Cuộc họp công bố kết quả kinh doanh quý 3 năm 2026 của aka Brands (AKA): Doanh số tại Mỹ tăng 14%

Điểm nhấn chính

• Doanh thu thuần quý 3/2026 tăng 9,7% so với cùng kỳ năm trước lên 161,3 triệu USD, tương đương mức tăng 7,6% trên cơ sở tỷ giá không đổi.
• Doanh thu tại Mỹ tăng 14% lên 112,6 triệu USD, đánh dấu sự trở lại mức tăng trưởng hai con số lần đầu tiên kể từ khi aka Brands tái cơ cấu mạng lưới tìm nguồn cung ứng vào năm 2025.
• Biên lợi nhuận gộp tăng khoảng 100 điểm cơ bản lên 60,1%, bất chấp áp lực bất lợi khoảng 140 điểm cơ bản từ chi phí cước vận tải đầu vào. EBITDA điều chỉnh tăng 16,6% lên 8,2 triệu USD.
• Doanh thu tại các thị trường còn lại trên thế giới tăng 78,9% lên 7,6 triệu USD, dẫn đầu là thương hiệu Princess Polly tại Anh. Doanh thu tại Australia và New Zealand giảm 6,7%, cải thiện so với mức giảm 12% trong quý 2.
• Ban lãnh đạo đã thu hẹp phạm vi dự báo doanh thu thuần cả năm xuống 626 triệu - 632 triệu USD và hiện kỳ vọng EBITDA điều chỉnh đạt 29 triệu - 30 triệu USD.
• Chi phí vận chuyển neo cao vẫn là yếu tố kìm hãm trong ngắn hạn. Ban lãnh đạo dự kiến biên lợi nhuận gộp quý 4 sẽ chịu thêm tác động tiêu cực 80 điểm cơ bản so với triển vọng trước đó.

Dữ liệu tài chính cốt lõi

Chi phí bán hàng tăng lên 52,3 triệu USD, tương đương 32,4% doanh thu, so với mức 29,4% của cùng kỳ năm trước. Con số này bao gồm 5,3 triệu USD chi phí một lần cho việc di dời trung tâm phân phối, khoản chi phí đã được loại trừ khỏi EBITDA điều chỉnh.

Chi phí tiếp thị đạt 21,1 triệu USD, tương đương 13,1% doanh thu, phản ánh các khoản đầu tư vào việc thu hút khách hàng và gia tăng nhận diện thương hiệu. Chi phí quản lý doanh nghiệp là 27,7 triệu USD, nhưng tỷ trọng trên doanh thu đã giảm xuống 17,1% từ mức 18,1%.

Hiệu quả kinh doanh và hoạt động

Princess Polly tiếp tục là động lực tăng trưởng chính. Doanh số bán hàng qua TikTok Shop tại Mỹ của thương hiệu này đã tăng gần gấp ba lần so với cùng kỳ năm trước và tăng hơn 40% so với quý 2. Thương hiệu này vận hành 15 cửa hàng tại Mỹ vào cuối quý 3 và dự kiến mở thêm hai cửa hàng trong quý 4. Thương hiệu cũng đã ký hợp đồng thuê ít nhất sáu địa điểm mới tại Mỹ trong năm 2027.

Doanh thu của Princess Polly tại Anh cao gấp khoảng bốn lần so với cùng kỳ năm trước và tăng 27% so với quý trước, nhờ sự hỗ trợ từ trang web, ứng dụng và trung tâm phân phối được địa phương hóa. Công ty đang sử dụng thị trường Anh làm bàn đạp để tiếp tục mở rộng sang châu Âu, bắt đầu bằng trang web dành riêng cho thị trường Đức trong quý 4.

