a.k.a. Brands Holding Corp. ($AKA)

All right. Well, hello again. I'm Jay Sole, UBS' retailing department stores and specialty softlines analyst. And welcome again to the 2026 UBS Global Consumer and Retail Conference. Really excited to have a.k.a. Brands here again to talk to us. I have to say that there's a very big fan in my household of Princess Polly and it's my 15-year-old she loves it. So I think that...

We appreciate your 15-year-old and we appreciate you and your credit card.

That's right. So...

It's great for us.

So there's a really good story here. And I think that we are going to dive into a little bit. But maybe just before we kind of dig into some of the nuances of why my kid loves your brand. Let's just talk about high level the business model. It gives us a little bit of overview for anybody who might not be totally up to speed on the company and what you guys do, just maybe start there.

Thanks for having me. Delighted to be here. Yes. So at a.k.a., we're a group of next-generation fashion brands, very much focused on that Gen Z millennial consumer. We started off all of the brands very much direct to consumer. And over the last couple of years, we started bringing the brands into wholesale, into stores and really just putting product in front of customers wherever they are, certainly, very early days as we get into that, but just really delighted with the traction we're seeing, our ability to engage the customers really across all those different channels.

Okay. So maybe let's talk a little bit more about the brands because you have a nice portfolio of brands been cultivating for a while. Maybe just tell us about the brands and also their respective target audiences and maybe the go-to-market strategy for each.

So today, we have brands that we focus on. On the women's side, we have 2 key brands, Princess Polly, which is about half the portfolio, as we mentioned, grew double-digit growth last year. And this really kind of led the charge of scaling that brand in the U.S. over the last number of years, focused on that 15- to 25-year-old consumer being there as they're going out, socializing and being out in the boat and very much has been just focused on store -- or sorry, just focused on direct-to-consumer and as I said, expanding into stores and wholesale. Our other women's brand, Petal & Pup, another great story. We originally got that brand in Australia, now scaling it in the U.S. It's now in all Nordstrom stores from a wholesale perspective on Nordstrom online as well, seeing great reaction there. And then on the men's side, we've got 2 brands, Culture Kings, very much, I would say, retailtainment, that kind of collision of music, sports and fashion. They have a number of first-party brands that they go to market with as well as kind of key third-party brands in that space, the new eras Nike, Adidas, people like that. And then Minimal is our fourth brand and very much on the men's side, kind of, I would say, runway inspired fashion and bringing it to those guys.

Got it. And maybe just to remind people like the newest brands in the portfolio like the ones you just...

Yes. The newest brands that we brought are the 2 men's brands, the Minimal brand and Culture Kings. Interestingly, 3 of the brands that we have, Princess Polly, Petal & Pup and Culture Kings started in Australia. We're around in Australia for maybe 10 years-ish. We were seeing organic demand for the brands here in the U.S., felt an opportunity to buy them, scale them in the U.S. And so that's really what we're doing and focused on at the moment.

Okay. So maybe just remind us how you guided 2026 and any puts and takes baked into your outlook?

Yes. So for '26 from a revenue sales perspective, we guided $625 million to $635 million. And then from an EBITDA perspective, $27 million to $29 million of EBITDA. I think, look, we are -- obviously had a lot going on from a 2025 perspective, glad to be kind of past all of that. Certainly, tariffs for us were challenging, but made huge progress there. Anything now with our ability to scale retail at Princess Polly from a store perspective, we're in 14 stores at this stage. We've just signed another 8 leases, I would expect to have 4 or 5 of those opened this year for Princess Polly. We'll continue with Princess Polly and Petal & Pup scaling our relationship with Nordstrom and see a lot of opportunity there. The Petal & Pup brand is also going into other wholesale opportunities, Von Maur, they are just in this week. We also expect to be in Dillard's in Q3. We're seeing just a lot of traction there with that brand. And then for Culture Kings, it's really scaling those first-party brands that they have.

Okay. Maybe you continuing talked about on the fourth quarter call, you mentioned the quarter-to-date for Q1, the comps are running up mid-single digits. Maybe can you speak to any brand level performance as well as the drivers to that solid trend?

