Bob's Discount Furniture, Inc.
For the period ended Mar 29, 2026. Filed May 7, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 29, 2026 · Filed May 7, 2026
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Item 1. Financial Statements
Condensed Consolidated Balance Sheets
(Unaudited, amounts in thousands, except share and per share amounts)
| March 29, 2026 | December 28, 2025 | |
|---|---|---|
| Assets | ||
| Current assets | ||
| Cash and cash equivalents | $27,738 | $53,202 |
| Restricted cash | 10,172 | 9,412 |
| Accounts receivable | 22,410 | 17,590 |
| Inventories | 336,840 | 350,284 |
| Prepaids and other current assets | 40,624 | 40,871 |
| Total current assets | 437,784 | 471,359 |
| Property and equipment, net | 344,944 | 328,827 |
| Operating lease right-of-use assets | 655,830 | 641,529 |
| Intangible assets | 179,100 | 179,100 |
| Goodwill | 181,699 | 181,699 |
| Deferred offering costs | — | 3,981 |
| Other assets | 9,106 | 5,260 |
| Total assets | $1,808,463 | $1,811,755 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities | ||
| Accounts payable | $248,031 | $260,610 |
| Self-insurance reserves | 26,538 | 27,959 |
| Accrued expenses | 47,760 | 66,211 |
| Customer deposits | 82,419 | 70,740 |
| Current portion of Term Loan | — | 1,750 |
| Finance lease liabilities, current portion | 14,230 | 15,201 |
| Operating lease liabilities, current portion | 102,200 | 100,563 |
| Total current liabilities | 521,178 | 543,034 |
| Revolving Credit Facility | 25,000 | — |
| Term Loan | — | 337,430 |
| Finance lease liabilities, noncurrent portion | 47,266 | 44,254 |
| Operating lease liabilities, noncurrent portion | 696,250 | 678,800 |
| Deferred income taxes | 45,530 | 43,306 |
| Other long-term liabilities | 1,011 | 1,011 |
| Total long-term liabilities | 815,057 | 1,104,801 |
| Total liabilities | 1,336,235 | 1,647,835 |
| Commitments and Contingencies (Note 8) | ||
| Stockholders' Equity | ||
| Preferred stock, $0.01 par value, 5,000,000 shares authorized, no shares issued or outstanding at March 29, 2026; $0.01 par value, 50,000 shares authorized, no shares issued or outstanding at December 28, 2025 | — | — |
| Common stock, $0.0001 par value, 445,000,000 shares authorized, 130,502,007 shares issued and outstanding at March 29, 2026; $0.0001 par value, 300,000,000 shares authorized, 119,777,765 shares issued and 110,530,029 outstanding at December 28, 2025 | 13 | 11 |
| Additional paid-in capital | 438,294 | 199,796 |
| Treasury stock shares, at cost, — and 9,247,736 shares at March 29, 2026 and December 28, 2025, respectively | — | (67,336) |
| Retained earnings | 33,921 | 31,449 |
| Total stockholders' equity | 472,228 | 163,920 |
| Total liabilities and stockholders' equity | $1,808,463 | $1,811,755 |
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited, amounts in thousands, except per share amounts)
| Three-Month Fiscal Period Ended | ||
|---|---|---|
| March 29, 2026 | March 30, 2025 | |
| Net revenues | $578,096 | $532,764 |
| Cost of sales | 321,586 | 296,121 |
| Gross profit | 256,510 | 236,643 |
| Operating expenses (income) | ||
| Selling, general, and administrative | 235,147 | 215,645 |
| Pre-opening expenses | 4,740 | 2,985 |
| Loss on disposal of fixed assets | — | 21 |
| Restructuring charges | — | 292 |
| Insurance recoveries | (667) | — |
| Total operating expenses | 239,220 | 218,943 |
| Operating income | 17,290 | 17,700 |
| Other (income) expense | ||
| Interest expense | 15,304 | 903 |
| Interest income | (197) | (400) |
| Other income, net | — | (574) |
| Total other expense (income), net | 15,107 | (71) |
| Income before taxes | 2,183 | 17,771 |
| Income tax (benefit) expense | (334) | 4,626 |
| Net income | $2,517 | $13,145 |
| Other comprehensive (loss) income | ||
| Total other comprehensive loss | — | — |
| Total comprehensive income | $2,517 | $13,145 |
| Basic net income per share | $0.02 | $0.12 |
| Diluted net income per share | $0.02 | $0.12 |
Condensed Consolidated Statements of Changes in Stockholders' Equity
(Unaudited, amounts in thousands, except share amounts)
