# Lulu's Fashion Lounge Holdings, Inc.: Form 10-Q for the period ended Jun 29, 2025

- Company: [Lulu's Fashion Lounge Holdings, Inc.](/companies/lvlu.md) (CIK 1780201)
- Form: 10-Q
- Filed: 2025-08-13
- Accepted by EDGAR: Aug 13, 2025, 20:02 ET
- Period: 2025-06-29
- Accession: 0001558370-25-011371
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1780201/000155837025011371/tmb-20250629x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1780201/000155837025011371/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-29.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-03-31 to 2025-06-29 | $81.5m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2024-12-30 to 2025-06-29 | $145.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-03-31 to 2025-06-29 | $44.6m | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2024-12-30 to 2025-06-29 | $82.9m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2025-03-31 to 2025-06-29 | $36.9m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2024-12-30 to 2025-06-29 | $62.8m | us-gaap:GrossProfit |
| Operating income | 3 months, 2025-03-31 to 2025-06-29 | −$2.6m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-12-30 to 2025-06-29 | −$10.7m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-03-31 to 2025-06-29 | $856.0k | us-gaap:InterestExpenseNonoperating |
| Interest expense | 6 months, 2024-12-30 to 2025-06-29 | $1.4m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2025-03-31 to 2025-06-29 | $62.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-12-30 to 2025-06-29 | −$12.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-03-31 to 2025-06-29 | −$3.0m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-12-30 to 2025-06-29 | −$11.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-03-31 to 2025-06-29 | −$1.08 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-12-30 to 2025-06-29 | −$3.94 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-03-31 to 2025-06-29 | −$1.08 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-12-30 to 2025-06-29 | −$3.94 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-03-31 to 2025-06-29 | 2,782,417 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-12-30 to 2025-06-29 | 2,787,924 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-12-30 to 2025-06-29 | $7.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-12-30 to 2025-06-29 | $276.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 6 months, 2024-12-30 to 2025-06-29 | $742.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-06-29 | $1.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-29 | $51.6m | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-29 | $101.0m | us-gaap:Assets |
| Current liabilities | at 2025-06-29 | $82.7m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-06-29 | $96.7m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-06-29 | $4.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 56,145 characters.

*You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024, filed with the Securities and Exchange Commission (“SEC”) on March 27, 2025 (the “2024 10-K”). This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Item I, Part 1A, “Risk Factors” in our 2024 10-K, Part II, Item 1A, “Risk Factors” in the Quarterly Report on Form 10-Q for the quarter ended March 30, 2025, and in Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q for the quarter ended June 29, 2025. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.*

### Overview

Lulu’s Fashion Lounge Holdings, Inc., a Delaware Corporation (“Lulus”, “we”, “our”, or the “Company”) is a customer-driven, digitally-native attainable luxury fashion brand for women, offering modern, unapologetically feminine designs at attainable prices for all of life’s fashionable moments. Our goal is to become the most trusted and number one destination for dresses, helping every woman feel confident and celebrated, supporting her for all of life's occasions. Lulus primarily serves a large, diverse community of Millennial and Gen Z women, who typically meet us in their 20s and stay with us through their 30s and beyond. We focus relentlessly on giving our customers what they want by using direct consumer feedback and insights to refine product offerings and elevate the customer experience. Lulus’ world class personal stylists, bridal concierge, and customer care team share an unwavering commitment to elevating style and quality and bring exceptional customer service and personalized shopping to customers around the world.

### Recent Developments

### Transfer to Nasdaq Capital Market

On May 27, 2025, we submitted an application for a transfer from the Nasdaq Global Market to the Nasdaq Capital Market which was approved and became effective as of the opening of business on June 10, 2025. The transfer to the Nasdaq Capital Market addressed a deficiency with the minimum of $10 million of stockholders’ equity required for continued listing on the Nasdaq Global Market. The Nasdaq Capital Market requires a minimum of $2.5 million of stockholders’ equity for continued listing.

### Departure of Chief Financial Officer

On May 30, 2025, Tiffany R. Smith notified us of her decision to resign as Chief Financial Officer, effective June 30, 2025 (the “Transition Date”). Following the Transition Date, Ms. Smith continued to serve in an advisory position with us through the filing of this Quarterly Report on Form 10-Q for the fiscal quarter ended June 29, 2025, to ensure an orderly transition of her duties. Ms. Smith’s resignation was for personal reasons and did not arise from any disagreement on any matter relating to the operations, policies, financial results or accounting practices of the Company. Our Board of Directors is conducting a search process with the assistance of a leading executive search firm to identify our next Chief Financial Officer. In the interim, our Board of Directors appointed Crystal Landsem to serve as the Company’s Interim Chief Financial Officer, effective as of the Transition Date, and she will hold the position of Interim Chief Financial Officer until a successor Chief Financial Officer is appointed. For avoidance of doubt, Ms. Landsem will also continue to serve as Chief Executive Officer, a position she has held with the Company since March 6, 2023.

### Reverse Stock Split

On June 11, 2025, the Company’s Board of Directors approved a 1-for-15 reverse stock split (the “Reverse Stock Split”) of the Company’s common stock, par value $0.001 per share. On June 26, 2025, the Company filed a Certificate of Amendment to the Company’s amended and restated certificate of incorporation with the Secretary of State of the State of Delaware to effect the Reverse Stock Split. As a result, each stockholder of record on June 26, 2025 received one share of common stock for every fifteen shares held on the record date. All share, equity award, and per share amounts presented herein have been retroactively adjusted to reflect this Reverse Stock Split. The Reverse Stock Split was effective for purposes of trading on the Nasdaq Capital Market as of the opening of business on July 7, 2025.

### Compliance with Nasdaq Continued Listing Standards

We were previously notified on February 27, 2025 that we were not in compliance with Nasdaq Listing Rule 5450(a)(1) because our common stock had failed to maintain a minimum bid price of $1.00 per share for a period of thirty (30) consecutive business days.

Pursuant to the Nasdaq Notice, Nasdaq notified us that for 10 consecutive business days from July 7 to July 18, 2025, the closing bid price of our common stock was at $1.00 per share or greater, and as such, we had regained compliance with the Minimum Bid Price Requirement.

On July 21, 2025, we received a notice (the “Nasdaq Notice”) from The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that we had regained compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”) for continued listing on The Nasdaq Capital Market.

