a.k.a. Brands (NYSE:AKA) reported fourth-quarter and fiscal 2025 results and outlined its priorities and financial outlook for fiscal 2026, pointing to continued sales growth, tighter inventory discipline, and an expected step-up in profitability as the company moves past tariff and supply chain-related headwinds that affected 2025.
Fiscal 2025 results showed continued growth and supply chain progress
CEO Ciaran Long said the company delivered “another year of growth,” despite what he described as a dynamic environment. For fiscal 2025, a.k.a. Brands grew net sales 4.4% to $600 million. The U.S. region, which management called its largest and fastest-growing market, increased net sales 7% to $394 million, representing 66% of the business. Long noted that on a two-year stack, U.S. sales were up 25%.
Long also said the company substantially completed a structural transformation of its supply chain, including accelerated sourcing diversification. He said approximately 50% of U.S. sourcing is now from outside of China, aligning with company targets and improving flexibility. However, he noted that the company’s short lead times and test-and-repeat model meant it could not “pre-buy inventory” ahead of elevated tariffs implemented in 2025.
Even with tariff-related pressure, Long said the company delivered 30 basis points of gross margin expansion for fiscal 2025 to 57.3%. He estimated tariff headwinds, partially offset by mitigation efforts, negatively impacted fiscal 2025 gross margins by approximately 100 basis points.
Fourth-quarter performance reflected out-of-stocks and higher costs
CFO Kevin Grant said fourth-quarter net sales increased 3.1% to $164 million, in line with guidance. He attributed some early-quarter pressure to out-of-stock positions in key best-selling styles, tied to the accelerated supply chain transition, which the company said limited sales in October before inventory levels stabilized and marketing ramped up.
Australia net sales increased 1.6% to $58.1 million, which Grant said was in line with expectations.
On customer metrics, Grant said total orders were 2.2 million, up 6.4% year-over-year. Trailing 12-month active customers (excluding wholesale) were 4.18 million, up from 4.07 million a year ago. Average order value was $76, down 2.6% year-over-year.
Fourth-quarter gross margin declined 30 basis points to 55.6%, which Grant attributed to the impact of out-of-stocks in best sellers during October, partially offset by a higher mix of retail stores. Selling expenses were $51 million (31% of net sales), reflecting retail footprint expansion and one-time fulfillment charges. Marketing expense was $20.5 million (12.5% of net sales). G&A expense was $30.3 million (18.5% of net sales), increasing year-over-year due primarily to charges for a non-recurring legal matter and increased headcount to support channel expansion.
Adjusted EBITDA for the quarter was $2.5 million, or 1.5% of net sales. For the full year, adjusted EBITDA was $19.7 million (3.3% of net sales), compared with $23.3 million (4.1%) a year ago, as tariffs and inventory disruptions pressured results.
Brand updates: stores, wholesale expansion, and streetwear reset
Princess Polly, the company’s largest brand and more than half the portfolio by revenue, delivered double-digit net sales growth in 2025, according to Long. The brand opened seven new U.S. stores in 2025 and launched its first store in Australia (Bondi Beach, Sydney) in the fourth quarter, ending 2025 with 14 stores globally and 13 in the U.S. Long said results from store openings exceeded expectations financially and for brand awareness.
Wholesale also contributed to performance. Management said the Nordstrom partnership exceeded expectations for both Princess Polly and Petal and Pup. Long also said Princess Polly’s wholesale business performed well in the fourth quarter and that the company will continue to expand and optimize its TikTok Shop and wholesale partnerships.
For Petal and Pup, Long said the brand delivered solid performance in 2025, supported by strength in dresses and event wear while broadening its assortment to capture more everyday demand. In the fourth quarter, he said Petal and Pup launched on Nuuly, Nykaa Fashion in India, and David Jones in Australia, with initial results described as strong and further expansion plans underway. Looking to 2026, management said Petal and Pup plans to launch with Dillard’s, Von Maur, and select independent boutiques.
