Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended August 2, 2025 or ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ______to ______. Commission file number: 000-49885 Tennessee 62-1287151 (State or other jurisdiction of (IRS Employer Identification No.) incorporation ...

Financial Data and Key Metrics Changes - For the second quarter, net sales were $75.8 million compared to $86.3 million in the prior year quarter, reflecting a decrease driven by a 9.7% decline in comparable sales and a 5% decline in store count [11][12] - Gross margin decreased by 410 basis points to 16.3% of sales, primarily due to a decline in merchandise margin and occupancy deleverage [12][13] - Net loss was $19.4 million for the quarter compared to $14.5 million in the prior year quarter, with an adjusted net loss of $17.8 million compared to $13.9 million in the prior year [15] Business Line Data and Key Metrics Changes - E-commerce sales experienced a decline of 38.5% in comparable sales, significantly impacted by the tornado disruption, which negatively affected e-commerce sales by 750 basis points [12][16] - Store count had a slightly positive comparable sales growth, driven by increases in traffic and conversion, but was offset by lower average transaction values due to liquidation efforts [12] Market Data and Key Metrics Changes - The first Bed Bath & Beyond Home Store opened in Brentwood, Tennessee, with sales exceeding expectations and significant media coverage generating over 250 million impressions [5][7] - The company plans to convert all Kirkland's Home stores into Bed Bath & Beyond stores over the next 24 months, with each conversion expected to cost less than $100,000 in CapEx [8][9] Company Strategy and Development Direction - The partnership with Bed Bath & Beyond is central to the company's transformation, focusing on an omnichannel retail strategy that includes store conversions and expansion into wholesale markets [9][10] - The company aims to close about 25 stores with natural lease expirations in January 2026, while estimating that 250 to 275 existing Kirkland's stores will remain in the mix over time [28][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in the second quarter due to the tornado and liquidation efforts but expressed confidence in the future growth potential driven by the Bed Bath & Beyond brand [4][18] - The company expects to continue promotional activities and anticipates some incremental tariff costs beginning in the third quarter, while focusing on improving liquidity and funding conversions [18][37] Other Important Information - The company ended the quarter with $82 million in inventory, down 12% from the prior year, and total debt outstanding of $55.2 million [16][17] - Management is actively negotiating with vendors to mitigate tariff impacts and is shifting towards more domestic sourcing as part of the store conversion strategy [36][38] Q&A Session Summary Question: What were the conversion costs for the Brentwood store? - The CapEx for the Brentwood store was significantly less than projected, around $30,000, due to minimal renovations required [23] Question: How many of the existing locations will ultimately be converted? - The company plans to convert approximately 250 to 275 of the existing Kirkland's stores, with about 25 stores expected to close due to lease expirations [28][29] Question: When can the e-commerce business be expected to stabilize? - Management indicated that they are focusing on brick-and-mortar sales and expect e-commerce to normalize to earlier declines, prioritizing more profitable transactions [32] Question: What is the expected impact of tariffs in the back half of the year? - Tariff impacts are anticipated to be around 100 basis points in Q3, with limited impact expected in Q4 as the company continues to liquidate non-go-forward categories [39][40] Question: How many conversions are planned for 2026 versus 2027? - The company has placed buys for 30 conversions in the first quarter of 2026 and aims to maximize store conversions based on inventory availability [41][42]

Financial Data and Key Metrics Changes - For Q2 2026, net sales were $75.8 million, down from $86.3 million in the prior year, reflecting a 12.5% year-over-year decline [11] - Comparable sales decreased by 9.7%, with a 5% decline in store count [12] - Gross margin decreased by 410 basis points to 16.3%, primarily due to a decline in merchandise margin and occupancy deleverage [12] - Net loss was $19.4 million compared to $14.5 million in the prior year, with an adjusted net loss of $17.8 million [15] Business Line Data and Key Metrics Changes - E-commerce sales faced a significant decline of 38.5%, impacted by a tornado disruption and liquidation efforts [12] - Store sales showed slightly positive comparable sales growth, driven by increased traffic and conversion, but were offset by lower average transaction values due to liquidation [12] Market Data and Key Metrics Changes - The company opened its first Bed Bath & Beyond Home Store in Brentwood, Tennessee, with strong initial sales and customer traffic exceeding expectations [5][6] - The company plans to convert all Kirkland's Home stores into Bed Bath & Beyond stores over the next 24 months, with each conversion expected to cost less than $100,000 [8] Company Strategy and Development Direction - The partnership with Bed Bath & Beyond is central to the company's transformation strategy, focusing on omnichannel retail and leveraging the Bed Bath & Beyond brand [10] - The company is also exploring expansion into the wholesale market for Kirkland's Home, aiming to improve supply chain efficiency and unit economics [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in Q2 due to the tornado and liquidation efforts but expressed confidence in the future growth potential of the Bed Bath & Beyond brand [3][4] - The company expects to continue promotional activities and manage tariff costs while focusing on brick-and-mortar sales to improve profitability [18][32] Other Important Information - The company ended the quarter with $82 million in inventory, down 12% from the prior year, and total debt outstanding of $55.2 million [16] - Management indicated that they do not expect significant additional expenses related to the tornado damage in the second half of the year [17] Q&A Session Summary Question: What were the conversion costs for the Brentwood store? - The conversion cost for the Brentwood store was approximately $30,000, significantly less than the projected $100,000 due to minimal renovations [23] Question: How many stores are expected to be converted versus closed? - The company plans to close about 25 stores with natural lease expirations and estimates that 250 to 275 existing Kirkland's stores will remain in the mix over time [28][29] Question: When can we expect stabilization in the e-commerce business? - Management anticipates that e-commerce may normalize to earlier declines, focusing on more profitable brick-and-mortar transactions [32] Question: What is the expected impact of tariffs in the back half of the year? - Tariff impacts are expected to be around 100 basis points in Q3, with limited impact anticipated in Q4 [39] Question: How many conversions are planned for 2026? - The company has placed buys for 30 conversions in the first quarter of 2026, aiming for a wide rollout in preparation for the back-to-campus season [41]

Financial Data and Key Metrics Changes - For Q2 2026, net sales were $75.8 million, down from $86.3 million in the prior year, reflecting a 12.5% year-over-year decline [11] - Comparable sales decreased by 9.7%, with a 5% decline in store count [12] - Gross margin decreased by 410 basis points to 16.3%, primarily due to a decline in merchandise margin and occupancy deleverage [12][13] - Net loss was $19.4 million compared to $14.5 million in the prior year, with an adjusted net loss of $17.8 million [15] Business Line Data and Key Metrics Changes - E-commerce sales faced a significant decline of 38.5%, impacted by the tornado disruption, which negatively affected e-commerce sales by 750 basis points [12] - Store sales showed slightly positive comparable sales growth, driven by increased traffic and conversion, but were offset by lower average transaction values due to liquidation efforts [12] Market Data and Key Metrics Changes - The company opened its first Bed Bath & Beyond Home store in Brentwood, Tennessee, with strong initial sales and customer traffic exceeding expectations [5][6] - The company plans to convert all Kirkland's Home stores into Bed Bath & Beyond stores over the next 24 months, with each conversion expected to cost less than $100,000 [8] Company Strategy and Development Direction - The partnership with Bed Bath & Beyond is central to the company's transformation strategy, focusing on an omnichannel retail approach [10] - The company is strategically liquidating non-go-forward inventory to optimize category mix and prepare for store conversions [4][18] - Plans for expansion include the introduction of Bye Bye Baby stores and a wholesale market for Kirkland's Home [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from the tornado disruption and ongoing liquidation efforts but expressed confidence in the brand's future and growth potential [3][4] - The company expects to continue promotional activities and manage tariff costs while focusing on brick-and-mortar sales [18][32] Other Important Information - The company ended the quarter with $82 million in inventory, down 12% from the prior year, and total debt outstanding of $55.2 million [16] - The company is actively reviewing store locations for conversion and plans to close about 25 stores with natural lease expirations in January 2026 [27] Q&A Session Summary Question: Insights on Bed Bath conversions and costs - The conversion cost for the Brentwood store was approximately $30,000, significantly lower than the projected $100,000 [23] Question: Future store conversions and closures - The company plans to convert 250-275 of its existing Kirkland's stores, with about 25 stores expected to close due to lease expirations [28][29] Question: E-commerce momentum and stabilization - Management aims to normalize e-commerce sales while focusing on profitable brick-and-mortar transactions [32] Question: Tariff impacts on gross margin - Tariff impacts are expected to be around 100 basis points in Q3, with limited impact anticipated in Q4 [39] Question: Conversion timeline and store count for 2026 - The company has placed orders for 30 conversions in Q1 2026, aiming for a significant presence in the back-to-campus season [41]