### Amendment to Forbearance Agreement and Fifth Amendment to 2021 Credit Agreement, As Amended

On August 11, 2025, we entered into the Forbearance Amendment with the Administrative Agent and Lenders. Pursuant to the terms of the Forbearance Amendment, the Administrative Agent and Lenders agreed to amend the definition of “Forbearance Termination Event” set forth in the Forbearance Agreement to replace “August 15, 2025” with “August 22, 2025”. The Forbearance Amendment also amended the definition of “Maturity Date” set forth in the 2021 Credit Agreement, as amended, to replace “August 15, 2025” with “August 22, 2025”. We are currently negotiating a new asset-based revolving credit facility.

### Impact of Macroeconomic Trends on Business

Changing macroeconomic factors, including inflation, interest rates, student loan repayment resumption, tariffs or bans, world events, wars and domestic and international conflicts, existing and future laws, regulations and directives and executive orders, and overall consumer confidence with respect to current and future economic conditions have directly impacted our sales as discretionary consumer spending levels and shopping behavior fluctuate with these factors. We have responded to these factors by taking appropriate pricing, promotional and other actions to stimulate customer demand. These factors are expected to continue to have an impact on our business, results of operations, our growth and financial condition.

### Liquidity

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. During the thirteen and twenty-six weeks ended June 29, 2025, the Company incurred net losses of $3.0 million and $11.0 million, respectively. As of June 29, 2025, we had $1.5 million in cash and cash equivalents and $5.8 million in outstanding amounts under the credit agreement with Bank of America for the Company’s revolving facility (“2021 Credit Agreement”), as amended, classified within total current liabilities. During the twenty-six weeks ended June 29, 2025, the Company did not borrow any amount under the 2021 Credit Agreement, as amended, and repaid $7.3 million of the outstanding balance. See Note 5, *Debt* within the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for further information on the 2021 Credit Agreement, as amended.

We are actively seeking alternative debt financing and continuing to take certain cash conservation measures, including adjustments to marketing and other fixed and variable costs and capital spend to meet our obligations as needed. While we are currently negotiating a new asset-based revolving credit facility, there can be no assurances that we will be able to close such credit facility in a timely manner on acceptable terms, if at all. As the ability to raise additional debt financing is outside of management’s control, we cannot conclude that management’s plans will be effectively implemented within twelve months from the date the condensed consolidated financial statements are issued. Accordingly, we have concluded that these plans do not alleviate substantial doubt about our ability to continue as a going concern. The condensed consolidated financial statements do not reflect any adjustments that might result from the outcome of this uncertainty.

### Key Operating and Financial Metrics

We collect and analyze operating and financial data to assess the performance of our business and optimize resource allocation. The following table sets forth our key performance indicators for the periods presented.

*(in thousands, except percentages and Average Order Value)*

| ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ Thirteen Weeks Ended June 29, ​ 2025 ​ | ​ ​ ​ | ​ ​ ​ June 30, ​ 2024 ​ | ​ ​ ​ ​ | ​ ​ ​ Twenty-Six Weeks Ended June 29, 2025 | ​ ​ ​ | ​ ​ ​ June 30, 2024 | ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Gross Margin | ​ | 45.3% |  | 45.5% | ​ | 43.1% |  | ​ 44.0% |  |
| Net loss | ​ | $(2,995) ​ | ​ | $(10,796) ​ | ​ | $(10,993) ​ | ​ | $(16,532) ​ | ​ |
| Adjusted EBITDA (1) | ​ | $482 ​ | ​ | $(207) ​ | ​ | $(4,188) ​ | ​ | $(2,866) ​ | ​ |
| Adjusted EBITDA margin (1) | ​ | 0.6% | ​ | (0.2)% | ​ | (2.9)% | ​ | (1.7)% | ​ |
| Active Customers |  | ​ 2,460 | ​ | ​ 2,670 | ​ | ​ 2,460 | ​ | ​ 2,670 | ​ |
| Average Order Value | ​ | $145 ​ | ​ | $143 ​ | ​ | $141 ​ | ​ | $143 ​ | ​ |

(1) For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure and why we consider them useful, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures.”

### Gross Margin

We define Gross Margin as gross profit as a percentage of our net revenue. Gross profit is equal to our net revenue less cost of revenue. Certain of our competitors and other retailers may report cost of revenue differently than we do. As a result, the reporting of our gross profit and Gross Margin may not be comparable to other companies.

### Active Customers

We define Active Customers as the number of customers who have made at least one purchase across our platform in the prior 12-month period. Active Customer count is measured as of the last day of the relevant period. We consider the number of Active Customers to be a key performance metric on the basis that it is directly related to consumer awareness of our brand, our ability to attract visitors to our primarily digital platform, and our ability to convert visitors to paying customers. Active Customers counts are based on deduplication logic using customer account and guest checkout name, address, and email information.

### Average Order Value

We define Average Order Value (“AOV”) as the sum of the total gross sales before returns across our platform in a given period, plus shipping revenue, less discounts and markdowns, divided by the Total Orders Placed (as defined below) in that period. AOV reflects the average basket size of our customers. AOV may fluctuate as we continue investing in the development and introduction of new Lulu’s merchandise and as a result of our promotional discount activity.

### Total Orders Placed

We define Total Orders Placed as the number of customer orders placed across our platform during a particular period. An order is counted on the day the customer places the order. We do not adjust the number of Total Orders Placed for any cancellation or return that may have occurred subsequent to a customer placing an order. We consider Total Orders Placed as a key performance metric on the basis that it is directly related to our ability to attract and retain customers as well as drive purchase frequency. Total Orders Placed, together with AOV, is an indicator of the net revenue we expect to generate in a particular period.

### Non-GAAP Financial Measures

We report our financial results in accordance with generally accepted accounting principles in the U.S. (“GAAP”). However, management believes that certain non-GAAP financial measures provide investors with additional useful information in evaluating our performance and that excluding certain items that may vary substantially in frequency and magnitude period-to-period from net loss provides useful supplemental measures that assist in evaluating our ability to generate earnings and to more readily compare these metrics between past and future periods. These non-GAAP financial measures may be different than similarly titled measures used by other companies.

### Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow

Adjusted EBITDA is a non-GAAP financial measure that we calculate as net loss before interest expense, income taxes or benefit, depreciation and amortization adjusted to exclude the effects of equity-based compensation expense and other non-routine expenses. Adjusted EBITDA is a key measure used by management to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. We believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to investors and others in understanding and evaluating our operating results and in comparing operating results across periods. We view Free Cash Flow as an important indicator of our liquidity because it measures the amount of cash we generate.