| Three-Month Fiscal Period Ended March 29, 2026 | |||||||
|---|---|---|---|---|---|---|---|
| Common Stock · Additional Paid-in Capital · Treasury Stock · Retained Earnings · Total Stockholders' Equity | |||||||
| Shares · Amount · Shares · Amount | |||||||
| Balances at December 28, 2025 | 110,530,029 | $11 | $199,796 | 9,247,736 | $(67,336) | $31,449 | $163,920 |
| Common stock issued under management incentive plan | 530,790 | 1 | 1,014 | — | — | — | 1,015 |
| Issuance of common stock upon initial public offering, net of underwriter discounts and offering expenses | 19,450,000 | 2 | 304,173 | — | — | — | 304,175 |
| Repurchases of common stock | (8,725) | — | — | 8,725 | (69) | — | (69) |
| Retirement of treasury stock | — | (1) | (67,404) | (9,256,461) | 67,405 | — | — |
| Stock-based compensation expense | — | — | 715 | — | — | — | 715 |
| Payment for fractional shares | (87) | — | — | — | — | (45) | (45) |
| Net income | — | — | — | — | — | 2,517 | 2,517 |
| Balances at March 29, 2026 | 130,502,007 | $13 | $438,294 | — | $— | $33,921 | $472,228 |
| Three-Month Fiscal Period Ended March 30, 2025 | |||||||
| Common Stock · Additional Paid-in Capital · Treasury Stock · Retained Earnings · Total Stockholders' Equity | |||||||
| Shares · Amount · Shares · Amount | |||||||
| Balances at December 29, 2024 | 109,872,523 | $11 | $225,886 | 8,831,043 | $(63,351) | $301,684 | $464,230 |
| Common stock issued under management incentive plan | 269,143 | — | 1,173 | — | — | — | 1,173 |
| Repurchases of common stock | (181,534) | — | — | 181,534 | (1,720) | — | (1,720) |
| Stock-based compensation expense | — | — | 891 | — | — | — | 891 |
| Net income | — | — | — | — | — | 13,145 | 13,145 |
| Balances at March 30, 2025 | 109,960,132 | $11 | $227,950 | 9,012,577 | $(65,071) | $314,829 | $477,719 |
Condensed Consolidated Statements of Cash Flows
(Unaudited, amounts in thousands)
| Three-Month Fiscal Period Ended | ||
|---|---|---|
| March 29, 2026 | March 30, 2025 | |
| Cash flows from operating activities | ||
| Net income | $2,517 | $13,145 |
| Adjustments to reconcile net income to net cash provided by operating activities | ||
| Stock-based compensation expense | 715 | 891 |
| Transaction losses | 704 | 770 |
| Depreciation and amortization | 18,615 | 16,758 |
| Non-cash interest expense | 10,842 | 22 |
| Loss on disposal of fixed assets | — | 21 |
| Non-cash lease costs | 20,304 | 18,291 |
| Deferred income taxes | 2,225 | (430) |
| Change in reserve for product warranties | — | 247 |
| Changes in operating assets and liabilities | ||
| Accounts receivable | (5,524) | (2,304) |
| Inventories | 13,444 | (15,747) |
| Prepaids and other current assets | 247 | 3,293 |
| Other assets | (3,867) | 43 |
| Accounts payable | (7,656) | (15,432) |
| Accrued expenses | (19,873) | (10,045) |
| Customer deposits | 11,679 | 6,336 |
| Operating leases | (15,519) | (12,149) |
| Net cash provided by operating activities | 28,853 | 3,710 |
| Cash flows from investing activities | ||
| Purchase of property and equipment | (31,594) | (15,867) |
| Net cash used in investing activities | (31,594) | (15,867) |
| Cash flows from financing activities | ||
| Principal payments on Term Loan | (350,000) | — |
| Proceeds from Line of Credit | 64,000 | — |
| Principal payments on Line of Credit | (39,000) | — |
| Principal payments on financing lease obligations | (3,545) | (2,574) |
| Proceeds (payments) related to exercise of employee stock options | 994 | (464) |
| Payments for the acquisition of treasury stock | (50) | (83) |
| Proceeds from issuance of common stock, net of underwriter discounts | 310,915 | — |
| Payments for fractional shares | (45) | — |
| Payments of initial public offering costs | (5,232) | — |
| Net cash used in financing activities | (21,963) | (3,121) |
| Net decrease in cash, cash equivalents, and restricted cash | (24,704) | (15,278) |
| Cash, cash equivalents, and restricted cash beginning of period | 62,614 | 80,558 |
| Cash, cash equivalents, and restricted cash end of period | $37,910 | $65,280 |