Yes, it's good to see the trend. And I think for us, as we went through kind of tariffs last year, we certainly had periods where we were out of stock and kind of chasing inventory and lost a little bit of demand there. So I think good to see the traction now as we're kind of past that and Princess Polly, certainly leading the way with double-digit growth. So kind of really strong performance there. And that coming for us what we've seen is good strength across the brands, right, and across the channels. And I think coming from just feeling like the product is in a really good spot. We're bringing in newness particularly for that spring/summer season, customers are reacting really positively to it. And I think looking forward to kind of continuing to execute against that strategy in '26.

Got it. I guess just thinking about quarter-to-date, what's your view of the consumer, both in U.S. and obviously, Australia? And just how are you -- because there's so much talk out there and some people say there's a K-shaped economy. Some people think consumers actually pretty strong. If you look at the holiday season, I mean there's a lot of mid-single digit better comps out there across the mall. What's your view?

We certainly feel we have a resilient consumer and the consumer from what we are seeing is resilient. For us, as you mentioned, we look at across geographies, we look at it across brands. And we now get a really good view into what's going on from a store perspective, what's going on with our wholesale partners, what's going on from an online perspective. I think, look, we're lapping a lot last year, certainly for our consumer with wildfires in L.A. Is Tiktok on or off? And lots of things like that. But I would say kind of all the signs we're looking at it from a traffic conversion engagement with the new product we're bringing in, we certainly feel like the consumer is there. We are not seeing any kind of clear signs of, I would say, distraction. And so I feel like, look, we're just going to keep our heads down, keep executing like we have been and looking forward to a strong year.

Okay. I guess the -- a lot of talk about tax refunds. I think that's important for your consumer historically. Have you seen any change in trend in your business when tax refunds get distributed? And how are you thinking about that issue this year?

Yes. We certainly look at this fairly closely. We're trying to keep an eye on it. And when we see the headlines of how much higher tax refunds are going to be this year, it certainly gets us excited. We're getting notes from Board members and investors saying, "Hey, are you getting some pickup here?" I think, look, we're trying to keep an eye on it. We're certainly -- I wouldn't say operationally, we're doing something different. We're not trying to time a change in marketing spend or product drops with kind of changes in when we kind of see refunds come out. I think, look, it probably just help reinforce that feeling that the consumer is there if the product is right and just continue to lean into that growth opportunity.

Okay. I mean it sounds kind of consistent with other companies. So I don't think anybody is taking a big bet on buying more inventories if there's a huge stimulus bump coming. It just doesn't feel like that, that's the right thing.

Yes. We're certainly not there. And for us, we're very fortunate that our model where we kind of -- on our model, we are dropping new styles each week. Small number of units in those. So we test into that inventory. So certainly from an inventory bet perspective, very much staying on that model of look let's test, let's find winners, let's repeat into them fast and make sure that we're there for the customer.

Okay. I mean the other thing people are talking about is gas prices and oil prices are up and gas prices presumably might follow. How sensitive do you think your consumer is to that kind of thing? And are you seeing any kind of impact from that yet?

Certainly, the -- in the last couple of weeks, we haven't seen an impact. I do reflect on 2022 back in that kind of summer of '22 in that May, June period, when I think when the headlines were gas prices are way up, and there were $7 a gallon, and all the rest of it. I think if it gets that high, I think there's maybe more of an impact on just the collective noise and conversations that are going out there from an economic perspective as opposed to kind of affecting our consumer direct.

Okay. I guess because you have such an interesting consumer and the consumer a lot of people are focused on just as a trendsetter and just an indication of where the culture is going. What does the consumer react to in terms of these? Because on Wall Street, we pay attention to everything. Every headline drives investors nuts. But -- and we've had so many headlines this year and last year, I mean, it just doesn't stop. But Obviously, we're talking about a lot of the war in Iran right now, but does your customer -- I mean how much does your customer really change? I am sure they're aware of it, but do they change their behavior? Like my 15-year-old as much as I try, I don't think she pays that much attention to whether it's Venezuela or Iran or Green Land or what's going on with defense companies or mortgage companies or new Fed shares or UAPs or whatever the topic du jour is. I mean I don't know if that's representative of the consumers' total. I mean how do you think the consumer just response to news in general and when it comes to spending and just living your life.

