The following discussion provides information that we believe to be relevant to an understanding of our unaudited consolidated financial condition and results of operations. The statements in this section regarding industry outlook, our expectations regarding the performance of our business and any other non-historical statements are forward-looking statements. Our actual results and outcomes may differ materially from those contained in or implied by any forward-looking statements contained herein. These forward-looking statements are subject to numerous risks, uncertainties, and other important factors, including, but not limited to, those described in "Special Cautionary Note Regarding Forward Looking Statements" and in Part II, Item 1A, "Risk Factors" included in this Quarterly Report on Form 10-Q. You should read the following discussion together with our unaudited consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and with the sections entitled "Special Cautionary Note Regarding Forward-Looking Statements," Part I, Item 1A, "Risk Factors," and our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025 and with the sections entitled "Special Cautionary Note Regarding Forward-Looking Statements," Part II, Item 1A, "Risk Factors" included in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026. Overview We are an omni-channel-focused retailer with an affinity model that owns or has ownership interests in various brands, offering a comprehensive array of products and services that enable its customers to enhance everyday life through quality, style, and value. In addition, we also offer an increasing number of add-on services across our platforms, including warranties, shipping insurance, and installation services. Our customer engagement and retention are bolstered by our welcome rewards+ membership program, enhancing the overall value proposition for our customers. We currently own Bed Bath & Beyond, Overstock, buybuy BABY, the Kirkland's and Kirkland's Home brands, SFV Services, and now The Container Store, among other brands. As used herein, "Bed Bath & Beyond," "the Company," "we," "our" and similar terms include Bed Bath & Beyond, Inc. and its controlled subsidiaries, unless the context indicates otherwise. Through our Bed Bath & Beyond brand, we provide an extensive array of home-related products tailored specifically for our target customers - consumers who seek comprehensive support throughout their shopping journey, aspiring to discover quality, stylish products at competitive prices that align with their budget requirements. We regularly refresh our product assortment to reflect the evolving preferences of our customers and aim to stay aligned with current trends. Furniture across all rooms continues to play a critical role in our strategy. Leveraging an asset-light supply chain, direct shipping is offered to customers from both our suppliers and third-party logistics providers. Bed Bath & Beyond's strategic priorities include curating stylish, high-quality assortments to make product selection intuitive and affordable, in addition to enhancing offerings with trusted aspirational brands. We transform the customer experience by building trust, creating life-stage experiences, and consistently delivering inspiration, quality, and value. Through our Overstock brand, we aim to provide a wide array of quality goods at discounted prices, and a treasure hunt-like experience for our target customers - consumers who are highly engaged, very accustomed to purchasing online, and actively seeking great deals. The mission of this brand is to delight our customers by offering them deals on products they will love. Our product assortment includes home categories such as indoor and outdoor furniture, rugs, décor, and lighting, as well as lifestyle categories such as jewelry and watches, apparel and accessories, and designer shoes and handbags. The buybuy BABY brand acquisition allows us to reunite two traditionally related brands, Bed Bath & Beyond and buybuy BABY, and support our customers through key life stage shopping moments. Through our Kirkland's and Kirkland's Home brands acquisition, we believe this addition strengthens our presence in key categories that drive both traffic and margin, while providing a flexible store base that can be integrated into our broader platform. The acquisition of SFV Services adds installation, renovation, construction and project-execution capabilities that further differentiate Bed Bath & Beyond from traditional retailers. 33 Table of Contents The Container Store acquisition (refer to Note 17—Subsequent Events) combines the best of organizing solutions, design services and expertise with the best of Bed Bath & Beyond's home essentials. The result is a more complete home destination that combines organization, essentials, decor and services in one convenient shopping experience. Recent Developments Acquisition of The Brand House Collective, Inc. On April 2, 2026, we completed the previously announced acquisition of The Brand House Collective, Inc. (“TBHC” or “The Brand House Collective”) pursuant to the Agreement and Plan of Merger, dated as of November 24, 2025 (the “TBHC Merger Agreement”), by and among the Company, Knight Merger Sub II, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Knight Merger Sub”), and TBHC. Pursuant to the TBHC Merger Agreement, upon the terms and subject to the conditions set forth therein, Knight Merger Sub merged with and into TBHC, with TBHC surviving as a wholly owned subsidiary of the Company. We believe the acquisition of TBHC will allow us to strengthen our presence in key categories of home décor and seasonal merchandise, while providing