| Supplemental disclosure of cash flow data | ||
| Cash paid for interest | $3,570 | $441 |
| Supplemental disclosure of noncash investing and financing activities | ||
| Assets acquired under financing leases | $5,586 | $— |
| Purchase of property and equipment included in accounts payable | 16,775 | 8,607 |
| Employees cashless exercising of stock options | 19 | 1,637 |
- Nature of Business
Bob’s Discount Furniture, Inc. is a Delaware corporation and omni-channel retailer of quality home furnishings offering a wide variety of merchandise assortments across several categories including upholstery, case goods, bedding and other. This assortment of merchandise can be purchased through both retail and eCommerce sales channels. As used in these Condensed Consolidated Financial Statements, "the Company" refers to Bob's Discount Furniture, Inc. and its subsidiaries. At March 29, 2026, the Company operated 214 stores in 26 states across the United States.
On February 5, 2026, the Company completed an initial public offering (the “IPO”), pursuant to which an aggregate of 19,450,000 shares of common stock were sold at a price of $17.00 per share. The Company received aggregate net proceeds of $304.2 million after deducting underwriting discounts and commissions and other offering expenses. The Company used the net proceeds from the IPO, cash on hand and borrowings under the Revolving Credit Facility to repay the amounts outstanding under its $350.0 million Term Loan. Refer to “Note 3, Long-Term Debt” for further information on the Term Loan and Revolving Credit Facility.
- Summary of Significant Accounting Policies
Basis of Presentation
These unaudited condensed consolidated financial statements include the accounts and those of the Company's wholly-owned subsidiaries and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States ("U.S. GAAP") for complete financial statements.
In the opinion of management, these condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of the Company's financial position, results of operations and cash flows for the interim periods presented. All adjustments are of a normal recurring nature, unless otherwise disclosed in this report. The results reported in these condensed consolidated financial statements should not necessarily be taken as indicative of the results that may be expected for the entire fiscal year. These condensed consolidated financial statements should be read in conjunction with the Company's consolidated financial statements as of and for the fiscal year ended December 28, 2025.
The Company's fiscal quarters follow a 13-week convention ("three-month fiscal period"), with each quarter ending on a Sunday. The first quarters for 2026 and 2025 ended on March 29, 2026 and March 30, 2025, respectively.
Estimates and Assumptions
The preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Areas in which significant estimates have been made include, but are not limited to leased assets and the Company's evaluation of retail stores for impairment. Actual results could differ from the estimates made and such differences could be material to the condensed consolidated financial statements.
Recently Issued Accounting Standards
Recent Accounting Standards Not Yet Adopted
In December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-11, Interim Reporting (Topic 270) - Narrow Scope Improvements. The standard update clarifies interim disclosure requirements and the applicability of Topic 270. This ASU adds a comprehensive list of required interim disclosures, clarifies the form and content of interim financial statements, and requires disclosure of events since the end of the previous annual reporting period that materially affect the entity. This update will be effective for interim periods within fiscal years beginning after December 15, 2027, and can be applied either prospectively or retrospectively. Early adoption is permitted. The Company does not expect this update to have a material impact on its condensed consolidated financial statements.