To supplement our condensed consolidated financial statements which are prepared in accordance with GAAP, we use “Adjusted EBITDA,” “Adjusted EBITDA Margin” (collectively referred to as “Adjusted EBITDA”) and “Free Cash Flow” which are non-GAAP financial measures. Our non-GAAP financial measures should not be considered in isolation from, or as substitutes for, financial information prepared in accordance with GAAP. There are several limitations related to the use of our non-GAAP financial measures as compared to the closest comparable GAAP measures. Some of these limitations include:

- Adjusted EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
- Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
- Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt;
- Adjusted EBITDA does not reflect our tax expense or the cash requirements to pay our taxes;
- Adjusted EBITDA does not reflect certain non-routine expenses that may represent a reduction in cash available to us;
- Adjusted EBITDA excludes equity-based compensation which has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy.
- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and such measures do not reflect any cash requirements for such replacements;
- Free Cash Flow does not represent the total residual cash flow available for discretionary purposes; and
- Other companies in our industry may calculate such measures differently than we do, limiting their usefulness as comparative measures.

Due to these limitations, Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP measures only supplementally. As noted in the table below, Adjusted EBITDA includes adjustments to exclude the impact of depreciation and amortization, interest expense, income taxes, and equity-based compensation. It is reasonable to expect that some of these items will occur in future periods. However, we believe these adjustments are appropriate because the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our business and may complicate comparisons of our internal results of operations and results of operations of other companies over time. In addition, Adjusted EBITDA includes adjustments for other items that we do not expect to regularly record. Each of the normal recurring adjustments and other adjustments described in this paragraph and in the following reconciliation table help management with a measure of our core operating performance over time by removing items that are not related to day-to-day operations. Adjusted EBITDA Margin is a non-GAAP financial measure that we calculate as Adjusted EBITDA (as defined above) as a percentage of our net revenue.

The following table provides a reconciliation for Adjusted EBITDA and Adjusted EBITDA Margin:

*(in thousands)*

*(in thousands)*

| ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ Thirteen Weeks Ended June 29, 2025 | ​ ​ ​ | ​ ​ ​ June 30, 2024 | ​ ​ ​ ​ ​ | ​ ​ ​ Twenty-Six Weeks Ended June 29, 2025 | ​ ​ ​ | ​ ​ ​ June 30, 2024 | ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Net loss |  | $(2,995) ​ | ​ | $(10,796) | ​ | $(10,993) ​ | ​ | $(16,532) | ​ |
| Depreciation and amortization | ​ | 1,277 ​ | ​ | 1,371 ​ | ​ | 2,628 ​ | ​ | 2,710 ​ | ​ |
| Interest expense | ​ | 856 ​ | ​ | 270 ​ | ​ | 1,433 ​ | ​ | 653 ​ | ​ |
| Income tax provision (benefit) | ​ | 62 ​ | ​ | 6,331 ​ | ​ | (12) ​ | ​ | 5,752 ​ | ​ |
| Equity-based compensation expense (1) | ​ | 1,282 ​ | ​ | 2,194 ​ | ​ | 2,756 ​ | ​ | 4,128 ​ | ​ |
| Other non-routine expense (2) | ​ | ​ — ​ | ​ | ​ 423 ​ | ​ | ​ — ​ | ​ | ​ 423 ​ | ​ |
| Adjusted EBITDA | ​ | $482 ​ | ​ | $(207) ​ | ​ | $(4,188) ​ | ​ | $(2,866) ​ | ​ |
| Net loss margin | ​ | ​ (3.7)% | ​ | ​ (11.7)% | ​ | ​ (7.5)% | ​ | ​ (9.8)% | ​ |
| Adjusted EBITDA margin | ​ | 0.6% | ​ | (0.2)% | ​ | (2.9)% | ​ | (1.7)% | ​ |

(1) The thirteen and twenty-six weeks ended June 29, 2025 include equity-based compensation expense for performance stock units (“PSUs”) and restricted stock units (“RSUs”) granted during the period and prior periods. The thirteen and twenty-six weeks ended June 30, 2024 include equity-based compensation expense for PSUs and RSUs granted during the period and prior periods, as well as other equity-based awards granted in prior periods.

(2) The thirteen and twenty-six weeks ended June 30, 2024 include non-routine expenses related to a legal reserve accrual net of an anticipated and contingent insurance receivable. See Note 7, *Commitments and Contingencies - Litigation and Other*, in the Notes to the Condensed Consolidated Financial Statements included in the Quarterly Report on Form 10-Q for the period ended June 30, 2024, for more information.

### Free Cash Flow

Free Cash Flow is a non-GAAP financial measure that we calculate as net cash provided by operating activities less cash used for capitalized software development costs and purchases of property and equipment. We view Free Cash Flow as an important indicator of our liquidity because it measures the amount of cash we generate.

A reconciliation to non-GAAP Free Cash Flow from net cash provided by operating activities for the thirteen and twenty-six weeks ended June 29, 2025 and June 30, 2024 is as follows:

| ​ ​ ​ | ​ ​ ​ | ​ ​ Thirteen Weeks Ended June 29, 2025 | ​ ​ | ​ ​ June 30, 2024 | ​ ​ ​ | ​ ​ Twenty-Six Weeks Ended June 29, 2025 | ​ ​ | ​ ​ June 30, 2024 | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Net cash provided by operating activities | ​ | $(1,356) | ​ | $3,690 | ​ | $6,966 | ​ | $10,637 | ​ |
| Capitalized software development costs | ​ | ​ (383) | ​ | ​ (341) | ​ | ​ (810) | ​ | ​ (738) | ​ |
| Purchases of property and equipment | ​ | ​ (136) | ​ | ​ (323) | ​ | ​ (276) | ​ | ​ (885) | ​ |
| Free Cash Flow | ​ | $(1,875) | ​ | $3,026 | ​ | $5,880 | ​ | $9,014 | ​ |

### Factors Affecting Our Performance

Our financial condition and results of operations have been, and will continue to be, affected by a number of factors that present significant opportunities for us but also pose risks and challenges, including what is discussed below. See Part I, Item 1A, “Risk Factors” in our 2024 10-K and Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q for the quarter ended June 29, 2025.