a flexible store base that can be integrated into our broader platform. Acquisition of SFV Services On June 30, 2026, we completed the previously announced acquisition of SFV Services. SFV Services provides renovation, construction, demolition, facilities and project management services across residential and commercial markets. Core offerings include residential renovations and remodeling, commercial renovations and tenant improvements, demolition and white-box services, construction management, general contracting, facilities maintenance programs, franchise and multi-unit rollouts, program management, project management, and owner's representation. Acquisition of The Container Store Holdings, LLC On July 8, 2026 we completed the previously announced acquisition of The Container Store Holdings, LLC, a Delaware limited liability company (“TCS”), pursuant to the Agreement and Plan of Merger (the “TCS Merger Agreement”), date April 2, 2026, by and among the Company, Falcon Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“TCS Merger Sub”) and TCS. Pursuant to the Merger Agreement, upon the terms and subject to the conditions set forth therein, Merger Sub merged with and into TCS, with TCS surviving as a wholly owned subsidiary of the Company (the “Merger”). Merger Agreement with Fathom Holdings On June 16, 2026, we entered into a Merger Agreement and Plan of Reorganization (the “Fathom Merger Agreement”), by and among the Company, Fathom Merger Sub, Inc., a North Carolina corporation and wholly owned subsidiary of the Company (“FTHM Merger Sub”), and Fathom Holdings, Inc., a North Carolina Corporation (“FTHM”), pursuant to which, subject to the terms and conditions set forth therein, FTHM Merger Sub will merge with and into FTHM, with FTHM surviving such Merger as a wholly owned subsidiary of the Company. Merger Agreement with F9 On July 23, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Beyond Home Services, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Purchaser”), F9 Merger Sub 1, Inc., a Delaware corporation and wholly owned subsidiary of Purchaser (“Merger Sub 1”), F9 Merger Sub 2, LLC, a Delaware limited liability company and wholly owned subsidiary of Purchaser (“Merger Sub 2”), F9 Investments, LLC, a Florida limited liability company (“Seller”), F9 Brands, Inc., a Delaware corporation (the “Target”), and, solely for the purposes of Sections 3.6, 3.7, 3.8 and 5.1 of the Merger Agreement, Tom Sullivan, the indirect owner of Seller (“Sullivan”), pursuant to which, subject to the terms and conditions set forth therein, Merger Sub 1 will merge with and into the Target (the “First Merger”), immediately followed by the merger of the Target with and into Merger Sub 2 (the “Second Merger” and, together with the First Merger, the “Mergers”), with Merger Sub 2 surviving as a wholly owned subsidiary of Purchaser. 34 Table of Contents Executive Commentary This executive commentary is intended to provide investors with a view of our business through the eyes of our management. As an executive commentary, it necessarily focuses on selected aspects of our business. This executive commentary is intended as a supplement to, but not a substitute for, the more detailed discussion of our business included elsewhere herein. Investors are cautioned to read our entire "Management's Discussion and Analysis of Financial Condition and Results of Operations," our interim and audited financial statements, and the discussion of our business and risk factors and other information included elsewhere or incorporated in this report. This executive commentary includes forward-looking statements, and investors are cautioned to read "Special Cautionary Note Regarding Forward-Looking Statements." Revenue for the three months ended June 30, 2026, was $361.2 million, compared to $282.3 million for the three months ended June 30, 2025, representing an increase of $78.9 million, or 28.0%. The increase was primarily due to the inclusion of The Brand House Collective. In other respects, revenue increased, largely driven by an increase in average order value, partially offset by a decrease in number of orders delivered. Gross profit for three months ended June 30, 2026, was $96.7 million, or 26.8% of revenue, compared to $67.0 million, or 23.7% of revenue, for the three months ended June 30, 2025. This represents an increase of $29.7 million, or 44.4%. The increase in gross profit was primarily attributable to the acquisition of The Brand House Collective, including the effect of tariff refunds. Gross margin increased by 310 basis points year-over-year, primarily due to positive mix associated with the acquisition of The Brand House Collective, including the effect of tariff refunds. Sales and marketing expenses were $43.1 million, or 11.9% of revenue, for the three months ended June 30, 2026, compared to $38.2 million, or 13.5% of revenue, for the three months ended June 30, 2025. This represents an increase of $4.9 million, or 12.8%. The increase was primarily driven by higher revenue and related performance marketing expenses, partially offset by improved marketing efficiency. Technology expenses increased by $1.1 million for the three months ended June 30, 2026, compared to the prior period. The increase was primarily due to severance, driven by the workforce optimization as part of our technology transformation efforts, including the adoption of evolving technological advancements such as artificial intelligence. General and administrative expenses increased by $43.4 million for the three months ended June 30, 2026, compared to the prior period. The increase primarily reflected the expansion of our physical retail footprint, including