impact, both positively and negatively, the level of demand by customers for our products. Consequently, the results of any prior quarterly or annual periods should not be relied upon as indications of our future operating performance.
Previous report
Senior Secured Credit Facility
Previous report
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 December 31, 2024, we owed a combined $89.1 million in term loan and accordion borrowings, as well as $23.3 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 in September 2026. 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 December 31, 2024, principal payments of our term loan and accordion for the next twelve months are anticipated to total $6.3 million.
Previous report
Under the senior secured credit facility, we are subject to certain financial covenant ratios and certain annual mandatory prepayment terms based on excess cash flows, as defined in the Credit Agreement, based on our net leverage ratio. If we are unable to comply with certain financial covenant ratios, which include provisions that are not precisely defined and are subject to interpretation, and terms requiring mandatory prepayment based on a percentage of excess cash flows, our long-term liquidity position may be adversely impacted. Furthermore, the variable interest rates associated with our senior secured credit facility could result in interest payments that are higher than anticipated. We were in compliance with all debt covenants as of December 31, 2024, and expect to be in compliance beyond the next 12 months, although our ability to meet these financial ratios and tests can be affected by the interpretation of certain provisions in our Credit Agreement, macro economic factors and the seasonality of our business, which is more concentrated in the third and fourth fiscal quarters.
Previous report
In 2023, net cash provided by operating activities increased $33.7 million. This was attributable primarily to a decrease in inventory compared to 2022, which was driven by reduced inventory buying and sell-through of aged inventory, partially offset by lower earnings.
Previous report
In 2023, net cash used in investing activities decreased $19.3 million. This was attributable to a reduction in purchases of property and equipment and the cash paid from holdbacks in the prior period related to the mnml acquisition. The purchases of property and equipment in the prior year were primarily due to the build-out of the Culture Kings Las Vegas store.
Reworded paragraphs (24)
Previous wording
•Increased net sales to$574.7 million from$546.3 million, representing 5% year-over-year growth
Current wording
•Increased net sales to$600.2 million from$574.7 million, representing 4% year-over-year growth
Previous wording
•Increased U.S. net sales to$368.8 million from$315.5 million, representing 17% year-over-year growth
Current wording
•Increased U.S. net sales to$394.3 million from$368.8 million, representing 7% year-over-year growth
Previous wording
•Expanded gross margin by 200 basis points to 57% from 55%
Current wording
•Expanded gross margin by 30 basis points
Previous wording
•Attracted 4.1 million active customers, anincrease of 9% from the prior year
Current wording
•Attracted 4.2 million active customers, anincrease of 3% from the prior year
Previous wording
•Received approximately 7.3 million orders, anincrease of 7% from the prior year
Current wording
•Received approximately 7.8 million orders, anincrease of 6% from the prior year
Previous wording
Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow are non-GAAP measures. See “Non-GAAP Financial Measures” below for information regarding our use of Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow and their reconciliation to net income (loss), net income (loss) margin and net cash provided by (used in) operating activities, respectively.
Current wording
Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), Adjusted EBITDA margin and Free Cash Flow are non-GAAP measures. See “Non-GAAP Financial Measures” below for information regarding our use of Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow and their reconciliation to net income (loss), net income (loss) margin and net cash provided by operating activities, respectively.
Previous wording
2 Non-routine items include severance from headcount reductions; sales tax penalties; and insured losses, net of recoveries.
Current wording
1 Non-routine items include severance from headcount reductions; one time supply chain sourcing costs and sales tax penalties.
Previous wording
The following table presents a reconciliation of Free Cash Flow to net cash provided by (used in) 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 provided by operating activities, the most directly comparable financial measure prepared in accordance with GAAP:
Previous wording
For theyear ended December 31, 2024, net cash provided by operating activities decreased by $32.8 million compared to net cash provided by operating activities for theyear ended December 31, 2023. This was attributable primarily to more cash used to purchase inventory in 2024, as compared to 2023, to support growth in the U.S., partially offset by the timing of payments.