### Customer Acquisition

Our business performance depends in part on our continued ability to cost-effectively acquire new customers. We define customer acquisition cost (“CAC”) as our brand and performance marketing expenses attributable to acquiring new customers, including, but not limited to, agency costs and marketing team costs but excluding any applicable equity-based compensation, divided by the number of customers who placed their first order with us in a given period. As a primarily digital brand, our marketing strategy is primarily focused on brand awareness marketing and digital advertising in channels like search, social, and programmatic – platforms that enable us to engage our customer where she spends her time, and in many cases also quickly track the success of our marketing, which allows us to adjust and optimize our marketing spend.

### Customer Retention

Our continued success depends in part on our ability to retain and drive repeat purchases from our existing customers. We monitor retention across our entire customer base. Our goal is to attract and convert visitors into Active Customers and foster relationships that drive repeat purchases. During the trailing 12 months ended June 29, 2025, we served 2.5 million Active Customers compared to 2.7 million for the trailing 12 months ended June 30, 2024.

### Inventory Management

We utilize a data-driven strategy that leverages our proprietary reorder algorithm to manage inventory as efficiently as possible. Our “test, learn, and reorder” approach consists of limited inventory purchases followed by the analysis of proprietary data including real-time transaction data and customer feedback, which then informs our selection and customization of popular merchandise prior to reordering in larger quantities. While our initial orders are limited in size and financial risk and our supplier partners are highly responsive, we nonetheless purchase inventory in anticipation of future demand and therefore are exposed to potential shifts in customer preferences and price sensitivity over time. As we continue to grow, we will adjust our inventory purchases to align with the current needs of the business.

### Investment in Our Operations and Infrastructure

We will continue to invest in our operations and infrastructure to facilitate further operational efficiencies and growth of our business, while managing expenses to align with our net revenue expectations and goals to return to profitability. We will continue to set a high bar for any new investments or capital spending initiatives as we believe that a disciplined approach to capital spending will enable us to generate positive returns on our investments over the long term.

### Components of Our Results of Operations

### Net Revenue

Net revenue consists primarily of gross sales, net of merchandise returns, international duties and taxes and promotional discounts and markdowns, generated from the sale of apparel, footwear, and accessories. Net revenue excludes sales taxes assessed by governmental authorities. We recognize net revenue at the point in time when control of the ordered product is transferred to the customer, which we determine to have occurred upon shipment.

### Cost of Revenue and Gross Margin

Cost of revenue consists of the product costs of merchandise sold to customers; shipping and handling costs, including all inbound, outbound, and return shipping expenses; rent, insurance, business property tax, utilities, depreciation and amortization, and repairs and maintenance related to our distribution facilities; and charges related to inventory shrinkage, damages, and our allowance for excess or obsolete inventory. Cost of revenue is primarily driven by growth in orders placed by customers, the mix of the product available for sale on our site, and transportation costs related to inventory receipts from our suppliers. We expect our cost of revenue to fluctuate as a percentage of net revenue primarily due to how we manage our inventory and merchandise mix.

Gross profit is equal to our net revenue less cost of revenue. We calculate Gross Margin as gross profit as a percentage of our net revenue. Our Gross Margin varies across Lulus, exclusive to Lulus, and third-party branded products. Exclusive to Lulus consists of products that we develop with design partners and have exclusive rights to sell across our platform, but that do not bear the Lulus brand. Gross Margin on sales of Lulus and exclusive to Lulus merchandise is generally higher than Gross Margin on sales of third-party branded products, which we offer for customers to “round out” the shopping basket. As we continue to optimize our distribution capabilities and gain more negotiation leverage with suppliers as we scale, our Gross Margin may fluctuate from period to period depending on the interplay of these factors.

### Selling and Marketing Expenses

Our selling and marketing expenses consist primarily of payment processing fees, advertising, targeted online performance marketing and customer order courtesy adjustments. Selling and marketing expenses also include our spend on brand marketing channels, including compensation and free products to social media influencers, events, and other forms of online and offline marketing related to growing and retaining the customer base. As discussed in “Net Revenue” above, in any given period, the amount of our selling and marketing expense can be affected by the use of promotional discounts in such period.

### General and Administrative Expenses

General and administrative expenses consist primarily of payroll and benefits costs, including equity-based compensation for our employees involved in general corporate functions including finance, merchandising, marketing, and technology, as well as costs associated with the use by these functions of facilities and equipment, including depreciation, rent, and other occupancy expenses. General and administrative expenses are primarily driven by increases in headcount required to support business growth and meet our obligations as a public company.

### Interest Expense

Interest expense consists of interest expense related to the revolving facility under the 2021 Credit Agreement, as amended.

### Income Tax Benefit (Provision)

The benefit (provision) for income taxes represents federal, state, and local income taxes. The effective rate differs from the statutory rate primarily due to the establishment of a deferred tax asset valuation allowance as the Company could not provide sufficient positive evidence that the deferred taxes will be more-likely-than-not realized in the future. Our effective tax rate will change from quarter to quarter based on recurring and nonrecurring factors including, but not limited to, enacted tax legislation, state and local income taxes, and tax audit settlements.

The Company regularly assesses the realizability of deferred tax assets and records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. In assessing the realizability of our deferred tax assets, we weigh all available positive and negative evidence. This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income. Due to the weight of objectively verifiable negative evidence, the Company established a valuation allowance of $14.9 million as of December 29, 2024 and the same position for the period ended June 29, 2025.

### Our Results of Operations

The following tables set forth our condensed consolidated results of operations for the periods presented and as a percentage of net revenue and net loss:

*(in thousands)*

| ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ Thirteen Weeks Ended June 29, 2025 | ​ ​ ​ | ​ ​ June 30, 2024 | ​ ​ ​ ​ | ​ ​ Twenty-Six Weeks Ended June 29, 2025 | ​ ​ ​ | ​ ​ June 30, 2024 | ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Net revenue |  | $81,520 | ​ | $91,966 |  | $145,675 | ​ | $169,225 |  |
| Cost of revenue | ​ | 44,588 | ​ | 50,083 | ​ | 82,902 | ​ | 94,696 | ​ |
| Gross profit | ​ | 36,932 | ​ | 41,883 | ​ | 62,773 | ​ | 74,529 | ​ |
| Selling and marketing expenses | ​ | 21,993 | ​ | 24,914 | ​ | 37,908 | ​ | 42,607 | ​ |
| General and administrative expenses | ​ | 17,562 | ​ | 21,436 | ​ | 35,606 | ​ | 42,547 | ​ |
| Loss from operations | ​ | (2,623) | ​ | (4,467) | ​ | (10,741) | ​ | (10,625) | ​ |
| Interest expense | ​ | (856) | ​ | (270) | ​ | (1,433) | ​ | (653) | ​ |
| Other income, net | ​ | 546 | ​ | 272 | ​ | 1,169 | ​ | 498 | ​ |
| Loss before income taxes | ​ | (2,933) | ​ | (4,465) | ​ | (11,005) | ​ | (10,780) | ​ |
| Income tax benefit (provision) | ​ | (62) | ​ | (6,331) | ​ | 12 | ​ | (5,752) | ​ |
| Net loss | ​ | $(2,995) | ​ | $(10,796) | ​ | $(10,993) | ​ | $(16,532) | ​ |