In December 2025, the FASB issued ASU 2025-10, Accounting for Government Grants Received by Business Entities. The standard update establishes the accounting for a government grant received by a business entity, including guidance for (1) a grant related to an asset and (2) a grant related to income. This update will be effective for fiscal years beginning after December 15, 2028, including interim periods within those fiscal years, and can be applied modified retrospectively or retrospectively. Early adoption is permitted. The impact that this standard update will have on the Company is dependent on future government grants.
In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software. The standard update eliminates accounting consideration of software project development stages that exists under current U.S. GAAP. Capitalization of software development costs would begin when (1) management has authorized and committed to funding a software development project and (2) it is probable that the software development project will be completed and the software will be used to perform its intended function. This update will be effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, and can be applied prospectively, using a modified transition based on status of the project and whether software costs were capitalized before the date of adoption, or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact that this standard update will have on the Company’s consolidated financial statements when adopted.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. The standard update requires disclosure of additional information about specific expense categories to provide investors with a better understanding of an entity’s cost structure and forecasting cash flows. The new requirements will be effective for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, and can be applied prospectively or retrospectively. Early adoption is permitted. The amendments in the standard can be applied either prospectively or retrospectively. The Company is currently evaluating the impact on its disclosures from adopting this new accounting standard.
- Long-Term Debt
Long-term debt obligations are summarized as follows:
| (in thousands) | March 29,2026 | December 28, 2025 |
|---|---|---|
| Revolving Credit Facility | $25,000 | $— |
| Term Loan | — | 350,000 |
| Total long-term debt at par value | 25,000 | 350,000 |
| Less: Current portion of long-term debt | — | (1,750) |
| Less: Unamortized original issue discount | — | (10,820) |
| Total long-term debt | $25,000 | $337,430 |
Term Loan
On October 31, 2025, the Company entered into a $350.0 million Term Loan (the “Term Loan”) having a maturity date of October 31, 2032 and bearing interest of 4.0% plus the Secured Overnight Financing Rate (“SOFR”), with a SOFR floor of 0%. Contracted payments were 1% of the Term Loan annually, with 0.25% paid quarterly beginning in June 2026. The Company was required to prepay the Term Loan with any proceeds received from an IPO of the Company’s common shares. In the three-month fiscal period ended March 29, 2026, the Company repaid the Term Loan using net proceeds from the IPO completed in February 2026, cash on hand and borrowings under the Revolving Credit Facility. Refer to “Note 1, Nature of Business” for further information on the IPO.
Debt Issuance Costs
In connection with the Term Loan, the Company incurred $11.0 million of financing costs, which were deferred as a reduction to the carrying value of the long-term debt obligation. The amounts deferred were amortized over the life of the Term Loan using the effective interest method and recognized as interest expense in the Company’s condensed consolidated statements of operations and comprehensive income. In connection with the repayment of the Term Loan, the Company recognized an acceleration of amortization of debt issuance costs of $10.7 million in the three-month fiscal period ended March 29, 2026.
Asset Based Revolving Credit Facility
The Company's Asset Based Revolving Credit Facility ("the Revolving Credit Facility") provides for a maximum availability of $125.0 million. The availability of credit at any given time is constrained by the terms and conditions of the facility, including the amount of collateral available and a borrowing base formula based on several factors including the value of eligible accounts receivable and inventory. In connection with the Revolving Credit Facility, the Company has entered into a letter of credit of $0.6 million issued on the Company's behalf by a financial institution related to the guarantee of future payment on certain lease agreements. Borrowing capacity under the Revolving Credit Facility was $99.4 million and $124.4 million at March 29, 2026 and December 28, 2025, respectively. Amortization of debt issuance costs associated with the Revolving Credit Facility was not material for the three-month fiscal periods ended March 29, 2026 and March 30, 2025.
Subsequent to March 29, 2026, the Company amended its Revolving Credit Facility on April 29, 2026, increasing the maximum availability from $125.0 million to $200.0 million and extending the maturity date to April 2031. In connection with the amendment, the Company incurred $0.6 million in financing costs that will be amortized over the term of the Revolving Credit Facility using the effective interest method.
