Reformation Q2 Earnings Call Highlights

Key Points

• Reformation delivered a strong Q2 2026: Revenue rose 24.1% year over year to $155.2 million, while net income increased to $12.4 million and adjusted EBITDA climbed 54% to $25.4 million, lifting the margin to 16.4%.
• Growth was broad-based: Active customers rose 23% to 1.2 million, direct-to-consumer revenue increased 21.2%, wholesale revenue grew 48.7%, and international revenue advanced 36.8%. The company also expanded to 70 stores and plans to open nine to 10 more in the second half.
• The company maintained its full-year outlook: Reformation expects 2026 revenue of $602 million to $606 million, adjusted EBITDA margins of 14% to 14.2%, and year-end store count of 79 to 80. Following its IPO, it used about $110 million of proceeds to reduce debt.

Reformation NYSE: REF reported second-quarter 2026 revenue and profitability above the high end of the company’s estimates provided at the time of its initial public offering, as growth in active customers, direct-to-consumer sales, wholesale and international markets supported results.

In its first earnings call as a public company, Reformation said net revenue increased 24.1% year over year to $155.2 million, marking its 21st consecutive quarter of double-digit revenue growth. Net income rose to $12.4 million from $6.9 million a year earlier, while adjusted EBITDA increased 54% to $25.4 million. Adjusted EBITDA margin expanded to 16.4% from 13.2% in the prior-year quarter.

Customer Growth Supports DTC Performance

Direct-to-consumer net revenue rose 21.2% to $135.3 million, driven by growth in the company’s trailing-12-month active customer base, which increased about 23% to 1.2 million. Chief Executive Officer Hali Borenstein said the growth reflected both new customer additions and continued engagement from returning customers.

Reformation’s DTC net revenue per customer declined 1.4% year over year to $417 on a trailing-12-month basis. Management attributed the decline to the rapid addition of new customers, who typically spend less initially than longer-tenured shoppers. Borenstein said returning customers spent nearly twice as much as new customers in 2025, while customer value has continued to rise with tenure.

During the question-and-answer session, Borenstein said the company continues to see mid-single-digit growth in value among established customer cohorts, particularly those in their first several years with the brand. She said Reformation retained 80% of revenue on a one-year basis and 98% on a two-year basis.

The company said about 70% of its 2025 revenue came from repeat customers. Customers who shop through both stores and e-commerce represented 34% of revenue and spent 3.1 times more than single-channel customers, according to management.

Wholesale and International Revenue Outpace Total Growth

Wholesale and other revenue increased 48.7% to $19.9 million in the second quarter. Chief Financial Officer Joshua Moore said the growth was fueled by strong customer response to Reformation’s spring and summer products, which increased order volumes from existing wholesale partners.

Borenstein said Reformation plans to remain selective in wholesale, prioritizing broader assortments and additional doors with current accounts. The company may add one or two new strategic wholesale partners in coming quarters, particularly where they can introduce the brand to new markets. Reformation said 90% of its 2025 revenue came from direct-to-consumer channels.

International revenue rose 36.8% to $31.2 million, accounting for approximately 20% of second-quarter revenue. The company cited growth in its core international markets of the United Kingdom, Canada and France. Reformation ended the quarter with 10 international stores and serves customers in more than 150 countries through digital channels.

In France, where Reformation opened its first Paris store in November 2025 and a second Paris location in March 2026, new customer growth exceeded 180% year over year during the first half of 2026. Borenstein said both French stores were performing above initial expectations.

Store Expansion and Category Diversification Continue

Reformation opened four stores during the second quarter, including locations in Raleigh, Paris and Chicago, bringing its total store count to 70. The company has opened 17 locations over the past 12 months and sees a path to doubling its store fleet over five years.

Management said stores are intended to drive both retail sales and e-commerce activity within their surrounding markets. In Chicago, where the company opened two additional stores on the same day during the quarter, new customer growth accelerated to 50% year over year in the 11 weeks following the openings, compared with 28% in the preceding 20 weeks. Total DTC revenue growth in the market accelerated by nearly one-and-a-half times, the company said.

Product diversification also remained a focus. Reformation said it has added more than $200 million in annual non-dress net revenue since 2021 and saw strength in separates, tops, bottoms, pants and skirts. Borenstein said footwear remains an emerging category with encouraging progress. In 2025, 74% of customers purchased across more than one category.

The company also highlighted its spring collaboration with Courtney Grow, which generated nearly $1.5 million in demand on its launch day. Two of the collaboration’s top five stock-keeping units were accessories, according to management.

Margins Expand as Company Maintains Full-Year Outlook

Gross margin increased 230 basis points to 66.7%, primarily reflecting lower blended tariff rates and higher average unit retail pricing, partly offset by faster wholesale growth. Moore said the company expects similar year-over-year gross-margin expansion in the third quarter, though third-quarter margin is typically lower than the second quarter because of Reformation’s summer sales event.

Operating expenses rose 24.2% to $84.4 million but remained flat as a percentage of revenue at 54.4%. Marketing expense was 9.3% of revenue, compared with 9% a year earlier. SG&A expenses improved 30 basis points as a percentage of revenue, although the company cited higher shipping costs, stock-based compensation and new-store expenses.

Reformation ended the quarter with $76.6 million in cash and cash equivalents, $246.7 million in total debt and $170.1 million in net debt. After its July IPO, the company used approximately $110 million of net proceeds to repay debt. As of Aug. 24, total debt stood at $136.7 million and net leverage was approximately 0.9 times.

For full-year 2026, Reformation reaffirmed expectations for net revenue of $602 million to $606 million, representing growth of approximately 18.6% to 19.5%. The company expects adjusted EBITDA margin of 14% to 14.2% and capital expenditures of about $23 million to $27 million, primarily for store openings. It expects to open nine to 10 stores in the second half, bringing its year-end store count to 79 to 80.

About Reformation (NYSE:REF)

Reformation Inc provide sustainable womenswear brand. Reformation Inc is based in LOS ANGELES.

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