Financial Performance - Total revenue for Q3 Fiscal 2026 was $120.3 million, representing a 13% year-over-year increase[7] - Net income for the quarter was $4.3 million, compared to a net loss of $14.4 million in the same period last year[7] - Adjusted EBITDA for the quarter was $29.1 million, compared to $9.8 million in the same period last year[7] - Total revenues for the three months ended October 31, 2025, were $120.3 million, a 12.5% increase from $106.8 million in the same period of 2024[28] - Net income for the three months ended October 31, 2025, was $4.3 million, compared to a net loss of $14.4 million in the same period of 2024[28] - Operating income improved to $3.7 million from a loss of $13.8 million year-over-year[28] - Adjusted EBITDA for the three months ended October 31, 2025, was $29,149,000, compared to $9,769,000 for the same period in 2024, representing a significant increase[41] - Free cash flow for the three months ended October 31, 2025, was $8,801,000, compared to $1,603,000 for the same period in 2024, demonstrating improved cash generation capabilities[44] - Net income for the three months ended October 31, 2025, was $4,271,000, a significant improvement from a net loss of $14,403,000 in the same period of 2024[41] Client Metrics - Average number of healthcare services clients (AHSCs) increased to 4,520, up 7% year-over-year[7] - The company expects AHSCs for fiscal 2026 to be approximately 4,515, including 15 AHSCs from the AccessOne acquisition[12] - The average number of healthcare services clients (AHSCs) increased to 4,520 in the three months ended October 31, 2025, up from 4,237 in the same period of 2024, indicating growth in client acquisition[48] - Total revenue per AHSC for the three months ended October 31, 2025, was $26,622, compared to $25,207 for the same period in 2024, reflecting a year-over-year increase of 5.6%[48] Revenue Outlook - The company updated its revenue outlook for fiscal 2026 to a range of $479 million to $481 million, including approximately $7.5 million from AccessOne[10] - For fiscal 2027, the company anticipates revenue in the range of $545 million to $559 million, a 14-16% increase over fiscal 2026[13] Acquisition and Investment - The AccessOne acquisition was completed for approximately $160 million, enhancing the company's financing solutions for healthcare receivables[4] - Research and development expenses were $29.5 million, consistent with $29.3 million in the prior year, indicating stable investment in innovation[28] - Capitalized internal-use software development costs for the three months ended October 31, 2025, were $3,395,000, compared to $3,566,000 in the same period of 2024, indicating a stable investment in technology[44] Cash and Assets - Cash and cash equivalents as of October 31, 2025, were $106.4 million, an increase of $22.2 million from January 31, 2025[7] - Cash and cash equivalents increased to $106.4 million as of October 31, 2025, compared to $81.7 million at the end of the previous year[32] - Total current assets rose to $240.9 million, a 18.5% increase from $203.3 million as of January 31, 2025[26] Liabilities and Expenses - Total liabilities decreased to $103.1 million from $123.6 million, reflecting a reduction of 16.6%[26] - GAAP operating expenses for the three months ended October 31, 2025, totaled $89,427,000, down from $96,873,000 in the same period of 2024, indicating cost management efforts[46] - Stock-based compensation expense for the three months ended October 31, 2025, was $15,959,000, slightly lower than $16,525,000 in the same period of 2024, reflecting a controlled approach to compensation[46] Payment Metrics - Patient payment volume reached $1,181 million in the three months ended October 31, 2025, compared to $1,081 million in the same period of 2024, showing a growth of 9.3%[51] - The payment facilitator volume percentage increased to 85% in the three months ended October 31, 2025, up from 81% in the same period of 2024, indicating a higher reliance on the payment facilitation services[51]

Revenue and Growth - Revenue for 2024 was $8.7 billion, with over 70% generated outside the United States, and TOMMY HILFIGER and Calvin Klein brands accounted for over 95% of total revenue [168]. - For the full year 2025, the company anticipates revenue growth in low single-digits, including a positive impact from foreign currency translation [204]. - The company expects Q4 2025 revenue to increase slightly in low single-digits compared to Q4 2024, with a positive impact from foreign currency translation [203]. - For the thirty-nine weeks ended November 2, 2025, total revenue was $6.445 billion, a 3% increase from $6.281 billion in the prior year [200]. - Total revenue for Q3 2025 was $2.294 billion, a 2% increase from $2.255 billion in Q3 2024, with a 3% positive impact from foreign currency translation [185]. Profitability and Margins - Gross profit for the same period decreased by 2% to $1.293 billion, with a gross margin of 56.3%, down 210 basis points from the previous year [184]. - Gross profit in Q3 2025 was $1.293 billion, or 56.3% of total revenue, down from $1.317 billion, or 58.4% in Q3 2024, primarily due to tariffs and a shift to lower-margin wholesale business [189]. - The company expects gross margin for the full year 2025 to decrease by approximately 250 basis points compared to 2024, including an 80 basis point negative impact from tariffs [208]. - Net income for the thirteen weeks ended November 2, 2025, was $4 million, a significant decrease from $132 million in the prior year [184]. - Income before interest and taxes in Q3 2025 was $181 million, or 7.9% of total revenue, down from $183 million, or 8.1% in Q3 2024 [195]. Expenses and Cost Management - SG&A expenses in Q3 2025 were $1.121 billion, or 48.9% of total revenue, compared to $1.154 billion, or 51.2% in Q3 2024, reflecting a 230 basis point decrease [190]. - SG&A expenses for the thirty-nine weeks ended November 2, 2025, were $3.274 billion, or 50.8% of total revenue, a decrease of 100 basis points from the prior year [209]. - A multiyear initiative aimed at simplifying the operating model is expected to yield annual cost savings of approximately $200 million to $300 million by 2026 [176]. Tax and Impairment Charges - The effective tax rate for the same period was 97.4%, compared to 21.0% in the previous year, indicating a substantial increase