Financial Data and Key Metrics Changes - For Q2 2026, net sales were $75.8 million, down from $86.3 million in the prior year, reflecting a 12.5% year-over-year decline [11] - Comparable sales decreased by 9.7%, with a 5% decline in store count [12] - Gross margin decreased by 410 basis points to 16.3% of sales, primarily due to a decline in merchandise margin and occupancy deleverage [12] - Net loss was $19.4 million compared to $14.5 million in the prior year, while adjusted net loss was $17.8 million compared to $13.9 million [14] - Adjusted loss per share improved to $0.90 from $1.11 in the prior year, driven by an increase in share count from 13 million to 22.3 million [15] Business Line Data and Key Metrics Changes - The e-commerce segment faced a significant decline, with comparable sales down 38.5%, impacted by a tornado disruption and liquidation efforts [12] - Store sales showed slight positive growth, driven by increased traffic and conversion, but were offset by lower average transaction values due to liquidation [12] Market Data and Key Metrics Changes - The company experienced a significant impact on e-commerce sales, estimated to be negatively affected by 750 basis points due to the tornado disruption [12] - The inventory at the end of the quarter was $82 million, down 12% from the prior year, influenced by a temporary pause in shipments due to tariff uncertainties [16] Company Strategy and Development Direction - The company is undergoing a transformation through its partnership with Bed Bath & Beyond, with plans to convert all Kirkland's Home stores into Bed Bath & Beyond Home stores over the next 24 months [8] - The conversion strategy is capital-light, with each store conversion expected to cost less than $100,000 [8] - The company is also exploring expansion into the wholesale market for Kirkland's Home, aiming to improve supply chain efficiency and unit economics [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in Q2 due to the tornado and liquidation efforts but expressed confidence in the brand's future and the strength of the Bed Bath & Beyond name [3][4] - The company expects to continue promotional activities and anticipates some incremental tariff costs in Q3, while focusing on setting the stage for growth through store conversions [18] Other Important Information - The company plans to close about 25 stores with natural lease expirations in January 2026, while estimating that 250 to 275 existing Kirkland's stores will remain in the mix over time [28] - The company is actively working on mitigating tariff impacts and is negotiating with vendors to balance sourcing strategies [36] Q&A Session Summary Question: What were the conversion costs for the Brentwood store? - The conversion cost for the Brentwood store was approximately $30,000, significantly less than the projected $100,000 due to its recent remodeling [23] Question: How many locations will ultimately be converted? - The company estimates that 250 to 275 of the existing Kirkland's stores will remain in the mix, with plans to close about 25 stores [28] Question: When can we expect stabilization in the e-commerce business? - Management indicated that they expect e-commerce to normalize back to earlier year declines, focusing on more profitable brick-and-mortar transactions [31] Question: What is the expected impact of tariffs in Q3 and Q4? - Tariff impacts are expected to be around 100 basis points in Q3, with limited impact anticipated in Q4 [39] Question: How many conversions are planned for 2026? - The company has placed buys for 30 conversions for the first quarter of 2026, aiming for a wide rollout in time for the back-to-campus season [41]

[Company Announcements & Business Updates](index=1&type=section&id=Company%20Announcement%20%26%20Business%20Update) The company announced new Bed Bath & Beyond Home store openings, the sale of Kirkland's Home IP, and strategic plans for store conversions and wholesale expansion, alongside CEO commentary on Q2 challenges [Recent Business Highlights](index=1&type=section&id=Recent%20Business%20Highlights) The Brand House Collective announced the successful opening of its first Bed Bath & Beyond Home store, sold Kirkland's Home IP, and plans to accelerate store conversions and wholesale market expansion - The company sold Kirkland's Home intellectual property to Bed Bath & Beyond, Inc. for **$10 million** on September 15, 2025, and secured a **$20 million** extension to its existing credit facility to support operations and store conversions[5](index=5&type=chunk) - The first Bed Bath & Beyond Home store successfully opened in Nashville on August 8, 2025, receiving strong customer response and national media attention[5](index=5&type=chunk) - The company plans to open **5 additional Bed Bath & Beyond Home stores** in FY2025 and convert all Kirkland's Home stores to Bed Bath & Beyond stores within the next **24 months**, with the first buybuy Baby store expected to open in FY2026[5](index=5&type=chunk) - The company is in the early planning stages of expanding Kirkland's Home into the wholesale market to create new growth channels[5](index=5&type=chunk) [CEO Commentary on Q2 Performance](index=1&type=section&id=CEO%20Commentary%20on%20Q2%20Performance) CEO Amy Sullivan noted Q2 performance was severely impacted by tornado damage to the distribution center and inventory liquidation for Bed Bath & Beyond expansion, leading to reduced profitability and sales pressure - Q2 performance was significantly impacted by two major events: tornado damage to the distribution center and inventory liquidation to expand the Bed Bath & Beyond product line[4](index=4&type=chunk) - These factors were the primary causes of a year-over-year decline in profitability and short-term pressure on sales, particularly e-commerce[4](index=4&type=chunk) - Inventory actions are strategic, aiming to reallocate space and capital to the Bed Bath & Beyond product line for stronger future growth[4](index=4&type=chunk) [Q2 Fiscal 2025 Financial Summary](index=1&type=section&id=Q2%20Fiscal%202025%20Financial%20Summary) The Q2 FY2025 financial summary details key performance indicators, including declining sales and profitability, and provides a snapshot of the company's balance sheet [Key Financial Metrics](index=1&type=section&id=Key%20Financial%20Metrics) The company's Q2 FY2025 net sales and gross profit declined year-over-year, primarily due to comparable