Hiệu quả kinh doanh của các dòng sản phẩm cũng được củng cố. Danh mục đồ nỉ của Princess Polly đạt doanh số gấp bốn lần cùng kỳ năm trước, trong khi áo dệt kim tăng gần gấp đôi. Ban lãnh đạo cho rằng kết quả này đến từ sự kết hợp giữa các sản phẩm đón đầu xu hướng và việc tăng cường dự trữ hàng tồn kho đối với các danh mục sản phẩm chủ lực vốn đã được kiểm chứng.

Petal & Pup tiếp tục mở rộng thông qua kênh bán buôn. Nordstrom và Macy’s ghi nhận mức tăng trưởng hai con số, trong khi thương hiệu này bổ sung thêm 100 đối tác boutique đại diện cho hơn 140 cửa hàng. Các kênh phân phối bổ sung bao gồm Bloomingdale’s trực tuyến, Myer tại Australia và Lea Fashion tại Ấn Độ, cùng kế hoạch mở rộng phân phối tại Dillard’s và ra mắt tại Urban Outfitters và Scheels vào năm 2027.

Việc Culture Kings chuyển sang mô hình kinh doanh bán nguyên giá kết hợp thử nghiệm và tái đặt hàng đã hỗ trợ mở rộng biên lợi nhuận gộp hợp nhất. Thương hiệu này dự kiến mở một cửa hàng rộng 5.000 foot vuông tại Puerto Rico vào cuối tháng 12. Ban lãnh đạo cũng nhận thấy cơ hội mở rộng các nhãn hiệu nội bộ của Culture Kings thông qua TikTok Shop, kênh bán buôn và các đối tác chiến lược khác.

Công ty đã hoàn tất việc chuyển sang trung tâm phân phối mới tại Ohio. Ban lãnh đạo kỳ vọng cơ sở này sẽ hỗ trợ giao hàng nhanh hơn và giảm chi phí vận chuyển kể từ năm 2027. aka Brands cũng đang thử nghiệm một công cụ AI tự phát triển nội bộ phục vụ việc mua hàng, phân bổ hàng tồn kho và định giá, nhằm cải thiện vòng quay hàng tồn kho và giảm bớt việc giảm giá bán.

Dự báo của ban lãnh đạo

Ban lãnh đạo cho biết triển vọng doanh thu quý 4 phản ánh mức tăng trưởng từ đầu quý đến nay ở mức một chữ số tầm trung. Công ty kỳ vọng tốc độ tăng trưởng lũy kế hai năm sẽ tăng tốc từ quý 3 sang quý 4.

Về dài hạn, ban lãnh đạo cho biết họ nhận thấy lộ trình đạt biên EBITDA điều chỉnh ở mức hai con số thông qua việc cải thiện biên lợi nhuận gộp, tiết giảm chi phí phân phối và tối ưu hóa đòn bẩy chi phí tiếp thị cũng như chi phí quản lý doanh nghiệp. Đây vẫn là mục tiêu của ban lãnh đạo chứ chưa phải là dự báo chính thức.

Rủi ro và các yếu tố cần theo dõi

• Chi phí cước vận chuyển đầu vào đã làm giảm biên lợi nhuận gộp quý 3 khoảng 140 điểm cơ bản và ước tính tác động khoảng 2,3 triệu USD đến EBITDA điều chỉnh. Ban lãnh đạo dự kiến tác động đến EBITDA trong nửa cuối năm sẽ vào khoảng 6 triệu USD.
• Biên lợi nhuận gộp quý 4 dự kiến sẽ chịu thêm tác động 80 điểm cơ bản từ chi phí cước vận chuyển so với triển vọng trước đó.
• Người tiêu dùng tại Australia và New Zealand tiếp tục chịu áp lực từ môi trường kinh tế vĩ mô, mặc dù đà suy giảm doanh thu của khu vực này đã thu hẹp so với quý trước.
• Ban lãnh đạo dự kiến môi trường khuyến mại dịp lễ hội sẽ tương tự như năm 2025. Họ cũng lưu ý rằng người tiêu dùng dường như thận trọng hơn trong việc bổ sung thêm các mặt hàng vào giỏ hàng.
• Mức nền so sánh tại thị trường Mỹ sẽ trở nên thách thức hơn vào cuối quý 4 do vị thế hàng tồn kho của công ty đã cải thiện trong cùng kỳ năm 2025.