- Fair Value Measurements
The following table summarizes, by level within the fair value hierarchy, the financial assets and liabilities that are accounted for at fair value on a recurring basis at March 29, 2026, and December 28, 2025.
| (in thousands) | Quoted Prices inActive Markets forIdentical Assets(Level 1) | Quoted Prices inActive Markets forSimilar Assets(Level 2) | Unobservable inputs for which little or no market data exists (Level 3) | Total |
|---|---|---|---|---|
| Asset (Liability) | ||||
| Money market funds | $7,513 | $— | $— | $7,513 |
| Balance at March 29, 2026 | $7,513 | $— | $— | $7,513 |
| Asset (Liability) | ||||
| Money market funds | $31,792 | $— | $— | $31,792 |
| Balance at December 28, 2025 | $31,792 | $— | $— | $31,792 |
There were no Level 3-classified assets or liabilities at March 29, 2026 or December 28, 2025.
The Company did not record any other-than-temporary impairments on assets required to be measured at fair value on a non-recurring basis during the three-month fiscal periods ended March 29, 2026 and March 30, 2025.
- Related Party Transactions
Leases
The Company had no related party lease activity in the three-month fiscal period ended March 29, 2026. In the three-month fiscal period ended March 30, 2025, the Company leased four retail stores from limited liability companies of which Mr. Bob Kaufman, the Company's founder and a member of the Board of Directors from 2014 until his resignation in December 2025, maintained ownership. Total rent expense associated with these related parties was $0.6 million for the three-month fiscal period ended March 30, 2025.
Management Fees
Upon consummation of the Company’s IPO, the Company's advisory agreement with Bain Capital terminated. In connection with the termination, the Company recognized a fee of $2.0 million in the three-month fiscal period ended March 29, 2026. In the three-month fiscal period ended March 30, 2025, the Company recognized management fees and expense reimbursement to entities affiliated with Bain Capital in connection with the advisory agreement totaling $0.5 million. The termination and management fees are classified as selling, general and administrative ("SG&A") expenses in the Company's condensed consolidated statements of operations and comprehensive income.
Customer Service Fees
The Company recognized fees for the outsourcing of customer service assistance to an entity affiliated with Bain Capital totaling $1.9 million for each of the three-month fiscal periods ended March 29, 2026 and March 30, 2025. These fees are classified as SG&A in the Company's condensed consolidated statements of operations and comprehensive income.
- Product Warranties
Product Warranties
The following table summarizes the Company's activity for product warranty obligations:
| Three-Month Fiscal Period Ended | ||
|---|---|---|
| (in thousands) | March 29, 2026 | March 30, 2025 |
| Product warranties beginning balance | $7,495 | $6,783 |
| Accruals for warranties issued | 4,044 | 3,813 |
| Settlements (in cash or in-kind) | (5,831) | (4,189) |
| Change in reserve estimate | 1,787 | 623 |
| Product warranties ending balance | 7,495 | 7,030 |
| Less: Current portion of warranties | (6,484) | (6,088) |
| Total long-term warranties | 1,011 | 942 |
- Leases
The Company recognizes leases in its condensed consolidated balance sheets as a right-of-use ("ROU") asset and a lease liability. The Company has operating leases for its retail stores, distribution centers, corporate headquarters, and certain equipment under operating and finance leases that expire at various dates through 2041. Some of the leases include options to extend the lease term for up to 20 years. The Company's leases do not have any residual value guarantees or any restrictions or covenants imposed by the leases.
At March 29, 2026, the Company had 18 non-cancellable leases for retail stores andone non-cancellable lease for a regional distribution center of which none had commenced. The initial terms of these leases range fromten tofifteen years with options to extend for up to an additional twenty years. Upon lease commencement, the ROU asset and lease liability will be determined and recognized in the Company's condensed consolidated balance sheets. Lease liabilities at March 29, 2026 exclude undiscounted future lease payments of approximately $244.7 million associated with these leases. Subsequent to March 29, 2026, the Company's lease for one of its distribution centers was extended five years through September 2032, which will result in an additional increase to the lease liability of approximately $17.4 million.
