A.K.A. BRANDS HOLDING CORP.

Previous wording

1 Non-routine items include severance from headcount reductions, one time supply chain sourcing costs and sales tax penalties for the three and nine months ended September 30, 2025. Non-routine items include severance from headcount reductions, sales tax penalties and insured losses, net of recoveries for the three and nine months ended September 30, 2024.

Current wording

1 Non-routine items include severance from headcount reductions, one time supply chain sourcing costs and sales tax penalties.

Previous wording

For the nine months ended September 30, 2025, net cash provided by operating activities increased by $21.1 million compared to net cash used in operating activities for the nine months ended September 30, 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 5% as well as an increase in lease incentive payments received.

Current wording

For the three months ended March 31, 2026, net cash used in operating activities increased by $2.0 million compared to net cash used in operating activities for the three months ended March 31, 2025. This was attributable primarily to timing of payments.

Previous wording

For the nine months ended September 30, 2025, Free Cash Flow increased by $16.4 million compared to Free Cash Flow for the nine months ended September 30, 2024. This was attributable primarily to more sell through of inventory in the current period, as compared to the prior period, 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.

Current wording

For the three months ended March 31, 2026, Free Cash Flow decreased by $1.1 million compared to Free Cash Flow for the three months ended March 31, 2025. This was attributable primarily to timing of payments, offset by less capital expenditures related to opening new stores, compared to the prior year.

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. 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, in the first half of 2025, the U.S. administration increased, at times, the aggregate tariff and duty levels for imported Chinese goods to greater than 150%. Such aggregate tariff and duty levels have since come down to the range of 50-60%. 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 in the process of evaluating and enacting 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 fully 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 might 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 material and adverse effects on our …

Excerpt shortened here; the source contains the full paragraph.

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. In February 2026, the U.S. Supreme Court struck down certain tariffs imposed under IEEPA, following which the administration imposed a 10% global tariff under Section 122 of the Trade Act of 1974. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels and whether further additional tariffs or other retaliatory actions may be imposed, modified or suspended.

Previous wording

Our test, repeat & clear inventory strategy, utilized fully by our Princess Polly and Petal & Pup brands, consists of smaller initial inventory purchases followed by analysis of real-time data and customer feedback, which allows us to identify and quickly re-order best sellers. While our initial orders are limited in size and, therefore, limit financial risk, we nonetheless purchase inventory in anticipation of future demand and therefore are exposed to potential shifts in customer preferences and price sensitivity over time. We have begun to adopt this strategy, with initial success, at our Culture Kings and mnml brands as well.

Current wording

Our test, repeat & clear inventory strategy for our owned and in-house product consists of smaller initial inventory purchases followed by analysis of real-time data and customer feedback, which allows us to identify and quickly re-order best sellers. While our initial orders are limited in size and, therefore, limit financial risk, we nonetheless purchase inventory in anticipation of future demand and therefore are exposed to potential shifts in customer preferences and price sensitivity over time.

Previous wording

Net sales increased by $20.6 million, or 5%, for the nine months ended September 30, 2025 compared to the same period in 2024. The increase in net sales was primarily driven by a 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 1%, from $79 in 2024 to $78 in 2025. On a constant currency basis, net sales and average order value for the nine months ended September 30, 2025 would have increased 5.8% and been flat, respectively, compared to 2024.

Current wording

Net sales increased by $3.8 million, or 3%, for the three months ended March 31, 2026 compared to the same period in 2025. The increase in net sales was primarily driven by a 4% increase in the number of orders we processed in 2026 compared to 2025, partially offset by a decrease in our average order value of 1%, from $78 in 2025 to $77 in 2026. On a constant currency basis, net sales and average order value for the three months ended March 31, 2026 would have increased 1% and decreased 3%, respectively, compared to 2025.

Previous wording

Gross profit increased by $14.4 million, or 6%, for the nine months ended September 30, 2025 compared to the same period in 2024. This increase was primarily driven by the 5% increase in net sales in 2025, as compared to 2024, a higher mix of retail stores, an improved inventory position, more full-price selling and targeted price increases, partially offset by the impact of increased tariffs and duties net of duty drawback. Gross margin as a percentage of net sales increased primarily due to the impact from a higher mix of retail stores, which have higher margins, and more full-price selling in the current period.

Current wording

Gross profit increased by $10.0 million, or 14%, for the three months ended March 31, 2026 compared to the same period in 2025. This increase was primarily driven by a 3% increase in net sales in 2026, as compared to 2025, an improved inventory position and more full price selling, our actions in 2025 to offset the impact of IEEPA tariffs and a $16.5 million benefit from tariff refunds related to prior periods; partially offset by a $12.0 million write-off of streetwear inventory as we fully transition to our test-and-repeat model. Gross margin increased primarily due to the impact from improved inventory position and more full price selling.

Previous wording

Selling expenses increased by $9.5 million, or 8%, for the nine months ended September 30, 2025 compared to the same period in 2024. This increase was driven by the opening of additional stores, as well as the 5% increase in net sales for the nine months ended September 30, 2025. 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 $2.8 million, or 7%, for the three months ended March 31, 2026 compared to the same period in 2025. This increase was driven by the opening of additional stores, as well as the 3% increase in net sales for the three months ended March 31, 2026. The increase in selling expenses as a percentage of net sales was primarily due to the opening of additional stores.