Yes. So I have a 15 and a 16-year-old, 2 girls. I would say like yours. Jay, they are -- that's not the new story they're focused on, right? They're on their screen. They're consuming their media, whether it's TikTok, Instagram, YouTube and all of those channels. Rather focus on their homework as well. There's a lot going on.

God bless them for that, you know.

Yes. I love that. I think, look, for us and our consumer, and I think maybe what's going on recently, but also kind of reflecting on all the macro noise that was going on last year, right? I think and the actions we took during the business to kind of transition our supply chain from where we were to kind of where we are now in the diversification. And a lot of what we saw was the customer continues to be there. They're engaging with the site. They're looking at our content across the different marketing channels where we're in, and they're consuming it. And I would say, look, when the product is good they're there. And I think like it's so interesting, right? I think even talking internally as a team when you hear sometimes marketing isn't great or having a tough time, it's usually the product isn't just as great as we want it to be. And I think that's really where we're focused. And I think once we are continuing to execute against that. I would say, from what we are seeing, the customers.

Makes sense. And it's encouraging, right? It's good that people don't get too -- I think that's a good thing about America is like nobody gets like too worked up about anything. You know what I mean, it's like life goes on.

Yes. And look, I would reflect on the journey we've gone through over the last kind of gosh, nearly 5 years being public now and before that, and with the geographies of Australia and the U.S., I certainly feel we've a more resilient consumer in the U.S., and they just get on with it, right? There's a lot of noise, there's a lot of changes, and they just -- they battled through and they're amazingly resilient.

That's right. I mean, we have an election year this year, so it's not going to -- like the headlines aren't going to stop, right? It's just -- it's good that people just -- they're focused on fashion. They want fashion.

They're focused on fashion. And I think when it speaks to them and makes them feel good and look good and they love it.

Right. My 15-year-old, she go to school feeling good about yourself, like how she looks like that's #1, 2 and 3. So that's what matters.

Yes. Yes.

All right. Well, I'm going to get back to sort of starting about some strategies a little bit because you're building a lot of several channel strategies across DTC, both in websites and stores and wholesale and marketplaces. Maybe what can you tell us about the profit profile of each channel and how you see growth across the channels materializing over the near term and even over the longer term?

Yes. I think it's been really interesting for us, right, being really much exclusive direct-to-consumer and then getting into these channels really over the last couple of years. And I would say, first, okay, Culture Kings have had stores for a while, but really we first put product, I would say, on Nordstrom from a dot-com perspective. We led there with Petal & Pup. And saw a fantastic response from a customer perspective. We then went into a test them for Princess Polly and Petal & Pup and then store wide last March. And then over the last 18 months, we started opening stores for Princess Polly. I think what we see is we certainly, I would say, the geography in the P&L is slightly different, obviously, kind of lower gross margins from a wholesale perspective, a little bit higher gross margins from a store perspective compared to online obviously, different selling expense profile. We really focus on, look, what's the, I would say, EBITDA before G&A before payroll and those kind of structural costs, what profit profile are we there? And I would say, at the moment, pretty similar, not really seeing big differences across the 3. And with that certainly gives us a lot of confidence to scale into all of them. And look, I think it's all going to bring us more profit dollars, which is ultimately the volume of profit dollars is what we're really going after. And I think we're also seeing across all of these new channels, they are bringing more customers into the brands. We're able to measure from a store perspective, about 30% of the people buying from us in stores are new to Princess Polly. We're also seeing new customers from a wholesale perspective. And then just from our stores, we're also seeing a nice halo for the online business. I think for us, just -- look, let's continue to increase the overall market for these brands and lean into them.

