Gross margin expanded to 62.4% from 57.5%, reflecting improved product margins in our core categories driven by benefits from our full price selling model, sourcing initiatives and reduced tariffs.

In February 2026, the Supreme Court of the United States held that the President of the United States is not authorized to impose tariffs under the International Economic Emergency Powers Act (“IEEPA”), resulting in the elimination of certain higher tariff rates against most major trading partners, including China. Following that ruling, the U.S. Court of International Trade ("CIT") issued an order directing U.S. Customs and Border Protection ("CBP") to process refunds of the IEEPA tariffs. CBP is proceeding with a phased rollout of refunds. Any potential recovery of IEEPA tariffs through this established process represents a loss recovery. During the Year To Date Period, we received refund claims under Phase I of the IEEPA refund process in the amount of $4.9 million and have recorded a receivable for an additional $1.0 million.

On November 13, 2025, we consummated the previously announced offer to exchange (the "Exchange Offer") with respect to the Prior Notes and the concurrent rights offering (the "Rights Offering") pursuant to a restructuring plan under Part 26A of the UK Companies Act 2006 (as amended) (the "Restructuring Plan") and together with the Exchange Offer and the Rights Offering, the "Transactions").

For 2026 and beyond, we are progressing our Turnaround Plan, with a focus on three new strategic pillars: (i) driving profitable growth, (ii) optimizing our operating model, and (iii) building shareholder value. Over the next three years, this evolution of our strategic turnaround pillars is expected to generate a return to top line growth, and improved operating margins and free cash flows.

We have reduced our store footprint by 17.8% since the end of the Prior Year Quarter, including stores converted to franchises with the sale of our South Africa subsidiary.

At the end of the Second Quarter, we had $13,000 of short-term borrowings and $203.0 million in long-term debt including unamortized issuance costs compared to $13.4 million of short-term borrowings and $165.6 million in long-term debt including unamortized issuance costs at the end of the Prior Year Quarter.

As of July 4, 2026, we had available borrowing capacity of $17.6 million under the Revolving Credit Facility.

On November 13, 2025, the Company consummated the previously announced offer to exchange (the “Exchange Offer”) with respect to the Prior Notes and the concurrent rights offering (the “Rights Offering”) pursuant to a restructuring plan under Part 26A of the UK Companies Act 2006 (as amended) (the “Restructuring Plan” and together with the Exchange Offer and the Rights Offering, the “Transactions”) for First-Out Notes and Second-Out Notes

Pursuant to the Credit Agreement, the Lenders have provided new financing commitments to the Company under a new senior secured asset-based revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of $150 million.

The First-Out Notes bear interest at a rate of 9.50% per annum. Interest on the First-Out Notes is payable quarterly in arrears on March 15, June 15, September 15, and December 15 of each year. The First-Out Notes mature on January 1, 2029. The Second-Out Notes bear interest at a rate of 7.50% per annum.

As of July 4, 2026, the Company had unamortized debt issuance costs of $15.6 million and original issue discount of $7.5 million recorded in long-term debt, and unamortized debt issuance costs of $19.5 million recorded in intangible and other assets-net on the Company's consolidated balance sheets.

As of July 4, 2026, the Company had available borrowing capacity of $17.6 million under the Revolving Credit Facility. Such amount is less than the $150 million total revolving commitments under the Revolving Credit Facility due to a reduction of borrowing capacity pursuant to the borrowing base.