sales decline, inventory liquidation, and tornado-related costs, leading to expanded net and adjusted EBITDA losses Q2 Fiscal 2025 Key Financial Metrics | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | YoY Change (%) | | :------------------- | :------------------- | :------------------- | :------------- | | Net Sales | 75.8 | 86.3 | -12.16% | | Comparable Sales (Consolidated) | -9.7% | - | - | | Comparable Store Sales | +0.4% | - | - | | E-commerce Sales | -38.5% | - | - | | Gross Profit | 12.4 | 17.7 | -30.06% | | Gross Margin | 16.3% | 20.5% | -4.2 pp | | Net Loss | (20.2) | (14.5) | +39.31% | | Diluted Loss Per Share | (0.90) | (1.11) | -18.92% | | Adjusted Net Loss* | (17.8) | (13.9) | +28.06% | | Adjusted EBITDA* | (14.3) | (10.2) | +40.20% | - Gross profit decreased primarily due to lower merchandise margins and reduced leverage of store operating costs from lower sales, with merchandise margin decline attributed to inventory liquidation for Bed Bath & Beyond expansion, tornado-damaged inventory write-offs, and additional tariff costs[6](index=6&type=chunk) - Operating expenses were **$31.1 million** (**41.1% of net sales**), up from **$31.0 million** (**35.9% of net sales**) in the prior year, mainly due to increased insurance costs related to tornado damage[9](index=9&type=chunk) [Balance Sheet Snapshot](index=2&type=section&id=Balance%20Sheet%20Snapshot) As of August 2, 2025, the company's store count decreased to 309, inventory declined, cash balance was $3.6 million, and total debt included $41.5 million in revolving credit and $13.7 million in related-party debt - The company closed **5 stores** during the quarter, ending with a total of **309 stores**[9](index=9&type=chunk) Inventory and Cash Balance | Metric | August 2, 2025 (Millions USD) | August 3, 2024 (Millions USD) | | :-------- | :------------------- | :------------------- | | Inventory | 81.7 | 92.8 | | Cash Balance | 3.6 | - | - As of August 2, 2025, the company had **$41.5 million** in outstanding borrowings and **$5.1 million** in outstanding letters of credit, along with **$13.7 million** in debt to affiliate Beyond; as of September 16, 2025, it had **$49.0 million** in outstanding borrowings, **$5.1 million** in outstanding letters of credit, **$13.7 million** in the Beyond term loan, and **$20.0 million** available from Beyond[9](index=9&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents the unaudited consolidated condensed statements of operations, balance sheets, and cash flows for the specified periods, detailing the company's financial position and performance [Unaudited Consolidated Condensed Statements of Operations](index=5&type=section&id=Unaudited%20Consolidated%20Condensed%20Statements%20of%20Operations) The company recorded year-over-year declines in net sales and gross profit for both Q2 and the 26-week period of FY2025, resulting in expanded operating and net losses, reflecting business transformation challenges [13-Week Period Ended August 2, 2025](index=5&type=section&id=13-Week%20Period%20Ended%20August%202%2C%202025) This section details the unaudited consolidated condensed statements of operations for the 13-week period ended August 2, 2025, showing net sales, gross profit, and net loss 13-Week Period Consolidated Condensed Statements of Operations (Thousands USD) | Metric | August 2, 2025 | August 3, 2024 | | :------------------------------------------ | :----------- | :----------- | | Net Sales | $75,788 | $86,289 | | Cost of Sales | 63,419 | 68,629 | | Gross Profit | 12,369 | 17,660 | | Operating Expenses: | | | | Compensation and benefits | 17,827 | 18,653 | | Other operating expenses | 12,643 | 11,384 | | Depreciation | 591 | 925 | | Asset impairment | 52 | 20 | | Total operating expenses | 31,113 | 30,982 | | Operating Loss | (18,744) | (13,322) | | Interest expense | 1,464 | 1,420 | | Other income | (39) | (120) | | Loss before income taxes | (20,169) | (14,622) | | Income tax expense (benefit) | 10 | (118) | | Net Loss | $(20,179) | $(14,504) | | Loss Per Share (Basic and Diluted) | $(0.90) | $(1.11) | | Weighted Average Shares Outstanding (Basic and Diluted) | 22,460 | 13,074 | [26-Week Period Ended August 2, 2025](index=6&type=section&id=26-Week%20Period%20Ended%20August%202%2C%202025) This section details the unaudited consolidated condensed statements of operations for the 26-week period ended August 2, 2025, showing net sales, gross profit, and net loss 26-Week Period Consolidated Condensed Statements of Operations (Thousands USD) | Metric | August 2, 2025 | August 3, 2024 | | :------------------------------------------ | :----------- | :----------- | | Net Sales | $157,292 | $178,042 | | Cost of Sales | 124,639 | 133,314 | | Gross Profit | 32,653 | 44,728 | | Operating Expenses: | | | | Compensation and benefits | 35,681 | 37,939 | | Other operating expenses | 24,909 | 25,702 | | Depreciation | 1,251 | 1,886 | | Asset impairment | 72 | 31 | | Total operating expenses | 61,913 | 65,558 | | Operating Loss | (29,260) | (20,830) | | Interest expense | 2,812 | 2,547 | | Other income | (123) | (236) | | Loss before income taxes | (31,949) | (23,141) | | Income tax expense | 54 | 193 | | Net Loss | $(32,003) | $(23,334) | | Loss Per Share (Basic and Diluted) | $(1.44) | $(1.79) | | Weighted Average Shares Outstanding (Basic and Diluted) | 22,277 | 13,019 | [Unaudited Consolidated Condensed Balance Sheets](index=7&type=section&id=Unaudited%20Consolidated%20Condensed%20Balance%20Sheets) As of August 2, 2025, the company's total assets and liabilities decreased, and shareholder deficit expanded, reflecting the impact of business restructuring and losses Consolidated Condensed Balance Sheets (Thousands