I mean implicit in what you're saying, tell me if I'm wrong, I'm just going to put a statement out there, tell me if I'm wrong, but it sounds like you feel that there's a very important place for brick-and-mortar retail. I think for -- people forget, 5 years ago, before COVID everybody was like, okay, brick-and-mortar is dead, get out of the mall, the mall is over, nobody shops there anymore. It's all about e-commerce. And now, I mean, I think at least what we saw in the U.S. this past holiday season is that especially for the young consumer, like they want to have a social experience. They want to have a brick-and-mortar experience like they want to touch and feel products. They want to be with a store representative brand representative face-to-face. And when I hear you saying that it makes me feel like you probably would agree with that. But you tell me. I mean, rather more nuanced view based on your understanding rather than my...

I would absolutely agree with this. I think, look, the -- and I would say the real hard confirmation for me, I suppose, and for us as a group is we opened our first store for Princess Polly in the West field in L.A. and Century City in L.A. And I would say, sitting outside that store, looking at those consumers going in and going in, in groups of 2, 3, 4 girls, friends together and the excitement they had on look at it, look there it is, there it is, let's get in there. And they're in there, like you say, they're touching product, they're feeling product. They love trying it on. One of the first things we learned was we don't have enough changing room in the store. So we had to change that. And they just -- yes, that in real-life experience is a big thing for -- just like it's always been, historically, it's a big thing for that consumer.

Especially that mall. It's such a beautiful mall. I mean, it's one of the best malls in the world, I think.

It's fantastic. And just to see -- just -- I would say what we're seeing as well, right, I think there is absolutely pace for great malls. People enjoy being in there. They enjoy walking around. The mall operators now have done a lot to create these really great experiences for people. And I think the retail they're putting in there. We see very thoughtful and makes sense and brands are kind of working well together and doing well.

Right. I mean it heightens the experience to be in a great environment like that, and then you go and you have an experience in principle. You remember that great feeling that you had, and that's how you start to really connect with the brand and internalize it where it sticks with you is like, yes, this is something that makes me feel good. I love this.

Absolutely. And look, we're all -- we're looking for that engaged customer that's coming back to you, coming back to you frequently and all of those touch points that we have and our experiences, whether it's measuring that NPS and all those metrics that we look at, it's really to drive customers.

Okay. In the U.S. region, the business has grown 25% on a 2-year stack, which is pretty awesome. I guess, what gives you confidence you can continue to grow in the U.S.?

It is great to be up 25%, it's always nice talking about great numbers. I think, look, the execution from the team across all of the brands, be it kind of opening stores, which are new to us, opening those great wholesale partners new to us and really showing up well for our customers there. I think all of that gives us confidence, but also as we are building into these channels seeing that we are engaging with new customers across all of the business. And I think we realize as well just with, okay, we've 13 stores in the U.S. for Princess Polly, that's really early on, right? We have a lot of opportunities to continue to execute against that. And I think all of that -- and having a model where we're very fortunate with pretty much all of our product is product that's exclusive to us. It's our own brands. Margin profile is better. So we certainly know is where we've got a model here that we can lean into is profitable, and we can get after these expansions.

Okay. I mean, I guess from a lot of investors' perspective, just having talked to people over the years about your company is that most people have like a frame revenue is like, okay, Australia is going to come here and engage with our -- that young super, super fickle sensitive customer better than the American brands because like, that's a pretty good trick, right? I mean it's like sure there's been Australia Mel Gibson came here and become a massive superstar and stuff. So I mean it's been done. I mean, obviously, there's a great connection in Australia and the United States, but just talk a little bit about of just how you've been able to cut through the noise because there's -- it's -- some people are like, we're very provincial here sometimes, very periodic. So only the U.S. brands know best or whatever. But clearly, you've obviously figured something out. I mean, what can you say?