Điểm nhấn phiên hỏi đáp (Q&A) với chuyên gia phân tích

Ban lãnh đạo cho biết đà tăng trưởng tại Mỹ tiếp tục duy trì trong quý 4, nhờ sự hỗ trợ từ các cửa hàng mới của Princess Polly, sự kiện khai trương cửa hàng Culture Kings tại Puerto Rico, mức tăng trưởng bán buôn và kênh TikTok Shop. Tuy nhiên, công ty đã không đưa ra dự báo tăng trưởng riêng cho thị trường Mỹ trong quý 4.

Sự sụt giảm giá trị đơn hàng trung bình chủ yếu do cơ cấu kênh bán hàng thay đổi thay vì áp lực giảm giá trên diện rộng. TikTok Shop có giá trị đơn hàng trung bình thấp hơn do khách hàng thường mua ít sản phẩm hơn trên mỗi giao dịch.

Về phân bổ vốn, ban lãnh đạo cho biết aka Brands dự định tiếp tục giảm nợ, đồng thời tài trợ cho việc mở rộng cửa hàng và kênh phân phối thông qua dòng tiền từ hoạt động kinh doanh. Công ty cũng kỳ vọng vòng quay hàng tồn kho tốt hơn, bao gồm các cải tiến nhờ công cụ AI hỗ trợ kinh doanh hàng hóa, sẽ giúp giải phóng thêm nguồn vốn.

Ban lãnh đạo cho biết các cửa hàng Princess Polly đang thu hút thêm khách hàng mới, tạo hiệu ứng lan tỏa sang kênh trực tuyến và đạt tỷ suất lợi nhuận tại cửa hàng vững chắc. Công ty tin rằng thương hiệu này có thể mở rộng lên tới 100 cửa hàng tại Mỹ, mặc dù trọng tâm bán lẻ trước mắt vẫn là thị trường nội địa.

Toàn văn biên bản cuộc gọi công bố kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Emily Goldberg Schwartz

Good afternoon. Thank you for joining aka Brands to discuss our third quarter 2026 results released this afternoon, which can be found on our website at ir.aka-brands.com. With me on the call today is Jerome Long, Chief Executive Officer; and Kevin Grant, Chief Financial Officer. Before we get started, I'd like to remind you of the company's safe harbor language.

Management may make forward-looking statements, which refer to expectations, projections and other characterizations of future events, including guidance and underlying assumptions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed. For a further discussion of risks related to our business, please see our filings with the SEC.

Please note, we assume no obligation to update any such forward-looking statements. This call will also contain non-GAAP financial measures such as adjusted EBITDA, adjusted EBITDA margin and constant currency net sales. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the release furnished to the SEC and available on our website.

With that, I'll turn the call over to Ciaran.

Ciaran Long

Good afternoon, and thank you for joining us to discuss the third quarter of 2026. Our results reflect strong execution against our strategic plan. Net sales grew 9.7% to $161.3 million and adjusted EBITDA increased nearly 17% to $8.2 million, both in line with expectations. We delivered top line growth this quarter while achieving our third consecutive quarter of double-digit adjusted EBITDA growth. That combination demonstrates that the structural improvements we've made across the business are now driving both growth and profitability.

Our performance this quarter was led by three key drivers: our expanding omnichannel model in the U.S., international growth and significant gross margin improvement. The U.S., our largest market and greatest growth opportunity, led our performance with net sales growing 14%. This marks a return to double-digit growth in the U.S. for the first time since we transformed our sourcing network last year. That transition was a significant undertaking, and we are now growing from a more resilient foundation.