The following table summarizes finance and operating lease assets and liabilities recognized in the Company's condensed consolidated balance sheets at March 29, 2026, and December 28, 2025:
| (in thousands) · Classification · March 29,2026 · December 28, 2025 | |||||
|---|---|---|---|---|---|
| Assets | |||||
| Finance leases | Property and equipment, net | $51,201 | $48,755 | ||
| Operating leases | Operating lease right-of-use assets | 655,830 | 641,529 | ||
| Total lease assets | $707,031 | $690,284 | |||
| Liabilities | |||||
| Current | |||||
| Finance leases | Finance lease liabilities, current portion | $14,230 | $15,201 | ||
| Operating leases | Operating lease liabilities, current portion | 102,200 | 100,563 | ||
| Noncurrent | |||||
| Finance leases | Finance lease liabilities, noncurrent portion | 47,266 | 44,254 | ||
| Operating leases | Operating lease liabilities, noncurrent portion | 696,250 | 678,800 | ||
| Total lease liabilities | $859,946 | $838,818 | |||
The following table summarizes lease expense recognized in the Company's condensed consolidated statements of operations and comprehensive income for thethree-month fiscal periods ended March 29, 2026 and March 30, 2025:
| Three-Month Fiscal Period Ended | ||
|---|---|---|
| (in thousands) | March 29, 2026 | March 30, 2025 |
| Operating lease cost | ||
| Fixed | $37,325 | $33,015 |
| Variable | 181 | 149 |
| Finance lease cost | ||
| Amortization of assets | 3,141 | 2,365 |
| Interest on lease liabilities | 875 | 578 |
| Short-term lease cost | 816 | 225 |
| Total lease expense | $42,338 | $36,332 |
Supplemental cash flow information related to leases is as follows:
| Three-Month Fiscal Period Ended | ||
|---|---|---|
| (in thousands) | March 29, 2026 | March 30, 2025 |
| Cash paid for amounts included in the measurement of lease liabilities | ||
| Operating cash flows from operating leases | $40,140 | $35,824 |
| Operating cash flows from finance leases | 4,420 | 578 |
| Financing cash flows from finance leases | 3,545 | 2,574 |
| Right-of-use assets obtained in exchange for lease obligations | ||
| Finance leases | 5,586 | — |
| Operating leases | 34,606 | 24,120 |
The weighted average remaining lease term and weighted average discount rate for finance and operating leases at March 29, 2026, and March 30, 2025, were:
| March 29, 2026 | March 30, 2025 | |
|---|---|---|
| Weighted average remaining lease term (in years) | ||
| Finance leases | 4.8 | 4.0 |
| Operating leases | 7.5 | 6.9 |
| Weighted average discount rate | ||
| Finance leases | 5.8% | 5.6% |
| Operating leases | 8.6% | 8.9% |
The following table summarizes the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancellable leases with terms of more than one year that are recognized in the Company's condensed consolidated balance sheet at March 29, 2026:
| (in thousands) | Operating Leases | Finance Leases |
|---|---|---|
| Remainder of 2026 | $124,494 | $14,925 |
| 2027 | 166,116 | 14,230 |
| 2028 | 156,764 | 11,106 |
| 2029 | 138,920 | 10,028 |
| 2030 | 120,463 | 9,298 |
| 2031 | 99,988 | 2,969 |
| Thereafter | 289,544 | 7,814 |
| Total undiscounted future minimum | $1,096,289 | $70,370 |
| Less: Amount representing interest | 297,839 | 8,874 |
| Total present value of lease obligations | $798,450 | $61,496 |
- Commitments and Contingencies
Contingencies
The Company is a defendant in lawsuits arising in the ordinary course of business. Such matters are subject to many uncertainties and the outcomes of individual litigated matters are not predictable with assurance. While the Company is unable to predict the outcome, based on information currently available, the Company does not believe that resolution of any of these matters, individually or in the aggregate, will have a material adverse effect on the Company's condensed consolidated financial position, results of operations or cash flows.
Government Grants
In 2016, the State of Connecticut Department of Economic and Community Development (“DECD”) agreed to provide the Company with up to $20.7 million in subsidies comprised primarily of a $1.7 million grant, up to $11.0 million of tax credits and a $7.0 million forgivable loan in consideration of certain minimum investments that the Company agreed to make in Connecticut. The grant, which has no continuing conditions, was received in prior years, and no material benefit has been or is expected to be realized from the tax credits. The terms of the forgivable loan are described below.