store labor, occupancy, distribution, and other operating costs associated with The Brand House Collective, as well as $7.3 million of acquisition‑related professional fees. Customer service and merchant fees increased by $2.2 million for the three months ended June 30, 2026, compared to the prior period. The increase was primarily driven by an increase in credit card costs, primarily due to increased volume. Other operating expense (income), net increased by $8.5 million for the three months ended June 30, 2026, compared to the prior period. The increase reflects the $5.2 million loss from The Brand House Collective's impairment of leased assets due to store closures and the non-recurrence of the $5.0 million gain from the 2025 sale of Bed Bath & Beyond trademarks in Canada and the United Kingdom, partially offset by $2.2 million gains from lease termination. Consolidated cash and cash equivalents decreased from $175.3 million as of December 31, 2025, to $99.5 million as of June 30, 2026, a decrease of $75.8 million, primarily as a result of disbursement for notes receivable of $20.0 million to TBHC, and net cash outflows from operating activities of $50.0 million. Key Operating Metrics We review a number of metrics, including the following key operating and financial metrics, to evaluate our business, measure our performance, identify trends in our business, prepare financial forecasts and make strategic decisions. We believe these operational measures are useful in evaluating our performance, in addition to our financial results prepared in accordance with U.S. GAAP. You should read the key operating and financial metrics in conjunction with the following discussion of our results of operations and together with our consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. 35 Table of Contents We use the following key operating metrics to assess the performance of our business (in thousands, except for LTM net revenue per active customer, average order value and orders per active customer): Three months ended June 30, 2026 2025 Active customers (1) 6,389 4,356 LTM net revenue per active customer (2) $ 178 $ 259 Orders delivered (3) 2,797 1,289 Average order value (4) $ 129 $ 219 Orders per active customer (5) 1.79 1.32 ___________________________________________ (1) Active customers represent the total number of unique customers who have made at least one purchase during the prior twelve-month period. This metric captures both the inflow of new customers and the outflow of existing customers who have not made a purchase during the prior twelve-month period. We view active customers as a key indicator of our growth. (2) Last twelve months (LTM) net revenue per active customer represents total net revenue in a twelve-month period divided by the total number of active customers for the same twelve-month period. We view LTM net revenue per active customer as a key indicator of our customers' purchasing patterns, including their initial and repeat purchase behavior. (3) Orders delivered represents the total number of orders fulfilled in any given period, including orders that may eventually be returned. As we ship a large volume of packages related to e-commerce orders through multiple carriers, actual delivery dates for e-commerce orders may not always be available, and in those circumstances, we estimate delivery dates based on historical data. Typically, brick and mortar store orders will be fulfilled on-site at the time of the order. We view the orders delivered metric as a key indicator of our growth. (4) Average order value is defined as total net revenue in any given period divided by the total number of orders delivered in that period. We view average order value as a key indicator of the mix of products on our sites, the mix of offers and promotions and the purchasing behavior of our customers. (5) Orders per active customer is defined as orders delivered in a twelve-month period divided by active customers for the same twelve-month period. We view orders per active customer as a key indicator of our customers' purchasing patterns, including their initial and repeat purchase behavior. Macroeconomic Trends We continue to monitor recent macroeconomic trends and geopolitical events, including, without limitation, ongoing global conflicts, trade barriers including tariffs, financial and stock market volatility, higher interest rates, inflation, and their impacts. These events have and may continue to negatively impact consumer confidence and consumer spending, which have and may continue to adversely affect our business and our results of operations. Many of our suppliers source from other countries and may be negatively affected by increased tariffs or other import/export controls by the United States and foreign governments, as well as uncertainty in the market as it responds to global macroeconomic factors. Due to the uncertain and constantly evolving nature and volatility of these trends and events, we cannot currently predict their long-term impact on our operations and financial results. As of June 30, 2026, the challenges arising from these events have not adversely affected our liquidity or capacity to service our debt, nor have these conditions required us to reduce our capital expenditures. 