in tax expense [184]. - The effective income tax rate for Q3 2025 was 97.4%, significantly higher than 21.0% in Q3 2024, due to non-deductible impairment charges [197][198]. - The effective income tax rate for the thirty-nine weeks ended November 2, 2025, was 335.1%, significantly higher than the prior year due to non-deductible impairment charges [224]. - The company recorded pre-tax noncash goodwill and other intangible impairment charges of $480 million in Q1 2025 due to increased discount rates [176]. - Noncash impairment charges of $480 million were recorded in the first quarter of 2025, including $426 million related to goodwill [212]. International Operations - Approximately 6% of revenue and 20% of income before interest and taxes were generated in China in 2024, with potential adverse effects from being placed on the List of Unreliable Entities [181]. - APAC revenue decreased by $61 million, or 5%, due to declines in both direct-to-consumer and wholesale businesses amid a challenging consumer environment [206]. Cash Flow and Capital Management - Cash and cash equivalents at November 2, 2025, were $158 million, a decrease of $590 million from $748 million at February 2, 2025 [230]. - Cash provided by operating activities decreased to $97 million for the thirty-nine weeks ended November 2, 2025, down from $254 million for the same period in 2024, primarily due to a decrease in net income adjusted for noncash charges [233]. - Capital expenditures for the thirty-nine weeks ended November 2, 2025, were $98 million, compared to $115 million in the same period in 2024, with expectations for full-year 2025 capital expenditures to be flat at approximately $159 million [239]. - The company completed the sale of its women's intimates businesses for net proceeds of $156 million on November 27, 2023, with an additional $10 million received in quarterly installments through the first quarter of 2025 [236]. Debt and Financing - Long-term debt increased to $2.246 billion as of November 2, 2025, from $1.654 billion as of November 3, 2024 [245]. - The company expects to make total long-term debt repayments of approximately $13 million for the full year 2025 [257]. - The company has not drawn on its $250 million delayed draw term loan facility as of November 2, 2025, which remains available for borrowing [251]. - The company issued $500 million principal amount of 5 1/2% senior notes due June 13, 2030, with $6 million in fees amortized over the term of the notes [265]. - The company ended the third quarter of 2025 with approximately $1.7 billion of borrowing capacity available under various debt facilities [230]. Shareholder Returns - The company has authorized a $5 billion stock repurchase program, with $1.212 billion remaining available for future repurchases as of November 2, 2025 [241][243]. - The company entered into ASR agreements to repurchase $500 million of its shares, acquiring approximately 6.9 million shares at an average price of $72.44 per share [242]. - Cash dividends paid on common stock totaled $6 million for both the thirty-nine weeks ended November 2, 2025, and November 3, 2024, with projected total dividends for 2025 expected to be approximately $7 million [240]. Currency and Foreign Exchange - The company expects 2025 revenue and net income to increase by approximately $200 million and $20 million, respectively, due to foreign currency translation [275]. - Favorable foreign currency translation adjustments of $294 million were recognized during the thirty-nine weeks ended November 2, 2025, primarily due to an 11% weakening of the U.S. dollar against the euro [276]. - A 10% change in foreign currency exchange rates against the U.S. dollar would result in a change in the fair value of foreign currency forward contracts of approximately $110 million [279]. - The effect of a 10% change in the euro against the U.S. dollar would result in a change in the fair value of net investment hedges of approximately $180 million [281].

Financial Restatements and Adjustments - Compass Diversified's restated financial results for fiscal years 2022, 2023, and 2024 have been filed, addressing prior financial and accounting fraud at Lugano Holding, Inc.[1] - Total net revenues for the year ended December 31, 2024, were reported at $2,198,233, with adjustments leading to a restated figure of $1,788,013, reflecting a decrease of approximately 18.6%[16] - Gross profit for the same period was $1,000,360, which, after adjustments, was restated to $750,419, indicating a reduction of about 25%[16] - Operating income (loss) was reported at $230,130, but after adjustments, it resulted in a loss of $14,868, showing a significant decline[16] - Total assets as of December 31, 2024, were reported at $4,052,422, with adjustments leading to a restated total of $3,297,422, a decrease of approximately 18.6%[14] - Total liabilities amounted to $2,489,358, which, after adjustments, were restated to $2,766,848, reflecting an increase of about 11.1%[14] - The company reported a net income (loss) of $47,349, which, after adjustments, resulted in a loss of $322,770, indicating a substantial negative shift[16] - The accumulated deficit increased from $386,324 to $1,004,975 after adjustments, representing a significant deterioration in financial health[14] - Current liabilities totaled $384,786, which, after adjustments, were restated to $2,433,423, indicating a substantial increase of approximately 532%[14] - Basic and fully diluted loss per share attributable to Holdings was reported at $(1.14), which adjusted to $(3.83), reflecting a significant increase in losses per share[16] - Total net revenues for the year ended December 31, 2023, were reported at $1,965,017, with adjustments leading to a restated figure of $1,689,920, reflecting a decrease of approximately 14%[20] - Gross profit for the same period was $833,003, which, after adjustments, was restated to $674,720, indicating a reduction of about 19%[20] - Operating income (loss) was reported at $85,249, with adjustments resulting in a restated operating loss of $69,409, a decline of approximately 181%[20] - Net income attributable to Holdings was $246,286, which, after adjustments, was restated to $108,647, representing a decrease of around 56%[20] - The total assets as of December 31, 2023, were reported at $3,816,981, with adjustments leading to a restated total of $3,325,141, a