Current wording
For theyear ended December 31, 2025, net cash provided by operating activities increased by $15.8 million compared to net cash provided by operating activities for theyear ended December 31, 2024. This was attributable primarily to more sell through of inventory in 2025, as compared to 2024, as net sales grew by 4%, as well as an increase in lease incentive payments received.
Previous wording
For theyear ended December 31, 2024, Free Cash Flow decreased by $38.4 million compared to Free Cash Flow for theyear ended December 31, 2023. This was attributable primarily to more cash used to purchase inventory in 2024 and additional capital expenditures related to new stores, as compared to 2023, to support growth in the U.S., partially offset by the timing of payments.
Current wording
For theyear ended December 31, 2025, Free Cash Flow increased by $10.3 million compared to Free Cash Flow for theyear ended December 31, 2024. This was attributable primarily to more sell through of inventory in 2025, as compared to 2024, as well as an increase in lease incentive payments received, partially offset by additional capital expenditures related to new stores, to support growth in the U.S. and Australia.
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; wars and geopolitical tensions; and the effects of tariffs.
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. On February 20, 2026, the U.S. Supreme Court struck down certain tariffs imposed under IEEPA. It is unclear at this time what impact this decision will have on our business, including whether we will be able to obtain refunds of amounts previously collected for such tariffs or the level of replacement tariffs the Trump Administration imposes through other means.
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 Annual Report on Form 10-K 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 Annual Report on Form 10-K 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 the results, including net sales and operating income, of the Company in the future.
Previous wording
Net sales decreased by $65.5 million, or 11%, in 2023 compared to 2022. The overall decrease in net sales was primarily driven by an 8% decrease in the number of orders we processed in 2023 compared to 2022, which drove a decrease in net sales of $49.7 million, and a decrease in our average order value of 2%, from $82 in 2022 to $80 in 2023, which drove a decrease in net sales of $15.8 million. The decrease in the number of orders and average order value were primarily due to adverse macroeconomic conditions in Australia and New Zealand. On a constant currency basis, net sales and average order value for 2023 would have decreased 9% and 1%, respectively, as compared to 2022.
Current wording
Net sales increased by $25.5 million, or 4%, in 2025 compared to 2024. The overall increase in net sales was primarily driven by an 6% increase in the number of orders we processed in 2025 compared to 2024, partially offset by a decrease in our average order value of 3%, from $79 in 2024 to $77 in 2025. On a constant currency basis, net sales and average order value for 2025 would have increased 5% and decreased 1%, respectively, as compared to 2024.
Previous wording
As of December 31, 2024, our principal sources of liquidity were cash and cash equivalents totaling $24.2 million, our revolving line of credit and our term loan accordion provision.
Current wording
As of December 31, 2025, our principal sources of liquidity were cash and cash equivalents totaling $20.3 million, our revolving line of credit and our term loan accordion provision.
Previous wording
Refer to Note 7, “Debt,” in the notes to our consolidated financial statements included in this Annual Report on Form 10-K for additional information regarding our senior secured credit facility.
Current wording
Refer to Note 7, “Debt,” in the notes to our consolidated financial statements included in this Annual Report on Form 10-K for additional information regarding the Amended and Restated Credit Agreement.
Previous wording
We have lease arrangements for certain equipment and facilities, primarily office locations, warehouse facilities and retail stores. Most of our property, equipment and software have been purchased with cash. As of December 31, 2024, our future minimum payments under non-cancelable operating leases totaled $92.9 million, with $13.2 million payable within the next 12 months.
Current wording
We have lease arrangements for certain equipment and facilities, primarily office locations, warehouse facilities and retail stores. Most of our property, equipment and software have been purchased with cash. As of December 31, 2025, our future minimum payments under non-cancelable operating leases totaled $129.9 million, with $18.2 million payable within the next 12 months.
