On Tuesday, a.k.a. Brands Holding (NYSE:AKA) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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View the webcast at https://event.choruscall.com/mediaframe/webcast.html?webcastid=3XErvk1m
Summary
a.k.a. Brands Holding reported a 3% increase in net sales to $132.5 million and an adjusted EBITDA of $5.1 million for Q1 2026, exceeding expectations.
The company achieved a gross margin expansion to 59%, driven by improved inventory discipline and the success of its test and repeat model, particularly in streetwear brands.
Strategic initiatives included expanding distribution across stores, wholesale, and marketplaces, and increasing investment in AI to enhance product imagery, marketing efficiency, and inventory optimization.
Princess Polly’s retail expansion continues with new store openings in the US and Australia, and strong performance on TikTok, contributing to customer acquisition.
Petal and Pup is gaining traction with significant wholesale momentum, expanding into new accounts such as Nordstrom, Von Maur, and Dillard’s.
The company’s streetwear brands, including Culture Kings, showed improved full price mix and gross margins due to strengthened in-house brand portfolios.
a.k.a. Brands Holding reduced its debt by 17% over the past three years and expects fiscal 2026 net sales between $625 to $635 million and adjusted EBITDA between $30 to $32 million.
Management remains positive about the company’s strategic trajectory, despite some macroeconomic pressures on consumer spending.
Full Transcript
OPERATOR
Greetings and welcome to the a.k.a. Brands Holding First quarter and fiscal 2026 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require Operator assistance, please press 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Emily Schwartz, Vice President of Investor Relations. Please go ahead.
Emily Schwartz (Vice President of Investor Relations)
Good afternoon. Thank you for joining AKA Brands to discuss our first quarter 2026 results released this afternoon, which can be found on our website at ir.aka-brands.com with me on the call today is Kieran Long, Chief Executive Officer and Kevin Grant, Chief Financial Officer. Before we get started, I’d like to remind you of the Company’s safe Harbor language. Management may make forward looking statements which refer to expectations, projections and other characterizations of future events including guidance and underlying assumptions. Forward looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed. For a further discussion of risks related to our business, please see our filings with the sec. Adjusted Gross Margin and constant Currency Net Sales Reconciliations of these non GAAP measures to the most comparable GAAP measures are included in the release furnished to the SEC and available on our website. With that, I’ll turn the call over to Kieran Long
Kieran Long (Chief Executive Officer)
Good afternoon and thank you for joining us to discuss our first quarter 2026 results. We delivered a strong start to the year with net sales of 132.5 million up 3% and adjusted EBITDA of 5.1 million ahead of expectations. More importantly, our results reflect significant gross margin expansion year over year as the structural improvements we’ve made to the business begin to take hold. Gross margin excluding one time adjustments related to tariffs and strategic charges primarily related to legacy streetwear inventory reached 59% which expanded by approximately 180 basis points year over year. The margin expansion was driven by improved inventory discipline, stronger full price sell through and the continued rollout of our test and repeat model. Importantly, the majority of that underlying gross margin expansion came from our streetwear brands. For several years the Culture Kings transition has been a priority strategic initiative moving on to test and repeat rebuilding the in house brand portfolio, resetting inventory and elevating product quality. This quarter that work translated into financial performance with streetwear delivering meaningful gross margin improvement year over year. We view this as the single clearest proof point that the structural changes are working. Over the past three years we fundamentally repositioned AKA brands to improve profitability and durability. We’ve expanded distribution of our brands across stores, wholesale and marketplace. We’ve strengthened our operational foundation and we’ve instilled a greater level of financial discipline across the business. I believe we’re now just starting to see the payoff of that work and 2026 will be a meaningful proof point in our trajectory. First, while we continue to grow our e commerce presence, we’ve expanded beyond our historical direct to consumer routes into a diversified omnichannel model across ret wholesaler marketplaces. Princess Polly now operates 13 stores across the US and opened its first store in Australia at Bondi beach in December with more to come in both regions. In 2026, we also launched with multiple wholesale partners in multiple countries and marketplace channels which continue to exceed our expectations. These channels are no meaningful contributors and are expanding our total addressable market while improving brand visibility and customer acquisition. Second, we built the operational foundation and added team members in key functions to support this expansion, setting the stage for a