reduction of approximately 13%[18] - Total liabilities amounted to $2,297,600, with adjustments resulting in a restated total of $2,468,716, reflecting an increase of about 7%[18] - Cash and cash equivalents were reported at $446,684, with adjustments leading to a restated figure of $446,616, showing a minimal decrease[18] - The company reported a loss from continuing operations of $61,251, which was adjusted to a loss of $198,890, indicating a significant increase in losses[20] - The company classified its 2022 Term Loan and Revolving Credit Facility as current liabilities due to non-compliance with financial covenants for the years ended December 31, 2024 and 2023[18] Financial Performance and Guidance - The company adjusted its full year 2025 guidance for Subsidiary Adjusted EBITDA to a range of $330 million to $360 million, excluding Lugano's impact, consistent with prior guidance[2] - Net revenues for the year ended December 31, 2024, were reported at $1,788,013, an increase from $1,689,920,000 in 2023[11] - The company reported a net loss attributable to Holdings of $208,861,000 for 2024, compared to a net income of $108,647,000 in 2023[11] - Adjusted EBITDA is used by the company to assess performance, but it is not reconciled to GAAP measures due to uncertainties regarding net income from continuing operations[3][4] - The company reported a gain on the sale of discontinued operations amounting to $283,025, with no adjustments necessary for this figure[20] - For the year ended December 31, 2024, the consolidated net income (loss) from continuing operations was $(327,822) thousand, compared to $(274,651) thousand for 2023, indicating a decline in performance[21][22] - Adjusted EBITDA for 2024 was $174,824 thousand, a significant increase from $167,054 thousand in 2023, reflecting improved operational efficiency[21][22] - The company reported a net income (loss) from continuing operations of $(35,634) thousand for Corporate in 2024, compared to $(60,454) thousand in 2023, showing a reduction in losses[21][22] Cash Flow and Assets - Cash and cash equivalents decreased significantly from $446,616,000 in 2023 to $59,659,000 in 2024[9] - Interest expense, net, increased to $122,802 thousand in 2024 from $109,892 thousand in 2023, indicating higher borrowing costs[21][22] - The provision (benefit) for income taxes in 2024 was $(2,095) thousand, compared to $301 thousand in 2023, reflecting changes in tax strategy or liabilities[21][22] - Depreciation and amortization expenses totaled $148,019 thousand in 2024, up from $133,572 thousand in 2023, suggesting increased capital expenditures or asset base[21][22] - The company incurred impairment expenses of $8,182 thousand in 2024, while in 2023, impairment expenses were $90,597 thousand, indicating a reduction in asset write-downs[21][22] - Integration services fees amounted to $2,625 thousand in 2024, compared to $2,375 thousand in 2023, reflecting ongoing integration efforts post-acquisition[21][22] - The adjusted EBITDA for the Outdoor segment was $46,541 thousand in 2024, up from $52,047 thousand in 2023, indicating fluctuations in segment performance[21][22] - The company’s total other (income) expense was $167,522 thousand in 2024, compared to $83,114 thousand in 2023, highlighting increased non-recurring operating expenses[21][22] Debt and Compliance - The company is in discussions with senior lenders for an amendment to its credit agreement to provide additional relief regarding its leverage profile[2] - The company anticipates filing its 2025 first, second, and third quarter financial results on Form 10-Q to regain compliance with SEC requirements[2] - The company classified its 2022 Term Loan and Revolving Credit Facility as current liabilities due to non-compliance with financial covenants[14]

Financial Performance - For the year ended September 30, 2025, the company's continuing operations generated net sales of approximately $6.5 million[27]. - The company has historically reported net losses, which could adversely affect its financial condition and stock price[52]. - The company requires additional financing to fully implement its business plan and growth strategy, with expectations of needing funds beyond its current cash position[58]. - The company does not expect to achieve positive cash flow until the end of 2025 or longer, indicating potential operational challenges[59]. - The company has no meaningful revenue from its discontinued operations following the bankruptcy of its legacy specialty pharmaceuticals and healthcare services[25]. Supply Chain and Inventory Management - The company relies on three principal suppliers for approximately 85% of its inventory purchases, indicating a concentrated supply chain[36]. - SRx Health's business may be adversely impacted by supply chain issues, including defective products and counterfeit infiltration, which could reduce its ability to process prescriptions[75]. - The company faces risks related to inventory management, including potential excess inventory leading to markdowns or promotional sales[165]. - Halo's ability to effectively manage its manufacturing and supply chain is critical, as inaccurate demand forecasts could adversely affect operations and financial results[164]. - The company relies heavily on third-party commerce platforms, and any disruptions could negatively impact sales and customer experience[175]. Market and Competition - The majority of continuing net sales are driven by E-commerce channels, including Amazon and Chewy, reflecting strong brand loyalty through repeat purchases[28]. - The competitive landscape in the pet health and wellness industry is intensifying, with larger competitors posing significant challenges[154]. - The company faces significant competition in the specialty healthcare industry, which may hinder its ability to maintain market share[70]. - Economic conditions affecting consumer spending may negatively impact SRx Health's business and financial condition, particularly in the Canadian market[133]. - Changes in the Canadian healthcare industry, including reforms to reduce costs for publicly funded health programs, may adversely affect SRx Health's revenue and operating results[141]. Regulatory and Compliance Risks - The specialty pharmacy business operates in a highly regulated environment, with compliance risks that could impact financial performance[61]. - The