DECD Loan Forgiveness Program
Under an agreement dated December 14, 2016, as most recently amended on December 3, 2025, the DECD provided a direct forgivable loan of $7.0 million which bears interest at an annual rate of 2%. The funds were specifically designated for use in the purchase of leasehold improvements, machinery and equipment, and furniture and fixtures in conjunction with the construction of the Company's corporate headquarters. Monthly interest-only payments commenced at the time the loan was granted with principal payments deferred until January 1, 2028. The final payment of principal and interest is due on September 1, 2029, if not sooner paid or forgiven. The Company will be entitled to prorated loan forgiveness so long as the Company has achieved at least 50% of its full-time Connecticut jobs creation requirement fortwenty-four consecutive months, of which it can choose thetwenty-four consecutive months with the highest average full-time employment in Connecticut during the period from December 14, 2016, through October 31, 2027, does not relocate its Manchester, Connecticut corporate headquarters through December 14, 2038 and does not relocate its Connecticut distribution center operations outside of the State of Connecticut through December 3, 2035. The Company believes it will meet all the requirements for loan forgiveness and accordingly has not recognized the forgivable loan in the Company’s condensed consolidated balance sheets. As the Company believes it will meet all requirements for loan forgiveness, the proceeds from the loan offset the carrying cost of the $7.9 million of assets generated in Connecticut associated with this program included in prepaid and other assets on the Company's condensed consolidated balance sheets.
The Company assesses the likelihood of the conditions attached to the loan each reporting period. If the Company determines that it is no longer probable it will meet the conditions outlined in the DECD agreement, the change will be accounted for as a change in estimate.
Letters of Credit
The Company has entered into a letter of credit issued on the Company's behalf by a financial institution related to the guarantee of collateral for our workers' compensation and automobile liability insurance contracts. There was $10.2 million and $9.4 million of outstanding letters of credit at March 29, 2026 and December 28, 2025, respectively, related to these insurance programs.
- Net Income Per Share
Basic and diluted net income per share were as follows:
| Three-Month Fiscal Period Ended | ||
|---|---|---|
| (in thousands, except share and per share amounts) | March 29, 2026 | March 30, 2025 |
| Net income | $2,517 | $13,145 |
| Weighted-Average Shares Outstanding | ||
| Weighted average number of shares outstanding | 122,228,415 | 109,895,185 |
| Dilutive effect of stock options | 5,879,950 | 2,709,596 |
| Diluted weighted-average number of shares outstanding | 128,108,365 | 112,604,781 |
| Net Income Per Share | ||
| Basic net income per share | $0.02 | $0.12 |
| Diluted net income per share | $0.02 | $0.12 |
In the three-month fiscal periods ended March 29, 2026 and March 30, 2025,308,677 and 1,690,090 stock-based awards, respectively, were excluded from the diluted net income per share calculation because their inclusion would have been anti-dilutive.
- Revenue and Segment Information
The following table details revenue by source and significant segment expenses for the Company'sone reportable segment:
| Three-Month Fiscal Period Ended | ||
|---|---|---|
| (in thousands) | March 29, 2026 | March 30, 2025 |
| Retail | $484,442 | $450,245 |
| eCommerce | 93,654 | 82,519 |
| Net revenues | 578,096 | 532,764 |
| Less: Significant and other segment expenses | ||
| Cost of sales(1) | 317,852 | 292,531 |
| Depreciation and amortization | 18,615 | 16,758 |
| Store and corporate expenses | 180,522 | 167,994 |
| Advertising expenses | 38,257 | 32,799 |
| Pre-opening expenses(2) | 2,904 | 1,795 |
| Other segment items(3) | 2,656 | 3,187 |
| Interest expense(4) | 15,304 | 903 |
| Interest income | (197) | (400) |
| Other income, net | — | (574) |
| Income tax (benefit) expense | (334) | 4,626 |
| Net income | $2,517 | $13,145 |
(1)Cost of sales excludes depreciation and amortization of $3.7 million and $3.6 million for the three-month fiscal periods ended March 29, 2026 and March 30, 2025, respectively.
(2) Pre-opening expenses exclude advertising expenses of $1.8 million and $1.2 million for the three-month fiscal periods ended March 29, 2026 and March 30, 2025, respectively.