Yes. I think, look, the -- firstly, I would say that the test and repeat model that the brands have from a merchandising perspective, right, where they are looking -- bringing in newness every single week and for Princess Polly, it will do over 100 new styles a week. Maybe 150 units deeps on each one of those styles. And so for that consumer that they are looking to talk to, that newness is so engaging for them, right? It's a reason to scroll. It's a reason to go to the site or to look at Princess Polly across all of the different marketing vehicles. So I think that's been fantastic. Also, look, the brand, and I would say Polly in particular, really does a great job from an influencer perspective, right? They don't really work with big mega influencers that we would all know, right? They're much more focused on those smaller influencers and those influencers with smaller following, very authentic for the customers that they're going to, right, much more relatable and it gives the ability for the brand to scale more. I would also say, look, from a seasonality perspective, when it comes to that spring/summer season that has happened in Australia. So we get to see what are the customers down there reacting to, what are the winners. And that allows us and gives us confidence as we head into the season here from a U.S. perspective to lean into those styles, lean into those winners and know we can do that with confidence. And so I would say, look, as you bring in the brands, that's certainly an advantage. Now we still have a opportunity with winter, their idea of winter in Australia is very, very different than ours, but it's good to have opportunities.

Okay. Maybe just going back to the Princess Polly stores, you mentioned the store in Los Angeles. Can you just talk about how the stores in general are performing? And maybe you can just talk about some of the learnings from the stores that have opened more recently. And maybe any unit economics kind of information you can share? And sort of what are the difference you're seeing between online and in-store shoppers?

Yes. I think, look, great for us. We opened that, like I mentioned, that first store now at 13. We just opened 1 in Australia as well. So kind of 14 overall. I would say, look, all the stores performing well. And we've kind of modeled them that we want to have a pay back in 2 years or less. So good from that perspective. They're in or around the kind of 3,500, 4,500 square foot from a size perspective. Really good productivity, as I mentioned, about 30% of the customer is new to the brand. So great to bring on new customers. And all nice profitability, good from a 4-wall perspective, we're very much just looking at what's going through the box as we measure that productivity. And I think all of that gives us confidence to continue scaling. We certainly have opportunity as we open each new store to get better and better and better, right? I think it has been interesting as we've gone through the process of bringing a brand like Princess Polly, that's from an online perspective, has a large breadth of SKUs. You can't put all of those in a store. And so that curation of assortment from picking which products you want to go in, when do you want them to go in. It is a new muscle for us. And I would also say from a visual merchandising perspective, how we tell stories online, obviously very different than how you would tell stories in a store environment. So all of those things we're learning. We're continuing to improve. I think -- so I think, look, the stores are doing great on model from where we want them to be, but we certainly have high standards, higher expectations and feel there's a lot of runway, yet.

Okay. I guess what do you see as the potential from a brick-and-mortar fleet, I guess, overall size for Princess Polly in the U.S.

Yes. I think, look, we're very early. I certainly could see a time when Princess Polly would have 100 stores. For us, it's going to be that mix of stores, the right wholesale partners that are brand enhancing and have the right economics and then our own direct-to-consumer business. I think it will be the blend of the 3 of those. Obviously, at this stage, we're much more I would say, much more of a volume coming from the direct-to-consumer perspective, but we could certainly see 100 stores for Princess Polly in the U.S.

You mentioned that with every store there's learnings. When you start with one and you probably feel like you need to get to 3, like, okay, this is the model, right? This is the box that we want to use and then you go, oh, we need more changing rooms, like you mentioned with Los Angeles. And sometimes I feel like companies get to that 10th store, 15th store and 20th store, and then it's like you've learned so much, the 20th store is so much different from like the 5th store. And then you have sort of a heterogenous mix and you just got started, and it's like, okay, well, wait on, what are we going to do here? How are you going to manage that? Like how are you going to sort of make -- because is it important to have all the stores be the same? Or is it okay if some are a little bit different? I mean how do you think about that growth process?

Yes, I think it is interesting, the level of learnings that we have now in the first 14, right? And I think we are -- look, U.S. is a big country. There are regional differences, whether it's kind of the consumer, weather, all that kind of stuff. I think for us, we are not looking to have every store be like every other store, right? We know there are differences. We know consumers is different. We should show up for them as they want us to show up. We should listen to the consumer. That's what we're focused on and make sure we have the product they want in the store. I think there are certainly learnings that we can apply across all of the stores, right? I would say we're very focused on that from how we bring on our teams in the store, how we train them, how we want them to talk to our consumer, but we want them to represent Princess Polly. And so I think there's a lot of focus for us there to make sure we show up right for all of our customers. But yes, I think at this stage, we will probably be a little bit different from store to store.