company may be subject to regulatory scrutiny, and failure to comply with laws could lead to investigations and financial penalties, harming its reputation and operations[131]. - Compliance with extensive governmental regulations is critical, as non-compliance could lead to significant penalties and operational disruptions[194]. - Changes in tax and trade policies could adversely affect SRx Health's costs and access to suppliers, impacting overall business performance[93]. - Changes in laws and regulations may increase operational costs and adversely affect Halo's business and financial results[202]. Growth Strategy and Acquisitions - The company plans to grow through acquisitions and strategic alliances, having completed three significant acquisitions in 2019[185]. - SRx Health's growth strategy relies on acquiring new pharmacies and integrating them into the SRx Network, which is essential for driving organic growth and expanding wholesale distribution capabilities[134]. - Future acquisitions are critical for SRx Health's growth, but challenges in identifying and negotiating favorable terms for these acquisitions could impede its strategy[138]. - Halo's growth strategy includes introducing new products and expanding into new markets, which is critical for attracting new consumers[149]. Operational Challenges - The company emphasizes a "Win From Anywhere" culture, allowing employees to work flexibly from various locations across the U.S.[43]. - The company has experienced significant growth recently, which has put strain on its operations and requires effective management of its IT infrastructure and financial systems[136]. - Clinical trials may face delays due to various factors, which could materially impact SRx Health's business and financial condition[82]. - The company faces challenges in meeting customer expectations, which could harm its brand and lead to excess inventory if consumer preferences are not effectively anticipated[98]. - Cybersecurity threats pose a risk to SRx Health's operations, requiring ongoing investment in protective measures to safeguard patient information[107][106]. Product and Brand Management - The Halo product portfolio includes over 100 premium and super-premium pet health and wellness products, formulated to meet high-quality sourcing and nutritional standards[22]. - The company emphasizes the importance of maintaining brand quality and customer experience to ensure business success[146]. - Negative consumer sentiment on social media could impact Halo's sales and profitability[159]. - Food recalls could result in significant financial losses and harm to Halo's brand reputation[161]. - Halo faces risks related to food safety incidents, which could lead to lawsuits, recalls, and increased operating costs[160]. Financial and Stock Market Risks - The company may be deemed a "penny stock," which could adversely affect the market price and trading of its common stock[214]. - The company received a notice from NYSE American indicating compliance with continued listing standards, requiring stockholders' equity of $4 million or more[215]. - The company is subject to potential delisting from NYSE American if it fails to meet continued listing requirements, which could impair capital raising efforts[215]. - The market price of the company's common stock has been highly volatile and subject to fluctuations due to various factors[216]. - The holding company structure may limit shareholder rights in the event of subsidiary insolvency, affecting cash flow and financial stability[203].

IPO and Trust Account - The Company completed its IPO on February 11, 2021, raising gross proceeds of $276.0 million from the sale of 27,600,000 units at $10.00 per unit, with offering costs of approximately $15.8 million[141] - Following the IPO, approximately $276.0 million was placed in a Trust Account, invested in U.S. government securities or money market funds until a business combination is completed[143] - The company incurred $16,505,915 in transaction costs related to its IPO, including $5,520,000 in underwriting fees[169] Business Combination Extensions - On February 9, 2024, shareholders approved an extension for the Company to consummate a business combination until August 11, 2024, with 2,195,847 Class A ordinary shares redeemed for $23,724,846 (approximately $10.80 per share)[147][148] - On August 9, 2024, shareholders approved another extension until May 11, 2025, with 1,487,025 Class A ordinary shares redeemed for $16,484,256 (approximately $11.09 per share)[151][152] - The company has until March 11, 2026, to consummate a Business Combination, or it will face mandatory liquidation[180] Financial Performance - The Company has not generated any revenues to date and only incurs expenses related to being a public company and due diligence activities[166] - For the three months ended March 31, 2025, the company reported a net loss of $712,127, with operating costs of $772,793, partially offset by trust dividend income of $60,666[167] - For the three months ended March 31, 2024, the company had a net loss of $333,546, with operating costs of $382,550 and non-redemption agreement expense of $375,981, offset by trust dividend income of $424,985[171] Financial Position and Liabilities - As of March 31, 2025, the company had cash outside the trust account of $425 and working capital deficits of $3,750,379[172] - The company has a convertible note with a principal amount of up to $1,000,000, due on the earlier of February 11, 2026, or the consummation of a Business Combination[176] - As of March 31, 2025, the company reported $1,275,219 due to related parties, compared to $1,189,077 as of December 31, 2024[177] - The company lacks sufficient financial resources to sustain operations for a reasonable period, raising substantial doubt about its ability to continue as a going concern[178] Compliance and Reporting - The Company was delisted from the NYSE on February 12, 2024, due to non-compliance with the requirement to complete a business combination within the specified time frame[159][160] - The company is evaluating the benefits of relying on reduced reporting requirements under the JOBS Act, which may affect its compliance with new accounting standards[192] Business Combination Agreements - A business combination agreement was entered into on July 2, 2025, with Mkango (Cayman) Limited and other subsidiaries, aiming to merge and become a publicly traded company under the name "Mkango Rare Earths Limited"[162][163] - The Company engaged Jett Capital Advisors, LLC as a financial advisor for the proposed business combination with Lancaster Exploration Limited and its subsidiaries[165] Shareholder Actions - As of the latest reports, the Company has approximately 491,806 Class A ordinary shares issued and outstanding following redemptions[156] - The company has not entered into any non-redemption agreements for the three months ended March 31, 2025[187]