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Thirteen Weeks Ended June 29, 2025 | ​ ​ ​ | ​ ​ June 30, 2024 | ​ ​ ​ ​ | ​ ​ Twenty-Six Weeks Ended June 29, 2025 | ​ ​ ​ | ​ ​ June 30, 2024 | ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Net revenue |  | 100% |  | 100% |  | 100% |  | 100% |  |
| Cost of revenue | ​ | 55 | ​ | 54 | ​ | 57 | ​ | 56 | ​ |
| Gross profit | ​ | 45 ​ | ​ | 46 ​ | ​ | 43 ​ | ​ | 44 ​ | ​ |
| Selling and marketing expenses | ​ | 26 ​ | ​ | 28 ​ | ​ | 26 ​ | ​ | 25 ​ | ​ |
| General and administrative expenses | ​ | 22 ​ | ​ | 23 ​ | ​ | 24 ​ | ​ | 25 ​ | ​ |
| Loss from operations | ​ | (3) ​ | ​ | (5) ​ | ​ | (7) ​ | ​ | (6) ​ | ​ |
| Interest expense | ​ | (1) ​ | ​ | — ​ | ​ | (1) ​ | ​ | — ​ | ​ |
| Other income, net | ​ | 1 ​ | ​ | — ​ | ​ | 1 ​ | ​ | — ​ | ​ |
| Loss before income taxes | ​ | (3) ​ | ​ | (5) ​ | ​ | (7) ​ | ​ | (6) ​ | ​ |
| Income tax benefit (provision) | ​ | — ​ | ​ | (7) ​ | ​ | — ​ | ​ | (3) ​ | ​ |
| Net loss | ​ | (3)% | ​ | (12)% | ​ | (7)% | ​ | (9)% | ​ |

### Comparisons for the Thirteen Weeks Ended June 29, 2025 and June 30, 2024

#### Net Revenue

Net revenue decreased in the thirteen weeks ended June 29, 2025 by $10.4 million, or 11%, compared to the same period of the prior year, primarily due to a 16% decrease in Total Orders Placed, partially offset by the impact of higher AOV and lower return rates.

#### Cost of Revenue

Cost of revenue decreased in the thirteen weeks ended June 29, 2025 by $5.5 million, or 11% compared to the same period of the prior year, primarily driven by the impact of lower net revenue.

#### Gross Profit

Gross profit decreased in the thirteen weeks ended June 29, 2025 by $5.0 million, or 12% compared to the same period of the prior year, primarily driven by the impact of the lower volume of sales.

#### Selling and Marketing Expenses

Selling and marketing expenses decreased in the thirteen weeks ended June 29, 2025 by $2.9 million, or 12%, compared to the same period of the prior year, due to lower online marketing costs of $2.4 million, lower merchant processing fees of $0.3 million, and lower campaign shoots and website spend of $0.2 million.

#### General and Administrative Expenses

General and administrative expenses decreased in the thirteen weeks ended June 29, 2025 by $3.9 million or 18%, compared to the same period of the prior year. The decrease was primarily due to a $1.0 million decrease in fixed labor driven by reduced fixed headcount, a $0.8 million decrease in equity-based compensation expense, a $0.6 million decrease in variable labor and benefits associated with lower sales volume, a $0.5 million decrease in directors and officers (“D&O”) liability insurance and legal and professional fees and a $0.4 million decrease in software, supplies and travel.

#### Interest Expense

Interest expense increased in the thirteen weeks ended June 29, 2025 by $0.6 million, or 218%, compared to the same period of the prior year. The increase is attributable to higher interest rates and higher average borrowings.

#### Income Tax Provision

Income tax provision in the thirteen weeks ended June 29, 2025 decreased by $6.2 million to a provision of $0.1 million, compared to a provision of $6.3 million in the thirteen weeks ended June 30, 2024. The decrease was primarily due to the establishment of valuation allowance in 2024.

### Comparisons for the Twenty-Six Weeks Ended June 29, 2025 and June 30, 2024

#### Net Revenue

Net revenue decreased in the twenty-six weeks ended June 29, 2025 by $23.6 million, or 14%, compared to the twenty-six weeks ended June 30, 2024. The decrease is primarily the result of a 17% decrease in Total Orders Placed and lower AOV, partially offset by lower return rates, compared to the twenty-six weeks ended June 30, 2024.

#### Cost of Revenue

Cost of revenue decreased in the twenty-six weeks ended June 29, 2025 by $11.8 million, or 13%, compared to the same period of the prior year, which was primarily driven by the impact of lower net revenue.

#### Gross Profit

Gross profit decreased in the twenty-six weeks ended June 29, 2025 by $11.8 million, or 16% compared to the same period of the prior year, which was primarily driven by the impact of the lower volume of sales.

#### Selling and Marketing Expenses

Selling and marketing expenses decreased in the twenty-six weeks ended June 29, 2025 by $4.7 million, or 11%, compared to the same period of the prior year, due to lower online marketing costs of $3.5 million, lower performance and awareness marketing spend of $0.6 million, and lower merchant processing fees of $0.6 million, partly due to the lower volume of sales.

#### General and Administrative Expenses

General and administrative expenses decreased in the twenty-six weeks ended June 29, 2025 by $6.9 million or 16%, compared to the same period of the prior year. The decrease was primarily due to a $2.3 million decrease in fixed labor costs due to reduced headcount, a $1.4 million decrease in equity-based compensation expense, a $1.1 million decrease in variable labor and benefits costs primarily associated with lower sales volume and operational efficiencies, a $0.9 million decrease in D&O insurance costs, and a $0.5 million decrease in software expenses.

#### Interest Expense

Interest expense increased in the twenty-six weeks ended June 29, 2025 by $0.8 million, compared to the same period of the prior year. The increase is attributable to higher average borrowings and higher interest rates.