Previous wording
Additionally, we plan to incur capital expenditures of approximately $12.0 to $14.0 million in 2025. This reflects the planned opening of 6-8 new stores, as well as investments in infrastructure and technology.
Current wording
Additionally, we plan to incur capital expenditures of approximately $14.0 to $16.0 million in 2026. This reflects the planned opening of 8-10 new stores, as well as investments in infrastructure and technology.
Previous wording
Cash provided by (used in) 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
Cash 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.
Previous wording
In 2024, net cash provided by operating activities decreased $32.8 million. This was attributable primarily to more cash used to purchase inventory in 2024, as compared to 2023, to support growth in the U.S., partially offset by the timing of payments.
Current wording
In 2024, net cash provided by operating activities decreased by $32.8 million. This decrease was attributable primarily to more cash used to purchase inventory in 2024, as compared to 2023, to support growth in the U.S., partially offset by the timing of payments.
Previous wording
In 2024, net cash used in investing activities increased $5.6 million. This was attributable to additional capital expenditures related to new stores.
Current wording
In 2024, net cash used in investing activities increased by $5.6 million. This increase was attributable to additional capital expenditures related to new stores.
Previous wording
In 2023, net cash used in financing activities increased $86.1 million as compared to net cash provided by financing activities in 2022. This was primarily attributable to the combined $50.7 million in principal payments, net of borrowings, on our senior secured credit facility in 2023 and the $34.4 million in borrowings, net of repayments, under our senior secured credit facility in 2022.
Current wording
In 2025, net cash used in financing activities increased by $19.9 million as compared to net cash provided by financing activities in 2024. This increase was primarily attributable to the $17.9 million in principal borrowings, net of repayments, on our senior secured credit facility in 2024 and $1.4 million in debt issuance costs, under our Amended and Restated Credit Agreement in 2025.
Previous wording
In 2024, net cash provided by financing activities increased $68.3 million as compared to net cash used in financing activities in 2023. This was primarily attributable to the combined $50.7 million in principal payments, net of borrowings, on our senior secured credit facility in 2023 and the $17.9 million in borrowings, net of repayments, under our senior secured credit facility in 2024.
Current wording
In 2024, net cash provided by financing activities increased $68.3 million as compared to net cash used in financing activities in 2023. This increase was primarily attributable to the combined $50.7 million in principal payments, net of borrowings, on our senior secured credit facility in 2023 and the $17.9 million in borrowings, net of repayments, under our senior secured credit facility in 2024.
Previous wording
During the year ended December 31, 2024, we repurchased 131,618 shares of our common stock under the Share Repurchase Program for $1.5 million, at an average price of $11.53 per share.
Current wording
During the year ended December 31, 2025, we repurchased 28,005 shares of our common stock under the Share Repurchase Program for $0.4 million, at an average price of $13.14 per share.
Previous wording
In August 2023, due to elevated interest rates and unfavorable demand in Australia, we reduced our forecasts and expectations for the Culture Kings and Petal & Pup reporting units. This reduction was identified as a triggering event and a subsequent quantitative test concluded that the carrying value of the Culture Kings and Petal & Pup reporting units exceeded their fair values as of August 31, 2023. As a result, we recorded a non-cash goodwill impairment charge of $68.5 million during the third quarter of 2023. As of December 31, 2023, $11.3 million of goodwill related to Petal & Pup remained on our balance sheet, while the goodwill related to Culture Kings was fully impaired. Additionally, as of December 31, 2024, the estimated fair value of the mnml reporting unit exceeded the carrying value by 11.2%, and the carrying value of the related goodwill was $30.0 million. No impairment was identified as part of the annual goodwill impairment test conducted in 2024.