USD) | Metric | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :-------------------------------- | :----------- | :----------- | :----------- | | **Assets** | | | | | Cash and cash equivalents | $3,641 | $3,820 | $4,461 | | Inventory, net | 81,693 | 81,899 | 92,760 | | Total current assets | 91,646 | 91,304 | 105,437 | | Property and equipment, net | 18,749 | 22,062 | 25,454 | | Operating lease right-of-use assets | 108,672 | 121,229 | 128,046 | | Total assets | $221,930 | $242,188 | $266,219 | | **Liabilities and Shareholder Deficit** | | | | | Accounts payable | $56,583 | $43,935 | $59,967 | | Total current liabilities | 116,882 | 152,672 | 119,525 | | Operating lease liabilities (long-term) | 83,100 | 95,085 | 100,565 | | Related party debt, net (long-term) | 11,895 | — | — | | Long-term debt, net | 41,520 | 10,003 | 61,396 | | Total liabilities | 257,091 | 261,205 | 285,924 | | Shareholder deficit | (35,161) | (19,017) | (19,705) | | Total liabilities and shareholder deficit | $221,930 | $242,188 | $266,219 | [Unaudited Consolidated Condensed Statements of Cash Flows](index=8&type=section&id=Unaudited%20Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) For the 26-week period ended August 2, 2025, the company's operating cash outflow significantly decreased, while financing cash inflow primarily came from revolving credit borrowings and common stock issuance, with a slight decrease in period-end cash balance 26-Week Period Consolidated Condensed Statements of Cash Flows (Thousands USD) | Metric | August 2, 2025 | August 3, 2024 | | :------------------------------------------ | :----------- | :----------- | | **Cash Flows From Operating Activities:** | | | | Net loss | $(32,003) | $(23,334) | | Net cash used in operating activities | (10,066) | (26,388) | | **Cash Flows From Investing Activities:** | | | | Capital expenditures | (1,026) | (1,193) | | Net cash used in investing activities | (1,008) | (1,176) | | **Cash Flows From Financing Activities:** | | | | Revolving credit borrowings | 88,644 | 22,800 | | Revolving credit repayments | (90,124) | (4,100) | | Proceeds from common stock issuance | 8,000 | — | | Net cash provided by financing activities | 10,895 | 28,220 | | **Cash and Cash Equivalents:** | | | | Net (decrease) increase | (179) | 656 | | Beginning balance | 3,820 | 3,805 | | Ending balance | $3,641 | $4,461 | [Non-GAAP Financial Measures](index=9&type=section&id=Non-GAAP%20Financial%20Measures) This section defines the company's non-GAAP financial measures and provides detailed reconciliations of net loss, EBITDA, operating loss, and diluted loss per share to their adjusted non-GAAP counterparts [Non-GAAP Definitions and Purpose](index=9&type=section&id=Non-GAAP%20Definitions%20and%20Purpose) The company uses non-GAAP financial measures like EBITDA, Adjusted EBITDA, Adjusted Operating Loss, Adjusted Net Loss, and Adjusted Diluted Loss Per Share to supplement GAAP metrics, providing additional insight into operational performance, not as substitutes for GAAP - Non-GAAP financial measures include EBITDA, Adjusted EBITDA, Adjusted Operating Loss, Adjusted Net Loss, and Adjusted Diluted Loss Per Share, used to supplement GAAP financial statements[21](index=21&type=chunk) - EBITDA is defined as net loss plus income tax expense, interest expense, other income, and depreciation; Adjusted EBITDA further adjusts for asset impairment, share-based compensation, severance, tornado-related costs, and financing-related legal or professional fees not eligible for capitalization[22](index=22&type=chunk) - Adjusted Operating Loss and Adjusted Net Loss include similar adjustments; these non-GAAP metrics are intended to provide additional information and should not be considered in isolation or as substitutes for GAAP results[23](index=23&type=chunk)[24](index=24&type=chunk) [Reconciliation of Net Loss to EBITDA and Adjusted EBITDA](index=9&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20EBITDA%20and%20Adjusted%20EBITDA) The company provided a reconciliation of net loss to EBITDA and Adjusted EBITDA, showing that Adjusted EBITDA loss expanded for both the 13-week and 26-week periods after considering various adjustments Reconciliation of Net Loss to EBITDA and Adjusted EBITDA (Thousands USD) | Metric | 13-Week Period (August 2, 2025) | 13-Week Period (August 3, 2024) | 26-Week Period (August 2, 2025) | 26-Week Period (August 3, 2024) | | :------------------------------------------ | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Net Loss | $(20,179) | $(14,504) | $(32,003) | $(23,334) | | Income tax expense (benefit) | 10 | (118) | 54 | 193 | | Interest expense | 1,464 | 1,420 | 2,812 | 2,547 | | Other income | (39) | (120) | (123) | (236) | | Depreciation | 2,060 | 2,513 | 4,150 | 5,137 | | **EBITDA** | $(16,684) | $(10,809) | $(25,110) | $(15,693) | | **Adjustments:** | | | | | | Asset impairment | 52 | 20 | 72 | 31 | | Share-based compensation expense | 82 | 264 | 321 | 556 | | Beyond transaction costs (non-capitalizable) | 100 | — | 229 | — | | Severance | 157 | 317 | 283 | 390 | | Tornado-related expenses, net | 1,974 | — | 1,974 | — | | **Total Adjustments** | 2,365 | 601 | 2,879 | 977 | | **Adjusted EBITDA** | $(14,319) | $(10,208) | $(22,231) | $(14,716) | [Reconciliation of Operating Loss to Adjusted Operating Loss](index=10&type=section&id=Reconciliation%20of%20Operating%20Loss%20to%20Adjusted%20Operating%20Loss) The company provided a reconciliation of operating loss to adjusted operating loss, indicating an improvement in adjusted operating loss for both periods after deducting specific non-recurring or non-cash adjustments Reconciliation of Operating Loss to Adjusted Operating Loss (Thousands