36 Table of Contents Results of Operations Comparisons of Three Months Ended June 30, 2026 to Three Months Ended June 30, 2025, and Six Months Ended June 30, 2026 to Six Months Ended June 30, 2025 Net revenue, cost of goods sold, gross profit and gross margin The following table summarizes our net revenue, cost of goods sold, and gross profit (in thousands): Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Net revenue $ 361,159 $ 282,251 $ 608,914 $ 513,999 Cost of goods sold Product costs and other costs of goods sold 264,478 215,282 453,035 388,898 Gross profit $ 96,681 $ 66,969 $ 155,879 $ 125,101 Year-over-year percentage change Net revenue 28.0 % 18.5 % Gross profit 44.4 % 24.6 % Percent of net revenue Cost of goods sold Product costs and other costs of goods sold 73.2 % 76.3 % 74.4 % 75.7 % Gross margin 26.8 % 23.7 % 25.6 % 24.3 % Revenue for the three months ended June 30, 2026, was $361.2 million, compared to $282.3 million for the three months ended June 30, 2025, representing an increase of $78.9 million, or 28.0%. The increase was primarily due to the inclusion of The Brand House Collective. In other respects, revenue increased, largely driven by an increase in average order value, partially offset by a decrease in number of orders delivered. Revenue for the six months ended June 30, 2026, was $608.9 million, compared to $514.0 million for the six months ended June 30, 2025, representing an increase of $95 million or 18.5%. The increase was primarily due to the inclusion of The Brand House Collective. Bed Bath & Beyond revenue also increased, largely driven by an increase in average order value, partially offset by a decrease in number of orders delivered. Change in estimate of average transit times (days) Our revenue related to merchandise sales is recognized upon delivery to our customers. Typically, brick and mortar store orders will be fulfilled on-site at the time of the order. As we ship a large volume of packages related to e-commerce orders through multiple carriers, it is not practical for us to track the actual delivery date for each of those shipments. We use estimates to determine which shipments are delivered and, therefore, recognized as revenue at the end of the period. Our delivery date estimates are based on average shipping transit times. We review and update our estimates on a quarterly basis based on our actual transit time experience. However, actual shipping times may differ from our estimates, which can be further impacted by uncertainty, volatility, and any disruption to our carriers caused by certain macroeconomic conditions, such as supply chain challenges, trade barriers including tariffs, inflation, rising interest rates, climate and weather events, or geopolitical events. 37 Table of Contents The following table shows the effect that hypothetical changes in the estimate of average shipping transit times would have had on the reported amount of revenue and income before income taxes (in thousands): Three months ended June 30, 2026 Change in the Estimate of Average Transit Times (Days) Increase (Decrease) Revenue Increase (Decrease) Income Before Income Taxes 2 $ (6,700) $ (1,053) 1 $ (3,172) $ (498) As reported As reported As reported -1 $ 4,866 $ 765 -2 $ 10,848 $ 1,705 Gross profit and gross margin Our overall gross margins fluctuate based on factors such as competitive pricing; product costs including the effect of tariffs; discounting; product mix of sales; advertising revenue and our marketing allowance program; and operational and fulfillment costs which include costs incurred to operate and staff warehouses, including rent and depreciation expense associated with these facilities, and costs to receive, inspect, pick, and prepare customer order for delivery, all of which we include as costs in calculating gross margin. Gross margins for the past six quarterly periods and fiscal year ending 2025 were: Q1 2025 Q2 2025 Q3 2025 Q4 2025 FY 2025 Q1 2026 Q2 2026 Gross margin 25.1 % 23.7 % 25.3 % 24.6 % 24.7 % 23.9 % 26.8 % Gross profit for the three months ended June 30, 2026, was $96.7 million, or 26.8% of revenue, compared to $67.0 million, or 23.7% of revenue, for the three months ended June 30, 2025. This represents an increase of $29.7 million, or 44.4%. The increase in gross profit was primarily attributable to the acquisition of The Brand House Collective, including the effect of tariff refunds. Gross margin increased by 310 basis points year-over-year, primarily due to positive mix associated with the acquisition of The Brand House Collective, including the effect of tariff refunds. Gross profit for the six months ended June 30, 2026, was $155.9 million or 25.6%, compared to $125.1 million, or 24.3% of revenue, for the six months ended June 30, 2025. This represents an increase of $30.8 million, or 24.6%. The increase in gross profit was primarily attributable to the acquisition of The Brand House Collective, including the effect of tariff refunds Gross margin increased by 130 basis points year-over-year, primarily due to positive mix associated with the acquisition of The Brand House Collective, including the effect of tariff refunds. Operating expenses Sales and marketing expenses We use a variety of online advertising channels to attract new and repeat customers, including search engine marketing, personalized emails, mobile app, loyalty program, affiliate marketing, display banners, and social media. We also build our brand awareness through linear and streaming TV advertising. Costs associated with our discounted shipping and other promotions, such as coupons, are not included in sales and marketing expenses. Rather, they are accounted for as a reduction in revenue as they reduce the amount of consideration we expect to receive in exchange for goods or services and therefore affect net revenues and gross margin. We consider these promotions to be an effective marketing tool. 38 Table of Contents The following table summarizes our sales and marketing expenses (in thousands): Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Sales and marketing expenses Sales and marketing expenses $ 43,108 $ 38,209 $ 75,418 $ 69,499 Advertising expense included in sales and marketing expenses 40,591 36,653 71,605 66,030 Year-over-year percentage change Sales and marketing expenses 12.8 % 8.5 % Advertising expense included in sales and marketing expenses 10.7 % 8.4 % Percent of net revenue Sales and marketing expenses 11.9 % 13.5 % 12.4 % 13.5 % Advertising expense included in sales and marketing expenses 11.2 % 13.0 % 11.8 % 12.8 % Sales and marketing expenses were $43.1 million, or 11.9% of revenue, for the three months ended June 30, 2026, compared to $38.2 million, or 13.5% of revenue, for the three months ended June 30, 2025. This represents an increase of $4.9 million, or 12.8%. The increase was primarily driven by higher revenue and related performance marketing expenses, partially offset by improved marketing efficiency. Sales and marketing expenses were $75.4 million, or 12.4% of revenue, for the six months ended June 30, 2026, compared to $69.5 million, or 13.5% of revenue, for the six months ended June 30, 2025. The increase was driven by higher revenue and related performance marketing expenses, partially offset by improved marketing efficiency. Technology expenses We seek to deploy our capital resources efficiently in technology to support operations, including private and public cloud, web services, customer support solutions, and product search. We aim to enhance the customer experience by investing in technology, including investing in machine learning algorithms and generative AI, improving our process automation and efficiency, modernizing and enhancing our systems, and supporting and expanding our logistics infrastructure. We expect to continue to incur technology expenses to support these efforts and these expenditures may continue to be material. The frequency and variety of cyberattacks on our websites, enterprise systems, services, and on third parties we use to support our technology continues to increase. The impact of such attacks, their costs, and the costs we incur to protect ourselves against future attacks, have not been material to date. However, we consider the risk introduced by cyberattacks to be serious and will continue to incur costs related to efforts to protect ourselves against them. The following table summarizes our technology expenses (in thousands): Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Technology expenses $ 24,334 $ 23,221 $ 45,548 $ 49,939 Year-over-year percentage change Technology expenses 4.8 % (8.8) % Technology expenses as a percent of net revenue 6.7 % 8.2 % 7.5 % 9.7 % Technology expenses increased by $1.1 million for the three months ended June 30, 2026, compared to the prior period. The increase was primarily due to severance, driven by the workforce optimization as part of our technology transformation efforts, including the adoption of evolving technological advancements such as artificial intelligence. Technology expenses decreased by $4.4 million for the six months ended June 30, 2026, compared to the prior period. The decrease was primarily due to a reduction in staff related expenses, and a reduction in depreciation and amortization, driven 39 Table of Contents by our technology transformation efforts, including the adoption of evolving technological advancements such as artificial intelligence. General and administrative expenses The following table summarizes our general and administrative expenses (in thousands): Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 General and administrative expenses $ 57,527 $ 14,088 $ 72,390 $ 28,402 Year-over-year percentage change General and administrative expenses 308.3 % 154.9 % General and administrative expenses as a percent of net revenue 15.9 % 5.0 % 11.9 % 5.5 % General and administrative expenses increased by $43.4 million for the three months ended June 30, 2026, compared to the prior period. The increase primarily reflected the expansion of our physical retail footprint, including store labor, occupancy, distribution, and other operating costs associated with The Brand House Collective, as well as $7.3 million of acquisition‑related professional fees. General and administrative expenses increased by $44.0 million for the six months ended June 30, 2026, compared to the prior period. The increase primarily reflects the expansion of our physical retail footprint, including store labor, occupancy, distribution, and other operating costs associated with The Brand House Collective, as well as $11.0 million of acquisition‑related professional fees. Customer service and merchant fees Customer service and merchant fees include customer service costs and merchant processing fees associated with customer payments made by credit cards and other payment methods and other variable fees. Customer service and merchant fees as a percent of net revenue may vary due to several factors, such as our ability to effectively manage customer service costs and merchant fees. The following table summarizes our customer service and merchant fees (in thousands): Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Customer service and merchant fees $ 11,579 $ 9,331 $ 20,597 $ 18,688 Year-over-year percentage change Customer service and merchant fees 24.1 % 10.2 % Customer service and merchant fees as a percent of net revenue 3.2 % 3.3 % 3.4 % 3.6 % Customer service and merchant fees increased by $2.2 million for the three months ended June 30, 2026, compared to the prior period. The increase was primarily driven by an increase in credit card costs, primarily due to increased volume. Customer service and merchant fees increased by $1.9 million for the six months ended June 30, 2026, compared to the prior period. The increase was primarily driven by a $3.0 million increase in credit card costs, primarily due to increased order volume, partially offset by a $1.1 million decrease in customer service outsourced labor. 