Revenue and Sales Performance - Revenue for the third quarter of fiscal 2026 was $9.7 billion, a 2.4% increase compared to $9.4 billion in the same period last year[88]. - Comparable sales grew by 2.7% in the third quarter and 1.2% in the first nine months of fiscal 2026, driven by growth in computing, gaming, and mobile phones[89]. - Domestic segment revenue for the three months ended November 1, 2025, was $8,878 million, a 2.1% increase from $8,697 million in the same period last year[101]. - Online revenue in the Domestic segment reached $2,823 million for the third quarter, reflecting a 3.5% increase on a comparable basis[104]. - International segment revenue increased to $794 million for the three months ended November 1, 2025, representing a 6.1% growth compared to $748 million in the prior year[110]. Profitability and Earnings - Gross profit for the third quarter was $2.25 billion, representing 23.2% of revenue, slightly down from 23.5% in the prior year[88]. - Operating income for the third quarter decreased to $198 million, with an operating income rate of 2.0%, down from 3.7% in the same quarter last year[88]. - Net earnings for the third quarter were $140 million, resulting in diluted EPS of $0.66, a decrease from $1.26 in the prior year[88]. - Adjusted operating income for the Domestic segment was $360 million for the third quarter, with an adjusted operating income margin of 4.1%[101]. - The International segment's adjusted operating income increased to $28 million for the third quarter, with an adjusted operating income margin of 3.5%[110]. - Consolidated adjusted operating income for the three months ended November 1, 2025, was $388 million, representing 4.0% of revenue[120]. - Adjusted diluted EPS for the three months ended November 1, 2025, was $1.40, compared to $1.26 in the same period last year[120]. - Adjusted operating income rate increased in Q3 of fiscal 2026, primarily due to a favorable SG&A rate, partially offset by an unfavorable gross profit rate[125]. - Adjusted diluted EPS increased in Q3 of fiscal 2026, primarily due to higher adjusted operating income[127]. Costs and Expenses - Restructuring charges in the first nine months of fiscal 2026 totaled $218 million, primarily related to labor and store optimization initiatives[90]. - Goodwill and intangible asset impairments in the third quarter amounted to $171 million, reflecting downward revisions in revenue growth rates for Best Buy Health[91]. - Income tax expense for the third quarter decreased to $64 million, with an effective tax rate of 31.5%, up from 23.9% in the prior year[98]. - The adjusted effective tax rate increased in Q3 of fiscal 2026, primarily due to decreased tax benefits from green energy incentives[126]. - Cash dividends declared and paid decreased to $199 million in Q3 of fiscal 2026, compared to $202 million in Q3 of fiscal 2025, due to fewer shares outstanding[143]. Cash Flow and Capital Management - Cash and cash equivalents decreased to $923 million as of November 1, 2025, from $1,578 million as of February 1, 2025, primarily due to dividend payments and capital expenditures[130]. - Total cash provided by operating activities increased to $684 million for the nine months ended November 1, 2025, compared to $561 million for the same period in the prior year[132]. - Total cost of shares repurchased decreased to $34 million in Q3 of fiscal 2026, down from $135 million in Q3 of fiscal 2025[142]. - The company entered into a $1.25 billion five-year senior unsecured revolving credit facility agreement on April 18, 2025, which permits borrowings of up to $1.25 billion[137]. - Restricted cash decreased to $271 million as of November 1, 2025, from $290 million as of February 1, 2025, primarily due to releases of product protection reserves[138]. Foreign Currency and Interest Rate Management - Foreign currency exchange rate fluctuations had an unfavorable impact of $13 million on revenue during the third quarter of fiscal 2026[155]. - The estimated impact of foreign exchange rate fluctuations on revenue for the first nine months of fiscal 2026 was $44 million[155]. - The company utilizes foreign currency forward contracts to manage exposure related to certain forecasted inventory purchases and recognized receivable and payable balances[154]. - The primary objective of holding derivatives is to reduce the volatility of net earnings and cash flows associated with foreign currency exchange rates[154]. - The strength of the U.S. dollar against the Canadian dollar primarily drove foreign currency exchange rate fluctuations compared to the prior-year period[155]. - The estimated impacts of foreign exchange rate fluctuations on net earnings in the third quarter and first nine months of fiscal 2026 were not significant[155]. - The company has swapped a portion of its fixed-rate debt to floating rate, which will vary with short-term interest rates[152]. - A 50-basis point increase in short-term interest rates would have led to an estimated $3 million increase in interest income during the third quarter ended November 1, 2025[153]. - Further information regarding interest rate swaps can be found in the Annual Report on Form 10-K for the fiscal year ended February 1, 2025[152]. Store Operations - Total domestic stores decreased to 926 from 957 year-over-year, with plans to reduce the store count by 5 in fiscal 2026[96][97]. - The revenue mix for the Domestic segment showed that computing and mobile phones accounted for 49% of revenue, with a comparable sales growth of 7.6%[105]. - Domestic segment gross profit for the three months ended November 1, 2025, was $2,067 million, with a gross profit margin of 23.3%[101]. - The International segment's gross profit margin increased to 22.8% for the three months ended November 1, 2025, driven by favorable supply chain costs[116].