USD) | Metric | 13-Week Period (August 2, 2025) | 13-Week Period (August 3, 2024) | 26-Week Period (August 2, 2025) | 26-Week Period (August 3, 2024) | | :------------------------------------------ | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Operating Loss | $(18,744) | $(13,322) | $(29,260) | $(20,830) | | **Adjustments:** | | | | | | Asset impairment | 52 | 20 | 72 | 31 | | Share-based compensation expense | 82 | 264 | 321 | 556 | | Beyond transaction costs (non-capitalizable) | 100 | — | 229 | — | | Severance | 157 | 317 | 283 | 390 | | Tornado-related expenses, net | 1,974 | — | 1,974 | — | | **Total Adjustments** | 2,365 | 601 | 2,879 | 977 | | **Adjusted Operating Loss** | $(16,379) | $(12,721) | $(26,381) | $(19,853) | [Reconciliation of Net Loss to Adjusted Net Loss and Adjusted Diluted Loss Per Share](index=10&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20Adjusted%20Net%20Loss%20and%20Adjusted%20Diluted%20Loss%20Per%20Share) The company provided a reconciliation of net loss to adjusted net loss and adjusted diluted loss per share, showing improvements in both after considering adjustments and their tax impact Reconciliation of Net Loss to Adjusted Net Loss and Adjusted Diluted Loss Per Share (Thousands USD, except per share data) | Metric | 13-Week Period (August 2, 2025) | 13-Week Period (August 3, 2024) | 26-Week Period (August 2, 2025) | 26-Week Period (August 3, 2024) | | :------------------------------------------ | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Net Loss | $(20,179) | $(14,504) | $(32,003) | $(23,334) | | **Adjustments:** | | | | | | Asset impairment | 52 | 20 | 72 | 31 | | Share-based compensation expense | 82 | 264 | 321 | 556 | | Beyond transaction costs (non-capitalizable) | 100 | — | 229 | — | | Severance | 157 | 317 | 283 | 390 | | Tornado-related expenses, net | 1,974 | — | 1,974 | — | | **Total Adjustments** | 2,365 | 601 | 2,879 | 977 | | Tax benefit on adjustments | 10 | 4 | 20 | 18 | | **Total Adjustments (after tax)** | 2,375 | 605 | 2,899 | 995 | | **Adjusted Net Loss** | $(17,804) | $(13,899) | $(29,104) | $(22,339) | | Diluted Loss Per Share | $(0.90) | $(1.11) | $(1.44) | $(1.79) | | **Adjusted Diluted Loss Per Share** | $(0.79) | $(1.06) | $(1.31) | $(1.72) | | Diluted Weighted Average Shares Outstanding | 22,460 | 13,074 | 22,277 | 13,019 | [Additional Company Information](index=3&type=section&id=Additional%20Company%20Information) This section provides an overview of The Brand House Collective, Inc., outlines forward-looking statements, and details the upcoming conference call for Q2 FY2025 results [About The Brand House Collective, Inc.](index=4&type=section&id=About%20The%20Brand%20House%20Collective%2C%20Inc.) The Brand House Collective, Inc. is a multi-brand merchandising, supply chain, and retail operator managing an iconic portfolio of home and family brands including Kirkland's Home and Bed Bath & Beyond - The company is a multi-brand merchandising, supply chain, and retail operator managing brands including Kirkland's Home, Bed Bath & Beyond Home, Bed Bath & Beyond, buybuy Baby, and Overstock[13](index=13&type=chunk) - Currently operates **over 300 stores** in **35 U.S. states** and maintains e-commerce websites such as www.kirklands.com and www.bedbathandbeyondhome.com[13](index=13&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This report contains forward-looking statements involving potential future circumstances and developments, subject to various known and unknown risks and uncertainties that could cause actual results to differ materially from projections - Forward-looking statements are protected by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to the finalization of the company's quarterly financial and accounting procedures[14](index=14&type=chunk) - Risks and uncertainties include the impact of the Beyond transaction, unexpected costs, litigation, continued availability of capital and financing, ability to realize synergies, success of new store openings or rebranding, marketing capabilities, liquidity risks, ability to continue as a going concern, natural disasters, inflation, tariff impacts, supply chain disruptions, and information technology system security breaches[14](index=14&type=chunk) - The company undertakes no obligation to update any forward-looking statements unless required by law[14](index=14&type=chunk) [Conference Call Information](index=3&type=section&id=Conference%20Call%20Information) The Brand House Collective management will host a conference call on September 16, 2025, to discuss Q2 FY2025 financial results and provide a Q&A session - The conference call will be held on Tuesday, September 16, 2025, at **9:00 AM ET**, hosted by President and CEO Amy Sullivan and SVP and CFO Andrea Courtois[10](index=10&type=chunk) - The call will be webcast live and an archived replay will be available through the investor relations section of the company's website, with a telephone replay service available until September 23, 2025[11](index=11&type=chunk)[12](index=12&type=chunk)

Core Viewpoint - The Brand House Collective, Inc. will release its financial results for Q2 2025 on September 16, 2025, and will host a conference call to discuss these results [1]. Company Overview - The Brand House Collective, Inc., formerly known as Kirkland's, Inc., operates as a multi-brand merchandising, supply chain, and retail operator, managing a portfolio that includes Kirkland's Home and Bed Bath & Beyond brands [4]. - The company currently operates over 300 stores across 35 states and has e-commerce platforms at www.kirklands.com and www.bedbathandbeyondhome.com, offering curated, high-quality product assortments [4].