40 Table of Contents Other operating (expense) income, net The following table summarizes our other operating income, net (in thousands): Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Other operating expense (income), net $ 3,016 $ (5,454) $ 3,016 $ (5,790) Year-over-year percentage change Other operating expense (income), net (155.3) % (152.1) % Other operating expense (income), net as a percent of net revenue 0.8 % (1.9) % 0.5 % (1.1) % Other operating expense (income), net increased by $8.5 million for the three months ended June 30, 2026, compared to the prior period. The increase reflects the $5.2 million loss from The Brand House Collective's impairment of leased assets due to store closures and the non-recurrence of the $5.0 million gain from the 2025 sale of Bed Bath & Beyond trademarks in Canada and the United Kingdom, partially offset by $2.2 million gains from lease termination. Other operating expense (income), net increased by $8.8 million for the six months ended June 30, 2026, compared to the prior period. The increase reflects the $5.2 million loss from The Brand House Collective's impairment of leased assets due to store closures and the non-recurrence of the $5.0 million gain from the 2025 sale of Bed Bath & Beyond trademarks in Canada and the United Kingdom, partially offset by $2.2 million of gains from lease terminations. Other income (expense), net The $7.6 million favorable change in other income (expense), net for the three months ended June 30, 2026, as compared to the same period in 2025, was primarily attributable to a $6.6 million decrease in loss recognized from our equity method securities and a $0.7 million loss from TBHC promissory convertible notes. The $25.2 million favorable change in other income (expense), net for the six months ended June 30, 2026, as compared to the same period in 2025, was primarily attributable to a $21.2 million decrease in loss recognized from our equity method securities, a gain of $2.8 million gain recognized on the loan commitment in 2026, and a $0.7 million non-recurring loss recognized from TBHC convertible promissory notes in 2025. The decrease in loss recognized from our equity method securities reflects the change from a recognized loss on equity method securities of $23.6 million for the six months ended June 30, 2025 to a recognized loss on equity method securities of $2.4 million for the six months ended June 30, 2026. The gain recognized on the loan commitment was driven by the fact that The Brand House Collective had drawn the entire available balance from the Delayed Draw Loan Commitment. Income taxes Our income tax provision for interim periods is determined using an estimate of our annual effective tax rate adjusted for discrete items, if any, for relevant interim periods. We update our estimate of the annual effective tax rate each quarter and make cumulative adjustments if our estimated annual effective tax rate changes. Our quarterly tax provision and our quarterly estimate of our annual effective tax rate are subject to significant variations due to several factors including: variability in predicting our pre-tax and taxable income, the mix of jurisdictions to which those items relate, relative changes in expenses or losses for which tax benefits are limited or not recognized, how we do business, fluctuations in our stock price, economic outlook, political climate, and other conditions such as supply chain challenges, inflation, rising interest rates, and geopolitical events. In addition, changes in laws, regulations, and administrative practices will impact our rate. Our effective tax rate can be volatile based on the amount of pre-tax income. For example, the impact of discrete items on our effective tax rate is greater when pre-tax income is lower. During the three months ended June 30, 2026, we completed the acquisition of The Brand House Collective, Inc. (“TBHC”). In connection with the preliminary purchase price allocation, we recognized deferred tax liabilities primarily related to differences between the financial reporting carrying amounts and the tax bases of acquired assets. 41 Table of Contents The deferred tax liabilities recognized in the acquisition provided a source of future taxable income that management considered in assessing the realizability of deferred tax assets. Based on this additional positive evidence, we released a portion of our valuation allowance during the second quarter of 2026. The release was recorded as a discrete income tax benefit in the period of the acquisition and reduced income tax expense for the three and six months ended June 30, 2026, by approximately $3.1 million. Our provision for income tax for the three months ended June 30, 2026 and 2025 was $2.5 million benefit and $0.3 million expense, respectively. The effective tax rate for the three months ended June 30, 2026 and 2025 was 6.0% and (1.5)%, respectively. Our provision for income tax for the six months ended June 30, 2026 and 2025 was $2.3 million benefit and $0.5 million expense, respectively. The effective tax rate for the six months ended June 30, 2026 and 2025 was 3.9% and (0.8)% benefit, respectively. Our tax provision and rate differs from the statutory federal income tax rate of 21% primarily due to year-to-date losses on our retail operations for which tax benefits are limited and the release of a portion of our valuation allowance. Each quarter we assess on a jurisdictional basis whether it is more likely than not that our