Okay. Interesting. Maybe can you talk a little bit about the Princess Polly and Petal & Pup partnerships with Nordstrom? Maybe how do you see those partnerships and others evolving over time?

Yes. So like I mentioned, we first went into Nordstrom, Nordstrom online March of '24. Saw really great success there with Petal & Pup first, followed on with Princess Polly, we did a test with them in some stores in kind of October '24 and then went chain-wide, all 94 doors, I think, with both brands in kind of March of last year. And I think just, look, seeing fantastic success and great customer response to both brands. For example, Petal & Pup is in the trend section. They have a really nice presence there, great breadth of product there. And I think we are even Petal as an example, It's been really interesting for us seeing the -- how consumers -- customers there are reacting probably with a different mix of assortment than they do with us from an online perspective. So Petal is probably -- from an online perspective, dresses would be their largest category. We're seeing differences in the Nordstrom -- with Nordstrom. So -- and I think for us, that kind of gives us confidence to realize the opportunity we have from a category expansion with that and with Princess Polly and certainly kind of more opportunities to continue executing against growth.

How much does the results that you see from your DTC channel, especially as you test inform the wholesaler -- the buyers within your wholesale partners about maybe willingness to try a little bit more to expand starting to give you a little bit of opportunity in different categories. I mean, how much do they feed off each other?

Yes. It's been an interesting journey with them on kind of the cycle that kind of, I suppose, speed of development, speed of market and short lead time that we work with from a direct-to-consumer perspective, and the longer lead times that they work with. So we certainly have a few that would ask us for, hey, what have you got, maybe sort of right now, what have you got coming for fall or later or like, hey, we're still buying and designing it into summer. So it can throw us a little bit. I think it has been interesting, though, to see how engaged they are getting with our development cycle and seeing that they can jump on trends, jump on it quickly and that our development cycle, supply chain cycle allows them to do that. So it's been interesting kind of how they are moving to -- and trying to move to that faster model.

Interesting. Okay. Maybe let's just -- I want to just talk about the stores just in Australia now, we talked about the U.S., but you mentioned you opened the Princess Polly store in Australia. Maybe just tell us a little bit about the potential for more stores in Australia and why you decided to open a store there.

Yes. I would say, certainly listening to the customers in Australia. They were very vocal about how can you keep opening stores in the U.S. We can't get one. It's been interesting that the level of engagement we see at Princess Polly to store opening announcements from regional places. Brilliant, I'll be there, what days? And then place it near to it? What about us? What about us? So we kind of -- we see that engagement from customers. As I mentioned, Princess Polly started in Australia. So we opened a store for them in Bondi in Sydney last December. And look, I have seen a fantastic response to them. And just like you see that excitement of consumers walking up to the store here and there's Princess Polly, let's go in there, touch and feel the product, exactly the same for the Australian consumer. I think there is more opportunity to do stores there. I think we've got 8 stores in Australia for Culture Kings. I could see kind of the same for Princess Polly at some point. And there's certainly opportunity there. But I would say, kind of, for us, very much the focus is on that U.S. is the growth driver.

Right. Okay. And that is a bit. That's a beautiful spot worthy of business.

Absolutely. Great mall, again.

Yes. All right. On the fourth quarter call, I want to just talk about some of the other initiatives you have going on. You mentioned the new international third-party logistics provider for Princess Polly. Maybe can you speak to your international strategy overall beyond Australia and the opportunity you see for further growth across the brand portfolio?