Rest of World continued to accelerate with net sales up 79% compared to approximately 49% in the second quarter, led by the ongoing success of Princess Polly in the U.K. Performance in Australia and New Zealand improved sequentially in Q3, with net sales declining approximately 7% compared to 12% in Q2 as we lap our strategic shift to a more profitable full price selling model. While the macro environment continues to pressure consumers, we remain focused on executing a disciplined operating model.

Importantly, gross margin expanded approximately 100 basis points year-over-year to 60.1%. This expansion was driven primarily by Culture Kings, where our multiyear transition to a full price test and repeat model is now firmly embedded in how the business operates. Notably, we achieved this gross margin improvement while absorbing significantly elevated freight costs, which speaks to our underlying margin profile.

The quarter also demonstrated the momentum of our expanding omnichannel model. Online remains the foundation of our business, while stores and wholesale also delivered growth, broadened our reach and introduced our brands to new customers. Our store fleet was a meaningful growth driver while delivering strong profitability and our wholesale partners continue to respond positively to our product with significant runway ahead. We also continue to improve our operational foundation.

During the quarter, we completed our planned distribution center relocation to a new facility in Ohio. This transition will enhance the customer experience and improve margins going forward, while also supporting the next stage of growth for our brands across online, stores and wholesale. At the same time, we're expanding our investment in AI, strengthening our team's ability to make faster and more informed decisions.

Our smaller brands are now testing a proprietary AI tool we developed in-house, which helps the merchandising and planning teams determine what we buy, how much we buy, where to allocate it and how we price it. The result is a sharper, more disciplined merchandising engine that helps us chase what's working, reduce markdowns and expand margins. AI is also accelerating our content engine.

Our creative teams can now take new content from production to live in a matter of days, and we are expanding our use of AI across video and imagery to create more content faster. We're also building AI into how customers shop. As more consumers start their search with AI assistance, we are making sure our brands show up in those results and traffic from those channels is growing. We're still early, but we see AI as a meaningful driver of conversion, inventory productivity and margin expansion in the years ahead.

Turning now to our brand highlights, starting with Princess Polly, our largest brand. Princess Polly delivered a strong third quarter as the brand continues to show the power of its omnichannel model. Our test and repeat engine is driving full price sell-through. Our stores and partners are introducing the brand to new customers and our international expansion is opening meaningfully new growth opportunities.

From a merchandising perspective, this year's back-to-school was Princess Polly's strongest season to date, and the quarter highlighted the key strength of the brand's test and repeat model, the ability to capitalize quickly on emerging trends while building a growing base of durable, repeatable programs. An example is that we can quickly build on viral cultural moments, such as the Cielo Halter top in Zebra Print that was featured in the film obsession. It became the brand's biggest selling style of the quarter, and Princess Polly is carrying that momentum into holiday with new going-out styles inspired by its success.

At the same time, the deeper buys and proven core evergreen categories discussed last quarter delivered exceptional results. Sweat sold 4x last year's level and knit tops nearly doubled. This balance of being both on trend and repeatability keeps the assortment fresh for customers while supporting more predictable demand, healthier inventory productivity and better margins.

Princess Polly's marketing engine remains a key competitive advantage, building cultural relevance at scale while driving efficient customer acquisition. The scale of the creator engine is a meaningful differentiator. Princess Polly ran thousands of creator collaborations in the quarter with more than 10,000 creator videos live each month and over 13 million weekly TikTok Shop video views.

This reach converts into sales and TikTok Shop remains one of the brand's fastest-growing channels, with U.S. sales nearly tripling year-over-year and growing more than 40% from the second quarter. The brand also launched TikTok Shop in the U.K. in July, opening a second market to the scale on the platform. Store expansion continued in the third quarter with new openings in Orlando and Houston, bringing the U.S. fleet to 15 stores. We look forward to opening Southdale Center in Idena, Minnesota and Stonebreer Center in Frisco, Texas in the fourth quarter.