(3)Other segment items include (gain) loss on disposal of fixed assets, impairment of long-lived assets, restructuring charges, insurance recoveries, stock-based compensation expense, and other items.
(4)Interest expense in the three-month fiscal period ended March 29, 2026 includes an acceleration of amortization of debt issuance costs of $10.7 million in connection with the repayment of the $350.0 million Term Loan.
Contract Liabilities
The Company defers revenue when cash payments are received in advance of performance for unsatisfied gift cards and customer deposit obligations. Gift card liabilities included in accrued expenses in the Company's condensed consolidated balance sheets were $7.3 million and $7.5 million at March 29, 2026, and December 28, 2025, respectively. Customer deposit liabilities were $82.4 million and $70.7 million at March 29, 2026 and December 28, 2025, respectively. The Company believes the majority of the contract liabilities outstanding at March 29, 2026 will be recognized as revenue within fiscal year 2026 as the performance obligations are satisfied.
The Company recognizes gift card and customer deposit breakage proportional to historical gift card and customer deposit redemption rates. Gift card and customer deposit breakage recognized as revenue in the three-month fiscal periods ended March 29, 2026 and March 30, 2025 were $0.5 million and $0.4 million, respectively.
- Stock-based Compensation
Stock Compensation Expense
The Company recognized stock-based compensation expense of $0.7 million and $0.9 million in the three-month fiscal periods ended March 29, 2026 and March 30, 2025, respectively. On March 29, 2026, the total unrecognized compensation cost related to non-vested service-based stock awards granted under the Company’s equity incentive plan was $8.8 million which will be recognized over a weighted average period of 3.3 years.
Stock Options Outstanding
The following table summarizes the stock option activity under the Company’s 2026 Equity Incentive Plan for the three-month fiscal period ended March 29, 2026:
| Options | Weighted-Average Exercise Price | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value (in thousands) | |
|---|---|---|---|---|
| Outstanding at December 28, 2025 | 7,938,157 | $2.93 | ||
| Granted | 309,956 | $19.69 | ||
| Forfeited or expired | (29,881) | $5.69 | ||
| Exercised | (538,211) | $2.09 | ||
| Outstanding at March 29, 2026 | 7,680,021 | $3.66 | 5.69 | $53,999 |
| Exercisable at March 29, 2026 | 5,423,848 | $2.35 | 4.68 | $43,188 |
| Options expected to vest at March 29, 2026 | 2,256,173 | $6.80 | 8.12 | $10,811 |
The aggregate intrinsic value of stock options vested during the three-month fiscal periods ended March 29, 2026 and March 30, 2025 was $1.2 million, and $0.4 million, respectively. The aggregate intrinsic value of the options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those options that had exercise prices lower than the fair value of the Company’s common stock. The tax benefit for stock option exercises recognized during the three-month fiscal period ended was $1.2 million and $0.4 million during the three-month fiscal periods ended March 29, 2026 and March 30, 2025, respectively.
Fair Value
The following table summarizes the weighted-average grant date fair value of stock options granted during the period and the assumptions that were used in determining the grant date fair value of each award granted:
| Three-Month Fiscal Period Ended | ||
|---|---|---|
| March 29, 2026 | March 30, 2025 | |
| Weighted-average grant date fair value per stock option | $9.86 | $3.88 |
| Risk-free interest rate | 3.75% - 3.77% | 3.69% - 4.24% |
| Expected stock price volatility | 45.66% - 45.85% | 40.00% - 45.00% |
| Average expected life (in years) | 6.3 - 6.5 | 4.5 - 6.5 |
| Dividend yield | —% | —% |
- Income Taxes
The following table summarizes the effective income tax rate for the three-month fiscal periods ended March 29, 2026 and March 30, 2025:
| Three-Month Fiscal Period Ended | ||
|---|---|---|
| March 29, 2026 | March 30, 2025 | |
| Effective Income Tax Rate | (15.3)% | 26.0% |
The effective income tax rate represents the combined federal and state tax effects attributable to pre-tax earnings for the period. The effective income tax rate for the three-month fiscal period ended March 29, 2026 decreased when compared to the corresponding rate in the prior year period, primarily driven by a larger excess tax benefit from stock-based compensation and a decrease in state tax costs coupled with lower pre-tax earnings.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.