Revenue and Growth - Total revenue for the three months ended October 31, 2025, was $818.35 million, a 8.4% increase from $754.82 million in the same period of 2024[97] - Subscription revenue accounted for 98% of total revenue for both the three and nine months ended October 31, 2025, compared to 97% for the same periods in 2024[92] - The number of customers with annualized contract values greater than $300,000 increased to 1,165 as of October 31, 2025, up from 1,075 in 2024, indicating growth in enterprise customer base[96] - International revenue grew by 13% in the nine months ended October 31, 2025, representing 30% of total revenue for the three months ended October 31, 2025[105] - Subscription revenue increased by $66.3 million, or 9%, in the three months ended October 31, 2025, and by $188.0 million, or 9%, in the nine months ended October 31, 2025, primarily due to the expansion of revenue from commercial and enterprise accounts[124] - Total revenue for the three months ended October 31, 2025, was $818.35 million, an increase of 8% compared to $754.82 million in the same period of 2024[121] Profitability - Net income for the three months ended October 31, 2025, was $83.73 million, compared to $62.42 million in the same period of 2024, reflecting a 34.2% increase[97] - Net income for the three months ended October 31, 2025, was $83.73 million, or 10% of total revenue, compared to $62.42 million, or 8%, in the same period of 2024[121] - GAAP net income for Q3 2025 was $83.7 million, an increase from $62.4 million in Q3 2024, marking a growth of 34.5%[164] - Non-GAAP net income for Q3 2025 reached $211.1 million, up from $188.5 million in Q3 2024, indicating a rise of 12.0%[164] Expenses and Costs - Operating expenses increased to $562.45 million in the three months ended October 31, 2025, compared to $539.25 million in the same period of 2024, primarily due to investments in workforce[128] - Research and development expenses rose by $16.5 million, or 11%, in the three months ended October 31, 2025, driven by investments in product innovation, including the acquisition of Lexion[129] - Cost of revenue for the three months ended October 31, 2025, was $170.55 million, an increase of 9% from $156.54 million in the same period of 2024[125] - Sales and marketing expenses increased by $5.9 million, or 2%, in the three months ended October 31, 2025, totaling $296.52 million[128] - General and administrative expenses increased by $0.8 million, or 1%, in the three months ended October 31, 2025, totaling $98.31 million[130] Cash and Investments - Cash, cash equivalents, restricted cash, and investments totaled $1.1 billion as of October 31, 2025[97] - As of October 31, 2025, the company had $839.9 million in cash and cash equivalents, along with $208.5 million in long-term investments[136] - A revolving credit facility of $750.0 million was established in May 2025, with no outstanding borrowings as of October 31, 2025[137] - Cash provided by operating activities was $787.8 million for the nine months ended October 31, 2025, compared to $709.4 million for the same period in 2024[145][146] - Net cash used in investing activities was $93.1 million for the nine months ended October 31, 2025, primarily due to $79.4 million in property and equipment purchases[147] - The company repurchased 7.7 million shares of common stock for $600.0 million during the nine months ended October 31, 2025[143] Strategic Initiatives - The company plans to invest in product innovation and enhance operational efficiency as part of its long-term growth strategy[100] - The IAM platform is expected to be offered across direct sales, partner-assisted sales, and digital self-service purchasing channels[94] - The company aims to strengthen its omnichannel go-to-market strategy to better address customer needs and optimize cost structure[99] - Future capital requirements will depend on growth rate, customer retention, and potential acquisitions, with a possibility of needing additional financing[140] Performance Metrics - Billings, reflecting sales to new customers and renewals, are crucial for measuring periodic performance, especially given the annual payment structure of customers[160] - GAAP gross profit for Q3 2025 was $647.8 million, up from $598.3 million in Q3 2024, representing a growth of 8.5%[162] - Non-GAAP gross profit for Q3 2025 was $669.5 million, compared to $622.4 million in Q3 2024, reflecting an increase of 7.6%[162] - Non-GAAP free cash flow for Q3 2025 was $262.9 million, compared to $210.7 million in Q3 2024, showing an increase of 24.8%[165] - Non-GAAP billings for Q3 2025 were $829.5 million, compared to $752.3 million in Q3 2024, reflecting an increase of 10.3%[166] - GAAP operating margin for Q3 2025 was 10.4%, up from 7.8% in Q3 2024, indicating a significant improvement[163] - Non-GAAP operating margin for Q3 2025 was 31.4%, compared to 29.6% in Q3 2024, showing an increase of 1.8 percentage points[163]

Financial Performance - For the three months ended November 1, 2025, product sales increased to $760.32 million, up from $705.51 million for the same period last year, representing a growth of 7.7%[13] - Net revenue for the nine months ended November 1, 2025, reached $2.21 billion, compared to $2.06 billion for the same period in the previous year, reflecting an increase of 7.2%[13] - Gross profit for the three months ended November 1, 2025, was $335.98 million, compared to $321.88 million for the same period last year, indicating a growth of 4.4%[13] - The company reported a net earnings of $29.39 million for the three months ended November 1, 2025, compared to a net loss of $20.76 million for the same period last year[13] - Net earnings for the nine months ended November 1, 2025, were $6,438,000, a significant improvement from a net loss of $(13,485,000) in the same period last year, representing a turnaround of approximately 148%[18] - Total net revenue for the three months ended Nov 1, 2025, was $791.427 million, a significant increase from the previous year[108] - For the nine months ended Nov 1, 2025, total net revenue was $2.212 billion, with product sales amounting to $2.130 billion[109] Assets and Liabilities - Total assets as of November 1, 2025, amounted to $3.01 billion, an increase from $2.77 billion as of February 1, 2025, representing a growth of 8.7%[12] - Current liabilities remained stable at $831.91 million as of November 1, 2025, compared to $831.33 million as of February 1, 2025[12] - The company’s long-term debt and finance lease obligations increased to $299.54 million as of November 1, 2025, compared to $150.67 million as of February 1, 2025[12] - Total debt and finance lease obligations as of November 1, 2025, amounted to $326,252, with long-term obligations at $299,542[114] Cash Flow and Investments - Cash flows from operating activities showed a net cash used of $(37,956,000), an improvement compared to $(61,555,000) in the prior year, indicating a reduction in cash outflow by about 38%[18] - Net cash used in investing activities was $(71,795,000), a decrease from $(85,333,000) in the prior year, indicating a 16% improvement in cash management[18] - The company reported a net cash provided by financing activities of $68,777,000, contrasting with a net cash used of $(61,977,000) in the prior year, indicating a positive shift in financing strategy[18] Expenses - Selling, general and administrative expenses for the three months ended November 1, 2025, were $309.03 million, up from $279.39 million for the same period last year, an increase of 10.6%[13] - The company reported depreciation and amortization expenses of $54,762,000, up from $51,114,000, reflecting a 5% increase year-over-year[18] - Advertising and marketing expenses for the three and nine months ended November 1, 2025, were $25.3 million and $76.3 million, respectively, compared to $25.7 million and $68.6 million for the same periods in 2024[51] Shareholder Activities - Dividends paid during the period totaled $43,413,000, down from $167,187,000, representing a reduction of approximately 74%[18] - The cash dividend declared per share for the three months ended November 1, 2025, was $0.225, down from $0.300 in the same period in 2024[90] - The company had remaining authority under the 2024 Share Repurchase Program to purchase approximately $139.8 million of its common stock as of November 1, 2025[89] Acquisitions and Mergers - Guess? announced the acquisition of all operating assets and a 50% interest in the intellectual property assets of rag & bone on April 2, 2024[25] - The company completed the acquisition of rag & bone on April 2, 2024, which included 34 stores in the U.S. and two in the U.K.[59] - A proposed take-private transaction with Authentic Brands Group was announced on August 20, 2025, offering shareholders $16.75 per share in cash[26] - The merger agreement includes a strategic partnership where Authentic would own 51% of the company's intellectual property[27] - The company’s stockholders adopted the merger agreement on November 21, 2025, with certain regulatory approvals still pending[29] Inventory and Receivables - The company's inventories increased to $692.266 million as of November 1, 2025, compared to $562.649 million as of February 1, 2025, representing a rise of about 23.1%[98] - As of November 1, 2025, total accounts receivable amounted to $417.175 million, up from $397.815 million as of February 1, 2025, reflecting a growth of approximately 4.3%[97] - Approximately 43% of the Company's total net trade accounts receivable were subject to credit insurance coverage as of November 1, 2025[49] Legal and Regulatory Matters - The Company is involved in legal proceedings, including a customs tax assessment totaling €9.8 million ($11.3 million) from the Italian Customs Agency, which the Company is appealing[182] Pension and Benefits - The net periodic defined benefit pension cost for the three months ended November 1, 2025, was $1.821 million, with a total cost of $5.329 million for the nine months ended[189] - The foreign pension plans had a total projected benefit obligation of $77.2 million and plan assets of $63.1 million as of November 1, 2025, resulting in a net liability of $14.1 million[188] Market Conditions - The Company continues to monitor macroeconomic conditions, including inflation and consumer spending declines, which are negatively impacting its business[36]

Financial Performance - Net sales for the three months ended November 1, 2025, increased by $41.8 million, or approximately 3%, to $1,468.8 million compared to $1,427.0 million for the prior year[63] - Net income for the three months ended November 1, 2025, was $129.8 million ($8.31 per share), compared to $124.6 million ($7.73 per share) for the same period in 2024, reflecting a 2.6% increase in net income[59] - Comparable store sales increased by 3% for the third quarter of 2025, compared to a decrease of 4% in the prior year[58] - Gross margin increased to $637.1 million for the three months ended November 1, 2025, up from $607.7 million in the same period in 2024, representing a 4.8% increase[87] - Retail operations segment gross margin as a percentage of sales rose to 45.3% for the three months ended November 1, 2025, compared to 44.5% for the same period in 2024[88] Expenses and Costs - Selling, general and administrative expenses increased by $21.5 million to $440.4 million, representing 30.0% of sales, up from 29.4% in the prior year[59] - Total SG&A expenses increased by $21.5 million to $440.4 million for the three months ended November 1, 2025, representing 30.0% of sales, up from 29.4% in the same period in 2024[93] - Interest and debt income decreased by $1.4 million to $(3.1) million for the three months ended November 1, 2025, compared to $(4.5) million for the same period in 2024[99] - Other expenses decreased by $1.1 million to $5.0 million for the three months ended November 1, 2025, compared to $6.2 million for the same period in 2024[100] Cash Flow and Capital Expenditures - Cash flow provided by operating activities for the nine months ended November 1, 2025, was $505.9 million, an increase of $156.5 million from $349.4 million in the prior year[60] - Net cash flows from operations increased by $156.4 million to $505.9 million for the nine months ended November 1, 2025, compared to $349.4 million for the same period in 2024[106] - Capital expenditures were $73.8 million for the nine months ended November 1, 2025, down from $89.1 million in the same period in 2024[113] Debt and Financial Position - The company operated 272 stores as of November 1, 2025, including 28 clearance centers, with total debt outstanding of $521.6 million[61] - The Company had cash and cash equivalents of $1.149 billion as of November 1, 2025, with a credit facility providing a borrowing capacity of $800 million[118] Special Dividends and Share Repurchase - A special dividend of $30.00 per share was declared on November 20, 2025, payable on January 5, 2026[122] - The Company repurchased 0.3 million shares of Class A Common Stock at an average price of $359.16 per share for $107.8 million during the nine months ended November 1, 2025[121] Strategic Partnerships and Future Expectations - The Company recognized income of $28.5 million from the Citibank Alliance during the nine months ended November 1, 2025, compared to $37.6 million from the Wells Fargo Alliance in the same period in 2024[111] - The company expects income from the new Citibank Alliance to initially be less than historical earnings from the Wells Fargo Alliance[85] - The Company expects cash flows from the new credit program with Citi to initially be less than historical cash flows from the Wells Fargo Alliance[112] - The company plans to continue aligning expenses with sales performance[97] Taxation - The estimated federal and state effective income tax rate for the three months ended November 1, 2025, was approximately 23.1%[103] - The Company expects the fiscal 2025 federal and state effective income tax rate to approximate 19%, influenced by a special dividend of $30.00 per share[104] Inventory and Sales Transactions - The average dollars per sales transaction increased by 5% for the three months ended November 1, 2025, despite a 1% decrease in the number of sales transactions[77] - Total inventory increased by 2% at November 1, 2025, compared to November 2, 2024[91] Construction Segment Performance - The construction segment's net sales decreased by approximately 4% to $68.2 million for the three months ended November 1, 2025, due to reduced construction activity[79] - Remaining performance obligations related to executed construction contracts totaled $92.3 million as of November 1, 2025, a decrease of approximately 54% from February 1, 2025[79] Other Income - Service charges and other income decreased by $1.9 million to $22.2 million for the three months ended November 1, 2025, compared to $24.2 million for the same period in 2024, primarily due to lower finance charges and late fees[84]