Company Overview - The Brand House Collective, Inc., formerly known as Kirkland's, Inc., is a multi-brand merchandising, supply chain, and retail operator managing a portfolio of iconic home and family brands including Bed Bath & Beyond Home, buybuy Baby, and Overstock [4] Grand Opening Announcement - The company will celebrate the grand opening of its first Bed Bath & Beyond Home store in Nashville, TN, on August 8, 2025, marking the first store opening under its new name [1] - The grand opening is part of the company's transformation strategy and aims to honor the brand's history while introducing new offerings [2] Ticker Symbol Change - Effective July 29, 2025, the company will change its ticker symbol from KIRK to TBHC, with no action required from shareholders [3] Marketing and Promotions - To celebrate the grand opening, the company will reintroduce the iconic Bed Bath & Beyond coupon, encouraging customers to bring in legacy coupons [2] - The first 25 customers making a purchase will receive a premium 10" memory foam queen size mattress valued at $226.99 as a free gift [2]

Leadership Changes - Andrea Courtois has been appointed as Chief Financial Officer, effective July 21, 2025, succeeding Mike Madden, who will remain in an advisory role until August 15, 2025 [1][5] - Michael Sheridan has joined as SVP, General Counsel & Corporate Secretary, overseeing legal affairs and corporate governance [5] - Mandy Gauldin has been promoted to VP, Talent & Culture, focusing on enhancing company culture and performance [5] Strategic Transformation - Kirkland's is undergoing a strategic shift to become The Brand House Collective, a multi-brand merchandising and retail operator [1][2] - The leadership changes are part of a broader effort to build a disciplined, performance-led operating model aimed at profitable scaling [2] - The company aims to elevate talent and drive meaningful outcomes through a mix of fresh perspectives and deep expertise [2] Company Overview - Kirkland's, Inc. is a specialty retailer of home décor and furnishings, operating 312 stores across 35 states and an e-commerce platform [3] - The company offers a curated selection of affordable home décor and furnishings, providing a unique shopping experience [3]

PART I [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The financial statements for the 13-week period ended May 3, 2025, reflect a challenging quarter with increased net loss and sales decline, while significant equity transactions improved the shareholders' deficit, though substantial doubt about going concern remains [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of May 3, 2025, total assets decreased to **$225.4 million**, total liabilities decreased to **$241.6 million** due to debt reclassification and conversion, and the shareholders' deficit improved to **$16.2 million** from the prior fiscal year-end Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | May 3, 2025 | February 1, 2025 | May 4, 2024 | | :--- | :--- | :--- | :--- | | **Total current assets** | $85,191 | $91,304 | $86,165 | | **Total assets** | $225,409 | $242,188 | $242,583 | | **Total current liabilities** | $99,348 | $152,672 | $101,573 | | **Total liabilities** | $241,627 | $261,205 | $248,048 | | **Total shareholders' deficit** | $(16,218) | $(19,017) | $(5,465) | - Debt was reclassified from current to long-term as of May 3, 2025, after the company received waivers for covenant violations that occurred on May 2, 2025[24](index=24&type=chunk)[60](index=60&type=chunk) - As of February 1, 2025, most of the company's debt was recorded as current[24](index=24&type=chunk)[60](index=60&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the 13-week period ended May 3, 2025, the company reported an **$11.8 million net loss** on **$81.5 million net sales**, with gross profit margin decreasing to **24.9%** and operating loss widening to **$10.5 million** Q1 2025 vs. Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 (13 wks ended May 3) | Q1 2024 (13 wks ended May 4) | | :--- | :--- | :--- | | Net sales | $81,504 | $91,753 | | Gross profit | $20,284 | $27,068 | | Operating loss | $(10,516) | $(7,508) | | Net loss | $(11,824) | $(8,830) | | Diluted loss per share | $(0.54) | $(0.68) | [Condensed Consolidated Statements of Shareholders' (Deficit) Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20(Deficit)%20Equity) The shareholders' deficit improved to **$16.2 million** by May 3, 2025, primarily due to **$7.7 million** from a common stock subscription and **$6.7 million** from debt conversion to equity with Beyond, Inc - The company issued **4,324,324 shares** to Beyond, Inc. for **$7.7 million** from a subscription agreement[11](index=11&type=chunk) - An additional **4,610,141 shares** were issued to Beyond, Inc. to convert a term loan and accrued interest valued at **$6.7 million**[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly improved to **$3.1 million** for the first 13 weeks of fiscal 2025, with financing activities providing **$3.4 million** primarily from an **$8.0 million** common stock issuance to Beyond, Inc Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 (13 wks ended May 3) | Q1 2024 (13 wks ended May 4) | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,077) | $(13,655) | | Net cash used in investing activities | $(558) | $(764) | | Net cash provided by financing activities | $3,350 | $14,450 | | **Net (decrease) increase in cash** | **$(285)** | **$31** | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes disclose substantial doubt about the company's going concern ability due to persistent losses and liquidity issues, detailing the strategic partnership with Beyond, Inc. and subsequent events including an additional term loan and tornado damage to the distribution center - Management has concluded there is substantial doubt about the Company's ability to continue as a going concern for at least 12 months from the issuance date of the financial statements, citing recurring