Previous wording

General and administrative expenses decreased by $1.1 million, or 4%, for the three months ended September 30, 2025, as compared to the same period in 2024. This decrease was due to a $2.3 million decrease in non-routine legal expenses, a $0.5 million decrease in insurance expenses and a $0.4 million decrease in non-recurring penalties. Partially offsetting these decreases was a $1.0 million increase in headcount to support omnichannel growth and severance expense, a $0.7 million increase in professional and administrative fees and a $0.3 million increase in information technology fees. The decrease in general and administrative expenses as a percentage of net sales was primarily due to the decrease in non-routine legal expenses.

Current wording

General and administrative expenses increased by $4.3 million, or 17%, for the three months ended March 31, 2026 compared to the same period in 2025. The increase was primarily driven by a $2.0 million increase in wages and incentive compensation expense, a $1.9 million increase in non-routine legal expenses and a $0.8 million increase in information technology expenses. The increase in general and administrative expenses as a percentage of net sales was primarily due to the increase in wages and incentive compensation expenses and non-routine legal expenses.

Previous wording

Total other expense decreased by $0.8 million, or 23%, for the three months ended September 30, 2025 compared to the same period in 2024, primarily due to the impact of foreign currency and lower interest expense from a decrease in our long-term debt balance and interest rates.

Current wording

Other expense decreased by$0.1 million, or 5%, for the three months ended March 31, 2026 compared to the same period in 2025 primarily due to lower interest expense from a decrease in our long-term debt balance and interest rates partially offset by the impact of foreign currency.

Previous wording

(Provision for) benefit from income taxes changed by$1.0 million for the three months ended September 30, 2025 compared to the same period in 2024. This change was due to current tax expense as a result of amended tax amounts owed in relation to the acquisition of mnml.

Current wording

Provision for income taxes changed by $0.2 million for the three months ended March 31, 2026 compared to the same period in 2025. This change was primarily due to projected full-year pre-tax income in the U.S. in the current year, compared to a projected full-year pre-tax loss in the same period in 2025.

Previous wording

As of September 30, 2025, our principal sources of liquidity were cash and cash equivalents totaling $23.4 million, our revolving line of credit and our term loan accordion provision.

Current wording

As of March 31, 2026, our principal sources of liquidity were cash and cash equivalents totaling $12.9 million, our revolving line of credit and our term loan accordion provision.

Previous wording

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 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.

Current wording

On October 14, 2025, we entered into an Amended and Restated Syndicated Facility Agreement (the “Amended and Restated Credit Agreement”) with the other borrowers party thereto, A.K.A. Brands Intermediate Holding Corp., as Holdings, Keybank National Association, as administrative agent, collateral agent, security trustee and lead arranger, and the other persons party thereto from time to time, which amends and restates in its entirety the Syndicated Facility Agreement, dated as of September 21, 2021 (as amended, restated, increased, extended, supplemented or otherwise modified from time to time). 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.

Previous wording

The Amended and Restated Credit Agreement extends the maturity date of (i) the revolving credit facility commitments to October 14, 2028 and (ii) the term loans to October 14, 2028. We are 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%.

Current wording

The Amended and Restated Credit Agreement extends the maturity date of (i) the revolving credit facility commitments to October 14, 2028 and (ii) the term loans to October 14, 2028. We are 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%. As of March 31, 2026, principal payments of our term loan for the next twelve months are anticipated to total $6.4 million.

Previous wording

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 September 30, 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 Credit Agreement, macro-economic factors and the seasonality of our business.

Current wording

Under the Amended and Restated Credit Agreement, we are subject to certain financial covenant ratios and certain annual mandatory prepayment terms based on excess cash flows, as defined in the Amended and Restated 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 March 31, 2026, 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.

Previous wording

Net 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

Net cash 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.

Previous wording

During the nine months ended September 30, 2025, net cash used in investing activities increased by $4.6 million, as compared to the same period in 2024. This was attributable to additional capital expenditures related to opening new stores compared to the prior year.

Current wording

During the three months ended March 31, 2026, net cash used in investing activities decreased by $0.9 million, as compared to the same period in 2025. This was attributable to less capital expenditures related to opening new stores compared to the prior year.

Previous wording

During the nine months ended September 30, 2025, net cash used in financing activities increased by $19.5 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 and line of credit in 2025, as compared to the prior period.

Current wording

During the three months ended March 31, 2026, net cash used in financing activities increased by $9.4 million, as compared to the same period in 2025. This was primarily attributable to no borrowings on our line of credit in 2026, as compared to the prior period.

Previous wording

During the three months ended September 30, 2025, no shares were repurchased under the Share Repurchase Program. During the nine months ended September 30, 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.

Current wording

During the three months ended March 31, 2026, no shares were repurchased under the Share Repurchase Program.

Previous wording

There have been no other significant changes in our critical accounting estimates from those reported in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our 2024 Form 10-K.

Current wording

There have been no significant changes in our critical accounting estimates from those reported in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our 2025 Form 10-K.