So as probably started in Australia, we're bringing to the U.S. scaling it here. We do see demand internationally, right? People are -- they come to our website, they buy from a huge number of countries. I would say, seeing really strong demand, particularly from the U.K. And so to date, we've been servicing that market from our distribution center in the L.A. region. So longer lead times, longer delivery times kind of in that 4- to 5-day window, which obviously impacts conversion, repeat rates. So we are putting product into the U.K. market there for them, and we'll actually start shipping from that U.K. distribution center next week, which is super exciting. So with that, we'll be able to give next-day delivery for that U.K. consumer. So obviously, a huge kind of jump up in service level there and also removing a lot of the barriers around VAT and duties and complications that we were kind of putting in front of them from a conversion perspective. So I'm excited to see the difference there. And I think certainly expect moderate growth there this year and kind of leading the way for us to see kind of what additional expansion opportunities there are for us and kind of next year and beyond.

Okay. It sounds exciting. I want to keep moving. I got a couple of more things before we run out of time. But I want to just talk about Culture Kings too. I guess what's changed over the past year at that business? And what are some of the opportunities you see for 2026 and longer term?

So Culture Kings is a predominantly men's business. It focuses on street wear mix of about 50% of their business is third-party brands that they have and about 50% from their own first-party brands and 5 or 6 brands that really matter to them. We brought in some new leadership in Australia last year and also from a global design perspective. And for us, really, we're kind of, again, back to let's get the product in each of those individual owned brands in a better shape as we look to scale them in the U.S. And look, the team has done a phenomenal job of really getting the aesthetic on each one of those first-party brands in a much tighter way, inventory in a much better way. And as we kind of launch some of those new products in Q4, saw much better customer response, much better style productivity, much better sell-through. So super excited and all part of getting the Culture Kings and really the men's businesses on that same test and repeat model that we had the women's businesses on. And I think for us, being able to drop product that you can test every week, seeing how they respond to it. You're not taking big, huge inventory swings. But when you have a winner, you can really chase into them. We see the -- we certainly see how powerful that model is, and we're just very, very focused on getting Culture Kings on to it.

Okay. Makes sense. Tell us about the relocated and newly renovated Culture Kings store in Brisbane.

Yes. So we've had 8 stores in Australia for a while. And the stores there were about kind of, I think of them in the 8000 -- kind of square -- 8,000 to 9,000 square foot size. And a lot of kind of retail payment aspects to that. I think for us, we wanted to figure out -- we have a great store for Culture Kings in Las Vegas, but it's a big store, right? It's about 13,000 square foot of retail space as well as basketball court, the DJ Booth recording studio, there's a fully licensed bar in there. And so as we think about that, it's fantastic for the first store and really put Culture Kings on the map, but that's not something we're going to replicate across the U.S., right? So for us, it was great that we were able to roll out quickly and test the new design concept in Australia. It's in that kind of 5,000 square foot size. And we're able to keep not every feature, but a lot of the key retail payment features. And look, it's getting us to be more curated, and more choiceful as we decide on what brands and what products for brands we put into the stores. And I think ultimately then is a model that we can roll out with much more confidence in the U.S.

Okay. Two more topics I want to ask you about AI and then we'll talk a little bit about tariffs at the end if we have time. AI first big picture question, on a scale of 0 to 10, where 0 is like, AI, it's completely overhyped and just ridiculous, and 10 is like this is a game changer for our business in terms of efficiencies and being able to do sales better, marketing better, operations better, design better, everything better, test better. Where are you on the scale?

I'm probably up 7, maybe even 8.

Really?

Yes, yes. I think the -- it's interesting, and I think we talked about it maybe 12 months ago, and I was kind of saying, look, there's some interesting stuff, but I don't see anything kind of groundbreaking huge. I think the progress of change probably over the last 12 months, I just think has been phenomenal. And what we are now of the business being able to do is I think we're getting a real view into, yes, they're big opportunities here, right? We're very fortunate with the technology that we have, right? We predominantly sit on Shopify, right in the ecosystem of software that works with that. So for us, it's a very flexible technology. We can try things really quickly. We can try different things across each brand. It's working, everybody uses it. If it's not, it's something you try it once and we just get on with it. And we're also very fortunate that we have all of our data across all of the brands, all of the metrics we want from a customer perspective, merchandising, operations, sourcing supply chain, all in one area, all in one database. And now we're able to let the different LLMs engage with all of that data and our team engage. So I think what's been really interesting for us is just, I would say, the kind of unlocking creativity in different teams, first, on how they're looking at their business, how they're finding opportunities to ultimately run.