scalable business model with strong profit flow through We’ve brought inventory down by approximately 45 million over the past three years, primarily in our streetwear business. This achievement has transformed the structure of our operating model, delivering healthier inventory turns, stronger full price selling and the financial flexibility to invest aggressively in growth. This disciplined inventory approach has also enabled us to accelerate our transition to a test and repeat merchandising model across our streetwear brands. As I mentioned, moving Culture Kings and Minimal fully onto this model has been a multi year effort and the results are increasingly evident. Our year over year gross margin improvements directly reflects a and more focused assortment that customers are positively reacting to and better buying discipline. Third, we accomplished a comprehensive transformation of our sourcing network in 2025, diversifying our sourcing across multiple geographies and vendors. It was a remarkable amount of work to have accomplished in such a short period of time and I’m very grateful to the teams who delivered on the task. We now operators sort of the ongoing trade environment and our next phase of growth. And lastly, taken together, we’ve been able to strengthen our financial foundation, reducing our debt by 17% over the past three years, which positions us to accelerate our growth and profitability in the years ahead. Heading into the balance of the year, our focus remains on three attracting and retaining customers through exclusive trend driven product and innovative marketing across our direct to consumer channels, expanding brand awareness and our total addressable market through continued investment in physical retail and strategic wholesale partners and continuing to streamline our operations and strengthen our financial foundation. As discussed last quarter, we’re also increasing our investment in AI across the platform with early applications already improving product imagery, marketing efficiency and inventory optimization. While still early, we expect these initiatives to contribute meaningfully to margin expansion over time. Turning now to our brand highlights, starting with Princess Polly. Our largest brand, Princess Polly delivered strong performance in the quarter, driven by disciplined execution of its test and repeat model and consistent weekly newness supporting strong full price sell through. Dresses continue to drive volume tied to key seasonal moments and Swim was a standout category that continues to grow as we enter the second quarter. We are also seeing good traction in basics and knits, expanding share of wardrobe and supporting a more consistent demand across categories. Key seasonal events including Valentine’s Day festival and Graduation drove meaningful growth, with graduation delivering record performance across sales, inventory turns and margins. From a marketing standpoint, the team continued to scale its TikTok presence in the quarter, expanding paid investment and going live up to 100 hours per week. We’re now leveraging thousands of affiliate and creator videos per month and February and March were both record months on the platform. TikTok shop also continues to drive new customer acquisition efficiently and the team is scaling it with conviction heading into Q2. We’re also seeing strong momentum in Omni Channel expansion. We’re excited to announce that Princess Polly will open a thousand square foot pop up at the Grove in Los Angeles which will run from the end of this month through the end of July. With eight new US Store leases fully executed with four expected to open by year end, I’m really confident in the momentum of the retail expansion. The Bondi beach store has also been very well received since opening in December and the brand will open another Australian store at Pacific Fair, slated to open in the back half of the year with more to come internationally. The UK distribution hub launched in March is off to a strong start with immediate sales acceleration driven by improved speed and customer experience, establishing a foundation for further growth in the back half and over the long term. Turning now to Petal and Pup, the brand continues to gain traction with its core customer and the progress the team has made expanding the business across channels and geographies has been significant. Petal and Pup delivered solid performance in Q1 with event dressing remaining the highest growth category across all regions and channels, particularly for event dresses at accessible price points. Customers also continue to expand into additional product categories as Petal and Pup grows as the separates offering, with tops and bottoms now representing a meaningfully higher share of the mix. Wholesale momentum continues to build with strong performance at key partners and successful expansion into new accounts across both the US and international markets. Nordstrom’s performance remained strong through the quarter with the brand well established at Nordstrom’s trend section across the dresses and casual styles. Von Maurer launched in February with stores already chasing into top performing styles. Following strong initial sell through Dillard’s, completed its first store test shipment in Q1 and will go live across nine locations in the second quarter. Petal and Pup also opened a new …
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