Financial Performance - Net sales for the thirteen weeks ended November 1, 2025, were $1,290,619, representing a 7% increase compared to $1,208,966 for the same period in 2024 [102]. - Comparable sales for the thirteen weeks increased by 3%, while the thirty-nine weeks saw a 4% increase compared to the previous year [104]. - Operating income for the thirteen weeks was $155,021, with an operating income margin of 12.0%, down from 14.8% in the prior year [102]. - Net income attributable to A&F for the thirteen weeks was $112,995, resulting in a net income per share of $2.36, compared to $2.50 in the same period last year [102]. - Net income for the thirteen weeks ended November 1, 2025, was $115,100, which is 8.9% of net sales, down from $133,864 or 11.1% for the same period in 2024 [151]. - Adjusted non-GAAP net income attributable to Abercrombie & Fitch for the year-to-date period of Fiscal 2025 was $306,046, representing 8.5% of net sales [125]. - Adjusted non-GAAP net income per diluted share for the thirty-nine weeks ended November 1, 2025, was $6.24, down 12.5% from $7.13 in the prior year [126]. - EBITDA for the thirteen weeks ended November 1, 2025, was $193.6 million, representing 15.0% of net sales, compared to $218.8 million or 18.1% of net sales in the same period of 2024 [127]. - Adjusted EBITDA for the thirty-nine weeks ended November 1, 2025, was $539,204, accounting for 15.0% of net sales, compared to $601,366 or 17.9% for the same period in 2024 [151]. Store Operations - The Company opened 48 new stores, remodeled 24 stores, and closed 10 stores through the end of the third fiscal quarter, with a plan for approximately 40 net store openings in Fiscal 2025 [96]. - The Company is focused on driving sales growth through marketing and store investments while pursuing new geographies via franchise, wholesale, and licensing partnerships [88]. Expenses and Costs - The Company expects to incur approximately $90 million of net tariff expense, or 170 basis points as a percent of net sales, negatively impacting operating profit in Fiscal 2025 [91]. - Cost of sales for the thirteen weeks was $483,670, representing 37.5% of net sales, an increase of 260 basis points from the previous year [108]. - Selling expenses for the thirteen weeks were $420,990, accounting for 35.6% of net sales, an increase of 80 basis points year-over-year [111]. - General and administrative expenses for the thirteen weeks ended November 1, 2025, were $188,246, a decrease of $5 million compared to the same period in 2024, with a percentage of net sales decreasing by 60 basis points to 15.0% [114]. - For the year-to-date period of Fiscal 2025, general and administrative expenses decreased by $12 million compared to the previous year, with a percentage of net sales decreasing by 140 basis points to 15.1% [115]. Cash Flow and Liquidity - Cash and equivalents decreased to $605,783 as of November 1, 2025, from $772,727 as of February 1, 2025 [102]. - For the thirty-nine weeks, net cash provided by operating activities was $313,000, down from $402,756 in the previous year [102]. - The company had cash and cash equivalents of $605.8 million and total liquidity of approximately $1.1 billion, down from $772.7 million and $1.2 billion at the beginning of Fiscal 2025 [131]. - The company expects primary cash requirements over the next twelve months to focus on investments in the business, including inventory acquisition and marketing [129]. Regional Performance - The Americas region saw a net sales increase of 7% for the thirteen weeks, with comparable sales growth of 4% [106]. - Operating income for the Americas region decreased by $16 million, or 360 basis points as a percentage of region net sales, compared to the third quarter of Fiscal 2024 [120]. - Operating income for the EMEA region decreased by $22 million, or 460 basis points as a percentage of region net sales, compared to the year-to-date period of Fiscal 2024 [120]. - Hollister brand net sales increased by 16% for the thirteen weeks, while Abercrombie brand sales decreased by 2% [107]. Tax and Interest - The effective tax rate for the thirteen weeks ended November 1, 2025, was 28.5%, compared to 28.8% for the same period in 2024 [123]. - Interest income, net for the thirteen weeks ended November 1, 2025, decreased by $2.8 million compared to the same period in 2024, primarily due to a reduction in interest income from time deposits and money market accounts [121]. Strategic Initiatives - The Company anticipates implementing new merchandising and human capital management systems in the first half of Fiscal 2026 as part of its multi-year ERP system transformation [88]. - The Company is implementing mitigation strategies to address the impact of tariffs, including evaluating supply chain changes and negotiating with vendors [91]. - The Company has a disciplined investment philosophy aimed at maintaining a durable balance sheet and consistent free cash flow [99]. - The Company continues to monitor global events and assess their potential impacts on business operations [94]. - The enactment of the One Big Beautiful Bill Act did not have a material impact on the Company's consolidated financial statements [98]. Foreign Currency and Risk Management - The company uses foreign currency exchange forward contracts to mitigate risks associated with foreign currency transactions and forecasted transactions [157]. - A hypothetical 10% devaluation of the U.S. dollar against foreign currencies could decrease the fair values of foreign currency exchange forward contracts by approximately $17.5 million [158]. - The company eliminated interest rate risk by redeeming all outstanding 8.75% Senior Secured Notes on July 15, 2024 [155]. - The impact of foreign currency exchange rates on net sales was neutral for the thirteen weeks ended November 1, 2025, with no significant changes reported [149]. Share Repurchase - The company repurchased approximately 4.5 million shares of its Common Stock for about $350 million during the year-to-date period ended November 1, 2025, with $950 million remaining under the $1.3 billion share repurchase program [133].