operating losses, negative cash flows, and insufficient liquidity[20](index=20&type=chunk)[23](index=23&type=chunk) - The company entered into a strategic partnership with Beyond, Inc., which included a **$17.0 million** term loan, an **$8.0 million** equity subscription, and collaboration agreements[26](index=26&type=chunk)[61](index=61&type=chunk) - The transactions were completed on February 5, 2025, making Beyond a related party with approximately **40% ownership**[26](index=26&type=chunk)[61](index=61&type=chunk) - On May 7, 2025, the company entered into an additional **$5.2 million** term loan with Beyond for working capital and to support its store conversion strategy[68](index=68&type=chunk) - On May 20, 2025, a tornado damaged the company's Jackson, Tennessee distribution center, causing disruptions to operations, particularly e-commerce[71](index=71&type=chunk) - The company is working with insurance carriers to assess the financial impact[71](index=71&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the negative impact of the macroeconomic environment on Q1 2025 financial performance, emphasizing the strategic partnership with Beyond, Inc. to improve liquidity, while reiterating substantial doubt about the company's going concern status due to severe liquidity constraints [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Net sales for Q1 2025 decreased by **11.2%** to **$81.5 million**, driven by a **26.7%** drop in e-commerce sales, leading to a **460 basis point** decline in gross profit margin and an increased operating loss of **$10.5 million** Q1 2025 vs Q1 2024 Performance | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $81.5M | $91.8M | -11.2% | | Comparable Sales | -8.9% | N/A | N/A | | E-commerce Comp Sales | -26.7% | N/A | N/A | | Gross Profit Margin | 24.9% | 29.5% | -460 bps | | Operating Loss | $(10.5)M | $(7.5)M | +40.1% | - The decrease in gross profit margin was primarily due to a **340 basis point** decline in merchandise margin from increased promotions and a **210 basis point** increase in store occupancy costs as a percentage of sales[88](index=88&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) The company's critical liquidity position leads to a going concern warning, with insufficient near-term liquidity despite financing from Beyond, Inc., and no borrowing availability under its revolving credit facility as of June 17, 2025 - There is substantial doubt about the company's ability to continue as a going concern for at least 12 months due to projected insufficient liquidity[104](index=104&type=chunk) - The company violated affirmative covenants on its credit facilities on May 2, 2025, due to the going concern opinion in its annual report, but received waivers from lenders on May 7, 2025[105](index=105&type=chunk) - As of June 17, 2025, the Company had **no availability for borrowing** under its revolving credit facility, after accounting for the minimum required excess availability covenant[72](index=72&type=chunk)[106](index=106&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is exposure to interest rate fluctuations on its variable-rate long-term debt, with no derivative instruments currently used for hedging - The company is exposed to **interest rate changes** as borrowings under its long-term debt agreements bear interest at variable rates[114](index=114&type=chunk) [Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of May 3, 2025, with no material changes in internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that as of May 3, 2025, the company's **disclosure controls and procedures were effective**[116](index=116&type=chunk) - No **material changes** in internal control over financial reporting occurred during the last fiscal quarter[117](index=117&type=chunk) PART II: OTHER INFORMATION [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending against several legal matters, including putative class action lawsuits for wage and hour violations and a commercial dispute, which management believes will not materially adversely affect financial condition - The company is defending against a putative class action in California regarding wage and hour violations (Miles v. Kirkland's Stores, Inc.)[44](index=44&type=chunk) - A putative class action in New York (Sicard v. Kirkland's Stores, Inc.) alleges violations of New York Labor Law for untimely wage payments[45](index=45&type=chunk) - Rugs America Corp. has sued the company for **$5 million** for an alleged breach of a 2019 agreement; the company has filed a counterclaim and believes the claim is without merit[46](index=46&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) No material changes occurred to the company's previously disclosed risk factors, which include liquidity challenges, going concern ability, and reliance on the strategic partnership with Beyond - There have been **no material changes** to the company's risk factors as previously disclosed in the Annual Report on Form 10-K[120](index=120&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase common stock during the quarter, with approximately **$26.3 million** remaining available under the existing share repurchase plan - The company **did not repurchase any shares** of common stock during the quarter[121](index=121&type=chunk) - As of May 3, 2025, approximately **$26.3 million** remained under the current share repurchase plan[121](index=121&type=chunk) [Other Information](index=27&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter ended May 3, 2025 - No directors or officers adopted or terminated a **Rule 10b5-1 trading arrangement** during the quarter[122](index=122&type=chunk) [Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the quarterly report, including amended agreements with Beyond, Inc., officer certifications, and Inline XBRL data files - The report includes several exhibits, such as **amended agreements with Beyond, Inc.**, and **certifications by the CEO and CFO**[123](index=123&type=chunk)