Executive Summary

Q1 2026 revenue was $184.3M (+3.9% YoY) with comps +5.5% and North America comps +7.4%; EPS was $(0.79). Gross margin expanded 70 bps to 30.0%; excluding a $2.9M legal settlement (~$0.13 per share), management said consolidated results exceeded the high end of guidance for both sales and loss per share .
Q2 2026 guidance: revenue $207–$214M, comps −1% to +3%, product margin up YoY, operating loss $(0.7)–$(4.0)M, and loss per share $(0.09)–$(0.24); pressures include lower interest income on reduced cash and a wider loss mix in Europe alongside FX headwinds .
Strategic actions: 1.8M shares repurchased in Q1 at $13.82 (total $25.2M); new $15M authorization approved June 4, 2025 (through June 30, 2026). Quarter-end cash and marketable securities were $101.0M; no debt .
Narrative/catalysts: resilient North America at full price selling, tariff mitigation via sourcing diversification (China exposure targeted to ~30% by year-end), and private label scaled to ~30% of Q1 sales, while Europe started slower and remains the key profit challenge .

What Went Well and What Went Wrong

What Went Well

North America strength: comps +7.4% and outsized performance drove consolidated comp +5.5% despite tariff uncertainty; full-price selling supported margins .
Gross margin expansion: Q1 gross margin rose to 30.0% (+70 bps YoY), driven by leverage and merchandising execution .
Private label momentum and product newness: private label reached ~30% of Q1 sales (vs. ~28% in FY24), supported by strong new brand curation; “Consumers continue to respond positively to our merchandise assortments and shopping experience evidenced by strong full price selling” — Rick Brooks .

What Went Wrong

Europe/International softness: other international net sales −0.2% YoY in Q1 and comps −2.3%; May comps in other international −14.8%, highlighting a slower start and FX/macro pressures .
SG&A deleverage from one-time cost: SG&A was 40.8% (+20 bps YoY) due to a $2.9M legal settlement (~$0.13 per share); operating margin remained negative at −10.8% .
Lower cash vs prior year: cash + marketable securities declined to $101.0M (from $146.6M) primarily due to repurchases and capex, pressuring interest income and contributing to guided EPS loss in Q2 .

Financial Results

Metric	Q3 2025	Q4 2025	Q1 2026
Revenue ($USD Millions)	$222.5	$279.2	$184.3
Gross Margin %	35.2%	36.2%	30.0%
Operating Margin %	1.1%	7.2%	−10.8%
Diluted EPS ($)	$0.06	$0.78	$(0.79)
Comparable Sales %	+7.5%	+5.9%	+5.5%

Actual vs Wall Street consensus (S&P Global):

Metric	Consensus	Actual	Surprise
Q1 2026 Revenue ($USD Millions)	182.5*	184.3	+1.8 (+1.0%)*
Q1 2026 EPS ($)	−0.77*	−0.79	−0.02*

Values retrieved from S&P Global.

Segment/Regional detail (Q1 2026):

Metric	Q1 2026
North America Net Sales ($USD Millions)	$149.7
Other International Net Sales ($USD Millions)	$34.6
North America Comps %	+7.4%
Other International Comps %	−2.3%

KPIs (Q1 2026 and balance sheet):

KPI	Q1 2026
Dollars per Transaction	Up YoY, driven by higher AUR and units per transaction
Inventory ($USD Millions, end of quarter)	$149.9
Cash + Marketable Securities ($USD Millions)	$101.0
Weighted Avg Diluted Shares (Millions)	18.116

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales ($USD Millions)	Q2 2026	N/A	$207–$214	New Q2 guide issued
Comparable Sales %	Q2 2026	N/A	−1% to +3%	New Q2 comp guide
Product Margin	Q2 2026	N/A	Up YoY	Positive directional update
Operating Loss ($USD Millions)	Q2 2026	N/A	$(0.7)–$(4.0)	New Q2 guide
Loss per Share ($)	Q2 2026	N/A	$(0.09)–$(0.24)	New Q2 guide
Q1 2026 (for context) Net Sales ($USD Millions)	Q1 2026	$179–$183	Actual: $184.3	Beat vs high end
Q1 2026 (for context) EPS ($)	Q1 2026	$(0.72)–$(0.82)	Actual: $(0.79); Adj ex-legal implied > high-end (approx. $(0.66))	Adjusted beat vs high end
Store Openings	FY 2025	~9 planned	~9 planned	Maintained
Store Closures	FY 2025	~20 planned	~20 planned	Maintained
Capex ($USD Millions)	FY 2025	$14–$16	$14–$16	Maintained
Depreciation & Amortization ($USD Millions)	FY 2025	~$22	~$22	Maintained
Effective Tax Rate	FY 2025	50%–60%	50%–60%	Maintained
Diluted Share Count (Millions)	FY 2025	~17.5	~17.5 (ex future buybacks)	Maintained
Share Repurchase Authorization ($USD Millions)	Through 6/30/2026	$25 program (approved Mar 2024, since exhausted)	New $15 authorization approved Jun 4, 2025	New program