In the streetwear segment, Long said the company strengthened leadership, operations, and go-to-market strategy to improve merchandising discipline and inventory productivity, positioning Culture Kings and mnml for faster growth and stronger margin contribution in 2026. He highlighted investments in in-house brands, saying Loiter delivered double-digit revenue and gross profit dollar growth in 2025, while 73Studio and American Thrift were relaunched in the fourth quarter with early sell-through and new-style velocity described as encouraging.
Long also discussed Culture Kings’ stores, including its Las Vegas flagship and nine locations across Australia and New Zealand. In the fourth quarter, the company relocated its Brisbane store into a renovated 5,000-square-foot format intended as a more productive, repeatable model. Long said early results were encouraging and that the company is pursuing a location for a second U.S. store. In Q&A, he said Culture Kings’ traditional store size had been more in the 800 to 1,000 square foot range, while the Las Vegas store is larger.
Channel strategy and margins: contribution profitability viewed as similar
During the question-and-answer session, management discussed how channel mix is evolving as stores and wholesale expand. Long said the company is “really happy” with Princess Polly store performance, pointing to strong productivity per square foot and four-wall profitability, as well as a “halo effect” benefiting online. He said eight new Princess Polly store leases are fully executed, with “four to five” expected to open in fiscal 2026.
Asked about channel margin differentials, Long said gross margins are “a little bit higher” in stores than online because stores are less promotional at this stage. He also said wholesale gross margins are lower, but selling expenses and marketing are very limited. On a contribution profit basis, he said performance is “pretty similar across them all,” which management said supports continued investment across channels.
Fiscal 2026 outlook: mid-single-digit sales growth and higher adjusted EBITDA
Grant said the company entered 2026 with “strong momentum,” including mid-single-digit first-quarter-to-date net sales growth driven by U.S. online channels. For the first quarter, however, the company guided to net sales of $130 million to $132 million, reflecting low single-digit growth. Management attributed the implied deceleration largely to tougher wholesale comparisons, noting Princess Polly and Petal and Pup launched across all Nordstrom stores in March 2025.
For fiscal 2026, a.k.a. Brands expects:
- Net sales of $625 million to $635 million (growth of 4.2% to 5.8%)
- Adjusted EBITDA of $27 million to $29 million
Grant said the outlook assumes tariff rates in place exiting 2025 and does not include potential refunds tied to what he described as the Supreme Court’s decision to overturn IEEPA tariffs.
On profitability cadence, Grant said adjusted EBITDA comparisons will be more challenging in the first quarter due to timing of tariff impacts, before normalizing in the second quarter. The company expects first-quarter adjusted EBITDA of $1.5 million to $2 million. For the remainder of the year, management said it expects EBITDA margin expansion of about 100 basis points in Q2 and Q3, with a larger expansion in Q4 versus the prior year.
Asked about the step-up in fiscal 2026 EBITDA guidance versus 2025 results, Grant said the bulk of the improvement is expected to come from gross margin, including moving past the fiscal 2025 gross margin headwind, along with some benefit from channel mix. He added that the rest of the improvement would come across operating expense lines, and he did not cite meaningful non-recurring charges embedded in the fiscal 2026 guide.
On the balance sheet, Grant said the company ended fiscal 2025 with $20.3 million in cash and cash equivalents and $111.1 million in debt. He noted the company refinanced its debt in October and extended maturity to 2028.
Management reiterated that 2026 is expected to be an “inflection point,” citing supply chain diversification, improved inventory health, omnichannel expansion, and efforts to embed AI across the organization to improve customer experience and operational execution.
About a.k.a. Brands (NYSE:AKA)
a.k.a. Brands Holding Corp. operates a portfolio of online fashion brands in the United States, Australia, and internationally. The company offers streetwear apparel, dresses, tops, bottoms, shoes, headwear, and accessories through its online stores under the Princess Polly, Petal & Pup, Culture Kings, and mnml brands. It also operates physical stores under the Culture Kings brand. The company was founded in 2018 and is headquartered in San Francisco, California.
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