Is there an aha moment over the last year or some maybe anecdotes you can share with us around like, oh...

Gosh, I think the -- some of the interesting ones where we were recently just able to really quickly, we were able to look at imagery on our website, the photography that we use, models, poses, setting, lighting and product description and using those and unit sales, unit velocity sales across all products, pickup trends on why we have slightly higher return rates than some products versus -- super interesting, right. Like look, we have -- we're fortunate to have a really low return rate across the group. It's only about 18%. But it's just an interesting question as somebody looked at and you're asking it to see if you can take a trend. And it's being -- look, it's not perfect, right? It's not. But it's just, I would say, setting off further kind of areas that you can look at interesting kind of aspects that are standing out to it. And look, as an individual you're not going to be able to consume that level of data and make those connections. But that does for you.

Well, I mean, that makes sense because obviously, inventory efficiency is probably any apparel company's biggest opportunity in general.

No doubt. That's where we're focused on the unlock rate. I would say the model we have is test and repeat is all around that and trying to differentiate ourselves there and unlock more opportunity there. And I think certainly feel that the -- this technology that's still coming on and coming along is going to lead to more opportunities.

I guess I'll ask you one more question about this, and then we'll probably run out of time. But I think from an investor perspective, everybody wants to understand the ROI, right? Hey, what does it mean for sales and margins because you're doing the AI stuff. And I think companies are a little bit hesitant to give that information. I think part of it because it's not necessarily like a do A get B type of situation. But to the extent you can share with us sort of like internally, are you able to measure return from using AI? Or are you able to sort of see the difference in the progress financially the company is making from AI? And I guess the second part of that is, where are you on the journey? I mean, obviously, I think you've said 7 or 8 in terms of excitement, rather it's not just hype, there's something real here. I mean are you in the very beginning of tapping into the -- getting the benefits that can lead to better profits overall? Or is it more like you've already done a lot, maybe your seventh or eighth inning and towards the end of the game essentially.

I'd say we're very early today. Right. We are starting to see -- I think we're starting to see where it's helping us build a better business. It's helping us, and I think do it probably in a quicker way. And I think particularly for us, at the moment, probably pointing out to us little kind of pockets of where we are wasting money or could be more efficient or doing something better. And I think whether that's on, I would say, promotion cadence, markdown management. I think there for us, the big, big opportunity. But look, they're -- I think there are a little bits of that all over the business, and I think we're super excited about...

And is it fair to say as a company with lots of growth potential in front of it, you'd rather take those savings and reinvest it in growth rather than sort of say, "Oh, let's just boost our margins and show Wall Street like a little bit more earnings power.

Absolutely. Look, we're in it for the long run, right? We know our profit is really going to come from scaling these brands, right? We have a model where we can scale them profitably. I think, look, we are focused on let's balance growth and profitability has been a big thing for us, but we are very focused getting after the growth.

Got it. And I guess -- I said last one, this is the very last one. Shopify sounds like a great platform because they probably give you an opportunity to sort of test things and try things, but I mean, do you need to leverage Anthropic or some of these other companies that are out there that are offering separate things or you can really work with a great platform like Shopify to sort of experiment and see what you can do.

Yes. I think that Shopify is a core platform we can certainly continue to work with. I think there are little add-ons to it that we will continue to evaluate. And when they work, we'll lean into them.

Right. Shopify can help you with your customer experience online, but in terms of maybe looking at stores or testing product or inventory, that has to be something separate. I mean, they can't probably help you with that.

That is absolutely something separate. And I think the big thing there for us is having your own data, having it connected, having it in space. You got a lot of choices.

Right. Well, it's right. And the trick is just put all that data in a platform to be able to make sense of it to give you tools that you can make decisions and kind of choose stuff, right? That's what Palantir does apparently for the Army.

Exactly. Yes.

Okay. All right. We got to the end of the time. That was great. I could keep asking you questions, but I think it's been a good day, so we'll stop there. Thank you so much a.k.a. Brands and everybody.

Thank you.