#### Income Tax Benefit (Provision)

Our income tax provision in the twenty-six weeks ended June 29, 2025 decreased by $5.8 million to an immaterial benefit position, compared to a provision of $5.8 million in the twenty-six weeks ended June 30, 2024. The decrease was primarily due to the establishment of valuation allowance in 2024.

### Quarterly Trends and Seasonality

We experience moderate seasonal fluctuations in aggregate sales volume during the year. Seasonality in our business does not follow that of traditional retailers, such as a typical concentration of revenue in the holiday quarter. Our net revenue is typically highest in the second and third quarters due to the increased demand for event dresses in the spring and summer. Net revenue is typically the lowest in the first and fourth quarters when event dresses are less in demand. The seasonality of our business has resulted in variability in our total net revenue quarter-to-quarter. We believe that this seasonality has affected and will continue to affect our results of operations.

Our quarterly gross profit fluctuates primarily based on how we manage our inventory and merchandise mix and has typically been in line with fluctuations in net revenue. When quarterly gross profit fluctuations have deviated relative to the fluctuations in sales, these situations have been driven by non-recurring, external factors, such as global pandemics or trade wars.

Selling and marketing expenses generally fluctuate with net revenue. Further, in any given period, the amount of our selling and marketing expense can be affected by the use of promotional discounts in such period. In addition, we may increase or decrease marketing spend to assist with optimizing inventory mix and quantities.

General and administrative expenses consist primarily of payroll and benefit costs and vary quarter to quarter due to changes in the number of seasonal workers to meet demand based on our seasonality.

### Liquidity and Capital Resources

Our primary sources of liquidity and capital resources are cash generated from operating activities as we have no further access to borrowings under our 2021 Credit Agreement, as amended. Our primary requirements for liquidity and capital are inventory purchases, payroll and general operating expenses, capital expenditures associated with our distribution facilities, capitalized software and debt service requirements.

### Credit Facilities

In November 2021, we entered into the 2021 Credit Agreement that provided for borrowings up to $50.0 million with a maturity date of November 15, 2024.

On July 22, 2024, we entered into an amendment to the 2021 Credit Agreement (the “First Credit Amendment”) which extended the maturity date to August 15, 2025 and reduced the Revolving Commitment (as defined in the 2021 Credit Agreement) to $15.0 million, with a further reduction to $10.0 million on or about March 31, 2025. The First Credit Amendment also reduced the previous letters of credit sublimit from $7.5 million to $5.0 million.

On November 12, 2024, we entered into a second amendment to the 2021 Credit Agreement (the “Second Credit Amendment”) which extended our reporting deadline for our financial statements and covenant compliance certificate for the third quarter 2024 to December 16, 2024, and required us to test the financial covenants no later than December 16, 2024. The Second Credit Amendment prohibited us from requesting any additional borrowing or letter of credit extension until the financial statements and the compliance certificate for the third quarter of 2024 were delivered. We successfully delivered the third quarter financial statements and the compliance certificate on December 16, 2024.

On December 13, 2024, we entered into a third amendment to the 2021 Credit Agreement (the “Third Credit Amendment”). The Third Credit Amendment provided a limited waiver for us to comply with the financial covenants for the period of four fiscal quarters ended on or about September 30, 2024. Under the Third Credit Amendment, we are required to, among other things, not permit unrestricted cash and cash equivalents, as determined on a consolidated basis and tested weekly, to be less than certain specified minimum amounts. The Third Credit Amendment also requires the payment of certain consent fees and increases the interest rates payable under the amended 2021 Credit Agreement for periods commencing on or after December 13, 2024 and February 1, 2025, as described in Note 5, *Debt* within the accompanying Notes to the Condensed Consolidated Financial Statements. Pursuant to the Third Credit Amendment, there was no financial covenant test for the quarter ended September 29, 2024.

On March 27, 2025, we entered into a fourth amendment to the 2021 Credit Agreement (the “Fourth Credit Amendment”). The Fourth Credit Amendment provided a limited waiver for us to comply with the financial covenants for the period of four fiscal quarters ended on or about December 31, 2024. It also suspends measurement of the Consolidated

Total Leverage Ratio and Consolidated Fixed Charge Covenant Ratio for the fiscal quarter ended on or about March 31, 2025. The Fourth Credit Amendment prohibits the Company from requesting any further borrowings under the 2021 Credit Agreement, as amended. The Fourth Credit Amendment includes a timeline of milestones for a refinancing transaction with a third-party lender, and limits our ability to further enter into certain transactions, including certain liens, dispositions, investments, debt and restricted payments. The Fourth Credit Amendment also requires the payment of the remaining portion of the consent fee payable under the Third Credit Amendment and increases the interest rates payable under the 2021 Credit Agreement, as amended, for periods commencing on or after March 27, 2025, as described in Note 5, *Debt* within the accompanying Notes to the Condensed Consolidated Financial Statements. Although we have secured these limited waivers, we cannot guarantee that we will be able to satisfy all of the necessary conditions or that we will not incur another covenant violation in the future.

On June 23, 2025, we entered into a Forbearance Agreement (the “Forbearance Agreement”) related to the 2021 Credit Agreement, as amended, with the lenders party thereto and Bank of America, N.A., as administrative agent (the “Administrative Agent”), and Swing Line Lender and an L/C Issuer (the “Lenders”). Pursuant to the terms of the Forbearance Agreement, the Administrative Agent and Lenders agreed that they would forbear, during the Forbearance Period (as defined below), from exercising any and all rights and remedies with respect to or arising out of the events of default that occurred as a result of the Company’s failure to comply with certain Refinancing Transaction Milestones by the specified dates under Sections 6.19(a), (c) and (d) of the 2021 Credit Agreement, as amended (collectively, the “Acknowledged Defaults”). The forbearance period (the “Forbearance Period”) under the Forbearance Agreement will expire on the earliest date that one of the following events occurs: (a) any Event of Default other than an Event of Default constituting the Acknowledged Defaults; (b) the breach by the Borrower of any covenant or provision of the Forbearance Agreement; or (c) 11:59 p.m. (Eastern time) on August 15, 2025 (the “Forbearance Termination Events”). Under the terms of the Forbearance Agreement, the Refinancing Transaction Milestones shall be due on the Maturity Date. Additionally, during the Forbearance Period, the minimum liquidity otherwise required to be maintained pursuant to the 2021 Credit Agreement, as amended, is $1,000,000, and to the extent the minimum liquidity prior to the Effective Date was below the required threshold, any resulting Default or Event of Default was waived. Pursuant to the Forbearance Agreement, the Company also agreed to provide additional financial and operational reports to the Administrative Agent during the Forbearance Period, including monthly unaudited financial statements and reports related to accounts receivable, accounts payable and inventory. The Forbearance Agreement also provides for mandatory prepayments in the event that Total Revolving Outstandings exceed the difference of 55% of the net book value of inventory less 50% of the store value credit liability. The Company will pay a one-time forbearance fee of $100,000.00 (the “Forbearance Fee”), fully earned and non-refundable as of the Effective Date and payable in immediately available funds upon the earlier of (a) the Maturity Date, and (b) the occurrence of a Forbearance Termination Event; provided, that, if all Obligations (other than the Forbearance Fee) have been paid in full on or prior to the Maturity Date, the Forbearance Fee shall be cancelled and waived.