Current wording
In August 2023, due to elevated interest rates and unfavorable demand in Australia, we reduced our forecasts and expectations for the Culture Kings and Petal & Pup reporting units. This reduction was identified as a triggering event and a subsequent quantitative test concluded that the carrying value of the Culture Kings and Petal & Pup reporting units exceeded their fair values as of August 31, 2023. As a result, we recorded a non-cash goodwill impairment charge of $68.5 million during the third quarter of 2023. As of December 31, 2023, $11.3 million of goodwill related to Petal & Pup remained on our balance sheet, while the goodwill related to Culture Kings was fully impaired. In June 2025, due to a continued period of uncertain trade policy and the impact of increased tariffs and duties between countries, we revised our forecasts for each of our reporting units. These revisions and a continued decrease in our stock price were identified as triggering events and a subsequent quantitative test concluded that the fair value of each of our reporting units exceeded their carrying values as of June 30, 2025. As of the testing date, the estimated fair value of the mnml reporting unit exceeded the carrying value by 4.6% and the carrying value of the related goodwill was $30.0 million. Holding all other assumptions used in the fair value measurement of the mnml reporting unit constant, a 60 basis points increase in the selected discount rate would result in impairment. No impairment was identified as part of the annual goodwill impairment test conducted in 2025.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Selling expenses increased by $16.0 million, or 10%, in 2025 compared to 2024. This increase was driven by the opening of additional stores, as well as the 4% increase in net sales in 2025 compared to 2024. The increase in selling expenses as a percentage of net sales was primarily due to the opening of additional stores.
Current report — wording carried from elsewhere
General and administrative expenses increased by $8.9 million, or 9%, in 2025 compared to 2024. The increase was primarily driven by a $5.3 million increase in wages and incentive compensation expense, a $2.1 million increase in professional services, a $2.1 million increase in other non-routine legal matters and a $1.0 million increase in travel expenses. Partially offsetting these increases was a $1.2 million decrease in insurance expense and a $0.4 million decrease in nonrecurring penalties. General and administrative expenses as a percentage of net sales for 2025 was flat compared to 2024.
Current report — wording carried from elsewhere
Other expense, net decreased by $0.1 million, or 1%, in 2025 compared to 2024, primarily due to lower interest expense from a reduction in our long-term balance, partially offset by the impact of changes in foreign currency exchange rates.
Current report — wording carried from elsewhere
Net Cash Provided by Operating Activities
Current report — wording carried from elsewhere
In 2025, net cash used in investing activities increased by $5.5 million. This increase was attributable to additional capital expenditures related to new stores.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
Cost of sales increased by $1.2 million in 2024 compared to 2023, due to a 7% increase in the total number of orders in 2024, as compared to 2023, and the effect of growing wholesale and marketplace initiatives, mostly offset by more full price selling and an 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, which have lower gross margins.
Previous report — wording carried elsewhere
Goodwill impairment decreased by $105.3 million, or 61%, in 2023 compared to 2022. Goodwill impairment in 2023 was recognized on the goodwill recorded from the acquisitions of the Culture Kings and Petal & Pup reporting units. Goodwill impairment in 2022 was recognized on the goodwill recorded from the acquisitions of the Culture Kings and Rebdolls reporting units. In August 2023, due to elevated interest rates and unfavorable demand in Australia, we reduced our earnings forecasts and expectations for the Culture Kings and Petal & Pup reporting units. This reduction was identified as a triggering event and a subsequent quantitative test concluded that the carrying value of the Culture Kings and Petal & Pup reporting units exceeded their fair values as of August 31, 2023. As of December 31, 2023, the goodwill related to Culture Kings was fully impaired, while $11.3 million of the goodwill related to Petal & Pup remained on our balance sheet.
Previous report — wording carried elsewhere
(Provision for) Benefit from Income Tax
Previous report — wording carried elsewhere
Provision for income tax increased by $5.8 million, or 149%, in 2023 compared to 2022. This increase was primarily due to the increase in the valuation allowance on the net deferred tax assets in Australia.
Previous report — wording carried elsewhere
Net Cash Provided by (Used in) Operating Activities
Previous report — wording carried elsewhere
Net Cash Provided by (Used in) Financing Activities