Note: Management indicated FY 2025 targets remain feasible under current tariff levels: YoY sales growth despite closures, modest product margin expansion, SG&A flat as % of sales ex-legal, and a return to profitability .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2025)	Previous Mentions (Q4 2025)	Current Period (Q1 2026)	Trend
Tariffs/Macro	Focus on merchandising/customer engagement; comps acceleration	Choppiness in environment; plan to “stay nimble”	Detailed tariff mitigation actions; sourcing diversification; pricing/bundling to offset costs	Increasing focus on mitigation; proactive sourcing shift
Private Label	Not highlighted	Not highlighted	Private label ~30% of Q1 sales (vs ~28% in FY24); lever for margin and value	Rising mix supporting margins
Regional Trends	Consolidated comps +7.5%	QTD comps up; NA leading	NA comps +7.4%; International comps −2.3%; Europe slow start	Divergence widening; Europe priority to fix
Product Performance	Apparel/footwear strength	Not specified	Women’s largest positive; hardgoods negative	Apparel-driven; women’s strength persists
Supply Chain Diversification	Not highlighted	Not highlighted	China sourcing ~50% in Q1; targeted ~30% by year-end; longer-term ≤20% per country	Accelerating diversification
Capital Allocation	Cash down YoY on repurchases/capex	$25M buyback approved Mar 2024	1.8M shares repurchased; new $15M authorization	Ongoing buybacks; share count reduction

Management Commentary

Rick Brooks (CEO): “Consumers continue to respond positively to our merchandise assortments and shopping experience evidenced by strong full price selling…” and “we have further diversified our North America supply chain and expect a meaningful reduction in exposure to China by the end of this year” .
Chris Work (CFO): “Based on quarter-to-date results…we are anticipating total sales to be between $207 million and $214 million…Comparable sales growth…between −1% and 3%…Operating loss…between $0.7 million and $4 million…Loss per share…between $0.09 and $0.24” .
Strategy/Europe: “We were really slowing growth [in Europe] and focusing on the core business…We’ve really got to push to profitability…Results of 2025 have started slow…We have made some changes…really focused on product and bringing newness…managing expenses and inventory levels” .
Sourcing: “As we get towards the end of the year, we think we’ll probably be 30% or even potentially lower in product coming out of China. Long-term…no individual country represent more than 20%” .

Q&A Highlights

Tariffs and sourcing: Management proactively pulled forward ~$7M cost inventory from China last year to buffer tariffs; private label (30% of mix) enables direct sourcing pivots; pricing/bundling/promotional adjustments used to offset cost increases .
Product margin: Despite tariffs, strategies across sourcing, vendor collaboration, and private label merchandising aim to deliver modest product margin growth YoY .
Europe outlook/execution: 2025 started below plan; May comps sharply down; focus on product newness, margin expansion, expense discipline, and inventory control with the fourth quarter as the key volume/profit period .
Mix/tax dynamics: Loss mix shifting toward Europe and lower interest income on reduced cash balances drives unfavorable effective tax rate and EPS guidance for Q2 .

Estimates Context

Q1 2026: Revenue beat consensus by ~$1.8M (+1.0%), EPS missed by ~$$0.02. Excluding the $0.13 legal settlement, adjusted loss per share would have been ~$(0.66), above the high end of prior guidance and likely above many models’ expectations for adjusted EPS . Values retrieved from S&P Global.
Q2 2026: Company guides revenue $207–$214M and loss per share $(0.09)–$(0.24), bracketing S&P consensus revenue (approx. $210.5M*) and EPS (approx. $(0.11)*). Values retrieved from S&P Global.
Models may need to reflect: stronger NA full-price selling and modest product margin gains; lower interest income; wider Europe losses and FX; share count reduction from buybacks .