All capitalized terms used above and not otherwise defined herein are defined in the 2021 Credit Agreement, as amended.

During the twenty-six weeks ended June 29, 2025, we did not borrow any amount under the 2021 Credit Agreement, as amended, and repaid $7.3 million of the outstanding balance. As of June 29, 2025, we had $0.2 million in letters of credit outstanding. The effective interest rate on the $5.8 million outstanding balance as of June 29, 2025, was 41.3% and 21.5% during the thirteen and twenty-six weeks ended June 29, 2025, respectively, which was inclusive of $0.7 million in one-time fees related to the 2021 Credit Agreement, as amended. As of June 29, 2025, the weighted-average interest rate was 10.4%. See Note 5, *Debt* within the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for further information on the 2021 Credit Agreement, as amended.

On August 11, 2025, the Company entered into the Forbearance Amendment with the Administrative Agent and Lenders. Pursuant to the terms of the Forbearance Amendment, the Administrative Agent and Lenders agreed to amend the definition of “Forbearance Termination Event” set forth in the Forbearance Agreement to replace “August 15, 2025” with “August 22, 2025”. The Forbearance Amendment also amended the definition of “Maturity Date” set forth in the 2021 Credit Agreement, as amended, to replace “August 15, 2025” with “August 22, 2025. The Company is currently negotiating a new asset-based revolving credit facility.

### Availability and Use of Cash

As of June 29, 2025, we had cash and cash equivalents of $1.5 million. During the thirteen and twenty-six weeks ended June 29, 2025, we took certain cost reduction and cash conservation measures, adjustments to marketing spend, and other fixed, variable, and capital spend. We are actively seeking alternative debt financing and continuing to take certain cash conservation measures, including adjustments to marketing and other fixed and variable costs and capital spend to meet our obligations as needed. While we are currently negotiating a new asset-based revolving credit facility, there can be no assurances that we will be able to close such credit facility in a timely manner on acceptable terms, if at all. As the ability to raise additional debt financing is outside of management’s control, we cannot conclude that management’s plans will be effectively implemented within twelve months from the date the condensed consolidated financial statements are issued. Accordingly, we have concluded that these plans do not alleviate substantial doubt about our ability to continue as a going concern. The condensed consolidated financial statements do not reflect any adjustments that might result from the outcome of this uncertainty. Actual results of operations will depend on numerous factors, many of which are beyond our control, as further discussed in Part I, Item 1A, “Risk Factors” included in our 2024 10-K, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 30, 2025 and Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q for the quarter ended June 29, 2025.

### Repurchases Pursuant to the 2024 Repurchase Program

On May 3, 2024, our Board of Directors authorized a stock repurchase program to repurchase up to $2.5 million of our common stock (the “2024 Repurchase Program”). During the thirteen and twenty-six weeks ended June 29, 2025, we repurchased 73,333 shares and 89,471 shares, respectively, of common stock in open market transactions pursuant to a 10b5-1 purchase plan. As of June 29, 2025, there was $1.3 million available under the 2024 Repurchase Program authorization.

The actual timing, number, and value of shares repurchased in the future will be determined at our discretion and will depend on a number of factors, including market conditions, applicable legal requirements, our capital needs, and whether there is a better alternative use of capital. Repurchases will be funded from our existing cash and cash equivalents, or future cash flow. The 2024 Repurchase Program may be modified, suspended, or terminated at any time. For further information on the 2024 Repurchase Program, see Note 2, *Significant Accounting Policies,* within the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

### Cash Flow Analysis

The following table summarizes our cash flows for the periods indicated:

*(in thousands)*

| ​ ​ ​ ​ ​ Net cash provided by (used in): | ​ ​ ​ ​ ​ | ​ ​ Twenty-Six Weeks Ended June 29, 2025 ​ ​ | ​ ​ ​ | ​ ​ June 30, 2024 ​ ​ | ​ ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- |
| Operating activities | **​** | $6,966 | **​** | $10,637 | **​** |
| Investing activities | **​** | **​** (1,053) | **​** | **​** (1,623) | **​** |
| Financing activities | **​** | **​** (8,839) | **​** | **​** (9,739) | **​** |
| Net decrease in cash and cash equivalents | ​ | $(2,926) | ​ | $(725) | ​ |

#### Operating Activities

Net cash provided by operating activities consists primarily of net loss adjusted for certain non-cash items, including depreciation, amortization, equity-based compensation, the effect of changes in working capital and other activities.

During the twenty-six weeks ended June 29, 2025, net cash provided by operating activities was $7.0 million, which consisted of a net loss of $11.0 million, partially offset by non-cash charges of $7.7 million and a net change of $10.3 million in operating assets and liabilities. The non-cash charges were primarily comprised of $2.8 of equity-based compensation expense, $2.6 million of depreciation and amortization, and $2.3 million of non-cash lease expense. The net change in operating assets and liabilities was primarily driven by a $20.5 million increase in accrued expenses driven by an increase in marketing cost, accrued inventory, and returns reserve; and a $3.0 million decrease in income tax receivable due to the receipt of state income tax refunds. These increases were partially offset by a $4.6 million decrease in accounts payable related to the timing of payments, a $3.3 million increase in inventory, and a $2.3 million decrease in operating lease liabilities.