deferred tax assets will be realized under ASC Topic 740. We have no carryback ability, and therefore we must rely on future taxable income, including tax planning strategies and future reversals of taxable temporary differences, to recover our deferred tax assets. We assess available positive and negative evidence to estimate whether we will generate sufficient future taxable income to use our existing deferred tax assets. A significant piece of objective negative evidence evaluated as of June 30, 2026, is the cumulative loss position over a three-year period generated by our U.S. retail operations. On the basis of this evaluation, we continue to maintain a valuation allowance against our deferred tax assets for the U.S. jurisdiction, not supported by reversals of taxable temporary differences. We intend to continue maintaining a valuation allowance on our net U.S. deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. We will continue to monitor the need for a valuation allowance against our deferred tax assets on a quarterly basis. As we repatriate foreign earnings for use in the United States, the distributions are generally exempt from federal and foreign income taxes but may be subject to certain state taxes. As of June 30, 2026, the cumulative amount of foreign earnings considered permanently reinvested upon which taxes have not been provided, and the corresponding unrecognized deferred tax liability was not material. We are subject to taxation in the United States and multiple state and foreign jurisdictions. Tax years beginning in 2020 are subject to examination by taxing authorities, although net operating loss and credit carryforwards from all years are subject to examinations and adjustments for at least three years following the year in which the attributes are used. Liquidity and Capital Resources Overview We believe that our cash and cash equivalents currently on hand and expected cash flows from future operations will be sufficient to continue operations for at least the next twelve months. We continue to monitor, evaluate, and manage our operating plans, forecasts, and liquidity considering the most recent developments driven by macroeconomic conditions, such as supply chain challenges, inflation, rising interest rates, tariffs, bans, or other measures or events that increase the effective price of products, and other geopolitical events. We proactively seek opportunities to improve the efficiency of our operations and have in the past and may in the future take steps to realize internal cost savings, including aligning our staffing needs, creating a more variable cost structure to better support our current and expected future levels of operations and process streamlining. We periodically evaluate opportunities to repurchase our equity securities, obtain credit facilities, or issue additional debt or equity securities, which may impact our future operations and liquidity. In addition, we may, from time to time, consider the investment in, or acquisition of, complementary businesses, products, services, or technologies to expand our business, any of which might affect our liquidity requirements or cause us to issue additional debt or equity securities that would be dilutive to stockholders. Our future capital requirements will depend on many factors, including, but not limited to, our growth, our ability to execute on our business strategy, our ability to integrate and realize synergies from investments in new business strategies, acquisitions, or other transactions, and consumer sentiment towards our offerings. In the event that additional liquidity is required from outside sources, we may not be able to raise the capital on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition, and results of operations could be adversely affected. 42 Table of Contents Current sources of liquidity Our principal sources of liquidity are existing cash and cash equivalents and accounts receivable, net. At June 30, 2026, we had $99.5 million of cash and cash equivalents and $29.8 million of accounts receivable, net of allowance for credit losses. During the six months ended June 30, 2026, the Company entered into standby letter of credits with BMO Bank N.A. valued at $9.5 million. The letter of credits were issued in favor of the Company's payment processors as a financial guarantee in connection with ongoing payment processing operations. On June 29, 2026 and in connection with the acquisition of TCS, the Company entered into a promissory note agreement with TCS in the amount of $7.5 million. The promissory note bears interest at 8.0% per annum and matures on July 31, 2026. The Company entered into the financing arrangement to provide additional short-term liquidity and support working capital needs. The note was repaid in full prior to its contractual maturity date. We entered into a Sales Agreement dated June 10, 2024 with JonesTrading, under which we have conducted and may in the future conduct "at the market" public offerings of our common stock. Under the Sales Agreement, JonesTrading, acting as our sales agent or principal, may offer our common stock in the market on a daily basis or otherwise as we request from time to time. At June 30, 2026, we had $16.0 million available under our "at the market" sales program. We have no obligation to sell additional shares under the Sales Agreement, but we may do so from time to time. Under the agreement, we will pay JonesTrading up to a 2% sales commission on all sales. For the six months ended June 30, 2026, we did not sell any shares of our common stock pursuant to the Sales Agreement. Cash flow information is as follows (in thousands): Six months ended June 30, 2026 