a.k.a. Brands (AKA) Q1 2026 earnings summary

Executive summary

• Net sales for Q1 2026 reached $132.5 million, up 3% year-over-year, with active customers up 3.1% and adjusted EBITDA more than doubling to $5.1 million, exceeding expectations.

• Gross profit increased 14% to $83.6 million, with gross margin improving to 63.1% from 57.2%, driven by inventory discipline, full-price selling, and a $16.5 million benefit from tariff refunds, partially offset by a $12 million streetwear inventory write-down.

• Strategic initiatives included omni-channel expansion, inventory reduction, sourcing diversification, retail and wholesale growth, and investments in AI and brand performance.

• The business benefited from a $25.8 million IEEPA tariff refund receivable following a Supreme Court decision, with $6 million already refunded and $18.6 million flowing through COGS.

• Net loss narrowed to $7.1 million from $8.4 million in Q1 2025, with net loss margin improving to (5%) from (6%).

Financial highlights

• Adjusted EBITDA increased to $5.1 million from $2.7 million a year ago; adjusted EBITDA margin rose to 3.9% from 2.1%.

• Gross margin, excluding one-time items, expanded to 59% from 57.2% year-over-year.

• Inventory at quarter-end was $67.7 million, down from $94.4 million a year ago, reflecting a 28% reduction.

• Total debt at quarter-end was $109.6 million, down from $119.9 million a year ago; cash and equivalents were $12.9 million.

• Free cash flow was $(6.4) million, down from $(5.3) million.

Outlook and guidance

• Fiscal 2026 net sales expected between $625 million–$635 million; adjusted EBITDA between $30 million–$32 million; capex projected at $18–$20 million.

• Q2 2026 net sales guidance is $160 million–$164 million, with adjusted EBITDA of $8.5 million–$9 million.

• Q2 gross margin expected around 60%, reflecting normalized operations without one-time tariff impacts.

• Management expects sufficient liquidity for the next 12 months, supported by cash, operations, and credit facilities.

• Remediation of material weaknesses in internal controls is targeted for completion by year-end 2026.