During the twenty-six weeks ended July 2, 2024, net cash provided by operating activities was $10.6 million, which consisted of a net loss of $16.5 million, partially offset by non-cash charges of $12.7 million and a net change of $14.4 million in operating assets and liabilities. The non-cash charges were primarily comprised of $4.1 of equity-based compensation expense, $3.8 million of deferred income taxes, $2.7 million of depreciation and amortization, and $2.0 million of non-cash lease expense. The net change in operating assets and liabilities was primarily driven by a $15.2 million increase in accrued expenses driven by an increase in return reserve and a $3.0 million increase in accounts payable due to the timing of payments. These increases were partially offset by a $2.2 million increase in inventory and a $1.9 million decrease in operating lease liabilities.

#### Investing Activities

Our primary investing activities have consisted of purchases of equipment to support our overall business growth and internally developed software for the continued development of our proprietary technology infrastructure. Purchases of property and equipment may vary from period to period due to the timing of the expansion of our operations. We have no material commitments for capital expenditures.

During the twenty-six weeks ended June 29, 2025, net cash used in investing activities decreased by $0.6 million as compared to the same period in 2024, primarily due to lower purchases of property and equipment.

#### Financing Activities

Financing activities consist primarily of borrowings and repayments related to our revolving facility under our 2021 Credit Agreement, as amended.

During the twenty-six weeks ended June 29, 2025, cash used in financing activities was $8.8 million, primarily due to $7.3 million of repayments on our revolving facility, $0.7 million used in the repurchase of our common stock, and $0.6 million of principal payments on finance lease obligations.

During the twenty-six weeks ended July 2, 2024, cash used in financing activities was $9.7 million, primarily due to $28.0 million of repayments on our revolving facility, $1.1 million of principal payments on finance lease obligations, and $0.8 million of withholding tax payments related to the vesting of equity-based awards, partially offset by $20.0 million of proceeds from borrowings on our revolving line of credit.

### Contractual Obligations and Commitments

There have been no other material changes to our contractual obligations and commitments as disclosed in our 2024 10-K.

### Critical Accounting Policies and Estimates

Our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q are prepared in accordance with GAAP. The preparation of condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” in our 2024 10-K and the notes to the audited consolidated financial statements appearing elsewhere in our 2024 10-K. There have been no significant changes to our critical accounting policies and estimates as disclosed in our 2024 10-K.

### Recent Accounting Pronouncements

See Note 2, *Significant Accounting Policies - Recently Issued Accounting Pronouncements*, in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial position and our results of operations.

### JOBS Act Accounting Election

We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to use this extended transition period until we are no longer an emerging growth company or until we affirmatively and irrevocably opt out of the extended transition period. Accordingly, our consolidated financial statements and our unaudited interim condensed consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

## Controls and procedures

As filed, 1,468 characters.

### Limitations on effectiveness of controls and procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

### Evaluation of disclosure controls and procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 29, 2025, our disclosure controls and procedures were effective.

### Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 29, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 4,476 characters.

For detailed information about certain risk factors that could materially affect our business, financial condition or future results see “Risk Factors” in Part I, Item 1A of our 2024 10-K and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 30, 2025. Set forth below are an additional risk factor and material changes to an existing risk factor previously disclosed in the 2024 10-K. Other than the risk factors set forth below, there have been no material changes to the risk factors previously disclosed in the 2024 10-K and the Form 10-Q for the quarter ended March 30, 2025.

***We may not be able to refinance the 2021 Credit Agreement, as amended, on favorable terms within our anticipated timeframe, or at all, in order to meet our current and future capital needs.***

The 2021 Credit Agreement, as amended, will mature on August 22, 2025 (the "Maturity Date"). The Forbearance Period under the Forbearance Agreement, as amended, also expires on August 22, 2025. Although the Company is currently negotiating a new asset-based revolving credit facility, we may not be able to timely refinance the 2021 Credit Agreement, as amended, on favorable terms, within our anticipated timeframe, or at all, including due to our current financial condition, market volatility and uncertainty resulting from international conflicts or geopolitical tensions, among other factors. Failure to repay the indebtedness outstanding under the 2021 Credit Agreement, as amended, by the Maturity Date, without a timely cure, waiver or further extension of the Forbearance Period, would result in an event of default under the 2021 Credit Agreement, as amended. If an event of default under the 2021 Credit Agreement, as amended, occurs and is not cured or waived, the lenders could elect to declare all amounts outstanding under the 2021 Credit Agreement, as amended, immediately due and payable and exercise other remedies as set forth in the 2021 Credit Agreement, as amended. In addition, the lenders would have the right to enforce their security interests against the collateral pledged to them, which includes substantially all of our assets.

We currently have $5.8 million of indebtedness outstanding under the terms of the 2021 Credit Agreement, as amended. In addition, we expect to require additional capital in the future to respond to business opportunities, challenges, or unforeseen circumstances. If we are unable to refinance the 2021 Credit Agreement, as amended, on favorable terms within our anticipated timeframe, or at all, our ability to repay our indebtedness under the 2021 Credit Agreement, as amended, and continue to grow or support our business, and respond to business challenges could be significantly limited.

***We are required to meet the Nasdaq Capital Market’s continued listing requirements and other Nasdaq rules, or we may risk delisting. Delisting could negatively affect the price of our common stock, which could make it more difficult for us to sell securities in a future financing or for you to sell our common stock.***

We are required to meet the continued listing requirements of the Nasdaq Capital Market and other Nasdaq rules, including those regarding director independence and independent committee requirements, minimum share price, minimum stockholders' equity and certain other continued listing standards and corporate governance requirements.

We have previously failed to meet the continued listing requirements of the Nasdaq Global Market under Nasdaq rules. Specifically, we received a deficiency letter from Nasdaq on February 27, 2025 regarding not being in compliance with the minimum close bid price of $1.00 per share required for continued listing, and we received a deficiency letter on May 21, 2025 regarding not being in compliance with the minimum $10 million of stockholders' equity required for continued listing on the Nasdaq Global Market. We regained compliance with these deficiencies through our implementation of the Reverse Stock Split and our transfer to the Nasdaq Capital Market, respectively. While we are currently in compliance with the continued listing requirements of the Nasdaq Capital Market, there can be no guarantee that we will be able to maintain compliance with these requirements in the future. If we are unable to maintain compliance with the continued listing requirements of the Nasdaq Capital Market in the future, our common stock could be delisted.

Filed Aug 13, 2025.
Source: SEC EDGAR, the filing index for accession 0001558370-25-011371. Last ingested by Listed: Oct 24, 2026, 15:07 ET. No prices; not investment advice.