2025 Cash (used in) provided by: Operating activities $ (50,040) $ (35,092) Investing activities (39,433) (20,188) Financing activities 13,630 16,718 Operating activities Cash received from customers generally corresponds to our net revenues as our customers primarily use credit cards to buy from us, causing our receivables from these sales transactions to settle quickly. We have payment terms with our partners that generally extend beyond the amount of time necessary to collect proceeds from our customers. The $50.0 million of net cash used in operating activities during the six months ended June 30, 2026, was primarily due to loss from operating activities adjusted for non-cash items of $38.1 million and cash used by changes in operating assets and liabilities of $11.9 million. The $35.1 million of net cash used in operating activities during the six months ended June 30, 2025, was primarily due to loss from operating activities adjusted for non-cash items of $25.3 million and cash used by changes in operating assets and liabilities of $9.8 million. Investing activities For the six months ended June 30, 2026, investing activities resulted in a net cash outflow of $39.4 million, primarily due to $27.2 million for the disbursement of notes receivable, $6.0 million related to the acquisitions of business, $4.6 million expenditures for property and equipment, and $1.6 million purchases of intangible assets. 43 Table of Contents For the six months ended June 30, 2025, investing activities resulted in a net cash outflow of $20.2 million, primarily due to $8.0 million for purchases of equity securities, $5.2 million for disbursement of notes receivable to Kirkland's, $5.2 million for purchases of intangible assets, and $3.0 million of expenditures for property and equipment, offset by $1.3 million of proceeds received from the sale of intangible assets. Financing activities For the six months ended June 30, 2026, financing activities resulted in a net cash inflow of $13.6 million, primarily due to $25.9 million from borrowings of revolving line of credits, $7.5 million proceeds from short-term debt, and $0.4 million purchases from ESPP, which was offset by $18.1 million repayments on revolving line of credits, purchase of treasury stock. For the six months ended June 30, 2025, financing activities resulted in a net cash inflow of $16.7 million, primarily due to $24.2 million in net proceeds from the sales of our common stock pursuant to our "at the market" public offering, net of offering costs, offset by $6.5 million payments on short-term debt. Future liquidity commitments We expect to fund the ongoing operations, capital requirements, and working capital needs of TBHC, TCS, and SFV Services through existing cash balances, cash flows from operations, and available credit facilities. Contractual Obligations and Commitments The following table summarizes our contractual obligations as of June 30, 2026, and the effect such obligations and commitments are expected to have on our liquidity and cash flow in future periods (in thousands): Contractual Obligations Total Less than 1 year 1-3 years 3-5 years More than 5 years Operating leases (1) $ 125,934 $ 37,124 $ 56,338 $ 28,295 $ 4,177 Total contractual cash obligations $ 125,934 $ 37,124 $ 56,338 $ 28,295 $ 4,177 __________________________________________ (1) Represents the future minimum lease payments under non-cancellable operating leases. For information regarding our operating lease obligations, see Note 9—Leases, in the Notes to Unaudited Consolidated Financial Statements included in Item 1, Part I, Financial Statements (Unaudited) of this Quarterly Report on Form 10-Q. Tax contingencies We are involved in various tax matters, the outcomes of which are uncertain. As of June 30, 2026, accrued tax contingencies were $3.6 million. Changes in federal, foreign, state, and local tax laws may increase our tax contingencies. The timing of the resolution of income tax contingencies is highly uncertain, and the amounts ultimately paid, if any, upon resolution of issues raised by the taxing authorities may differ from the amounts accrued. It is reasonably possible that within the next 12 months we will receive additional assessments by various tax authorities. These assessments may or may not result in changes to our contingencies related to positions on prior years' tax filings. Critical Accounting Policies and Estimates During the period we completed the acquisitions of TBHC and SFV Services, we allocated the fair value of purchase consideration to the tangible assets acquired and liabilities assumed. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Our valuation procedures include consultation with an independent adviser, as appropriate. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to inventories, fixed assets and operating right-of-use assets and lease liabilities. Critical estimates in valuing certain assets include but are not limited to projected future cash flows, comparable assets, and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates and changes could be significant. We expect to finalize these amounts during the one-year measurement period starting from the date of each acquisition. 44 Table of Contents Other estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed, as more fully discussed in Note 3—Business Combinations of our unaudited consolidated financial statements included elsewhere in this Quarterly Report. As of June 30, 2026, there were no significant changes in the application of our critical accounting policies or estimation procedures from those presented in Annual Report on Form 10-K for the year ended December 31, 2025. 45 Table of Contents