Looking ahead, Princess Potty has signed leases for at least six new locations in the U.S. in 2027. In wholesale, demand was solid across partners in the third quarter, including Nordstrom and ASOS. Internationally, the U.K. remains a standout growth story. Since the launch of the local site app and distribution center in March, faster delivery has resonated strongly with customers. Third quarter U.K. sales were roughly 4x last year's level. U.K. customers nearly quadrupled and sales grew 27% from the second quarter. Looking ahead, the U.K. serves as Princess Polly springboard into Europe, beginning with a dedicated German site launching this quarter, and we see significant growth potential across the region.

Turning now to Petal & Pub. Petal & Pub continued to build its reach as a multichannel lifestyle brand in the quarter. Event dressing remains the brand's signature strength. Its August event collection was the most successful third quarter launch to date with customers trading up to more elevated styles, a signal of the brand's pricing power.

Heading into holiday, the brand launched its seasonal assortment earlier than last year, including a curated sweaters shop, giving customers and wholesale partners a longer selling window. Wholesale remains a key growth driver, led to double-digit growth at Nordstrom and Macy's.

At the Nordstrom anniversary sale, Petal & Pop ranked as the #6 most demanded brand across all women's apparel. The brand has also opened 100 boutique accounts, representing more than 140 stores in just two quarters of focused specialty wholesale effort.

Looking ahead, Petal & Pop's distribution pipeline is the strongest in the brand's history. In the U.S., the brand recently launched on bloomingdales.com. Internationally, we will expand into new markets in the fourth quarter through launches with Myer in Australia and Lea Fashion in India. That momentum continues into 2027.

Following a successful initial launch with Dillard's, Pet & Pop will expand across the retailer's full store fleet and Urban Outfitters and Scheels will both begin carrying the brand next year. Each new partner broadens the brand's reach and reinforces our confidence in Petal & Pop's long-term growth trajectory.

Turning now to our streetwear brands. Culture Kings continues to make progress on its product and margin transformation with its full price test and repeat model driving a meaningful contribution to our consolidated gross margin expansion. With a stronger margin structure now in place, Culture Kings is well positioned to drive profit flow-through as it grows.

Culture Kings in-house brands continue to resonate with customers, fueled by a robust slate of collaborations. The highlight of the quarter was Carry's collaboration with Mickey & Friends, which was revealed at Disney's D23 showcase and launched globally in September. 73 Studio built on its success with Marvel through Spider-Man and expanded into gaming with Halo, while Leder carried that momentum into October with global launches alongside Sonic and Alpha Industries.

Beyond product, Culture Kings continues to stand out for its ability to bring sport, culture and retail together. Around Australia's first regular season NFL game, the brand partnered with the San Francisco 49ers and the NFL on a citywide activation in Melbourne, delivering the Melbourne store biggest sales day outside of Boxing Day in more than 5 years. That success provides a blueprint for future sporting partnerships in both Australia and the U.S. Culture Kings U.S. expansion is also underway in Puerto Rico.

In late December, the brand will open a 5,000 square foot store at Plaza Las Americas in San Juan, the largest shopping center in the Caribbean. Built around the immersive format that defines Culture Kings, the store features a basketball hoop, a wall of headwear, a light DJ booth alongside a curated mix of global brands such as Adidas, ASICS and New Era and our in-house brands, Loiter, 73 Studio and Minimal.

Rounding out the portfolio, Minimal continued its momentum and remained the top 5 men's brand on TikTok Shop. This quarter, the brand relaunched its standard form basic collection with a refreshed logo, minimal branding on the outside of the garment for the first time and fully redesigned packaging. Minimal also celebrated its 10-year anniversary with a pop-up in Los Angeles, bringing the brand's community together in person.

Overall, I'm very pleased with our performance this quarter. We returned the U.S. to double-digit growth, expanded gross margin and continue to scale our omnichannel model while strengthening our balance sheet. We have a clear set of catalysts ahead, a growing Princess Polly store fleet and a pipeline of 2027 openings, expansion into Europe beginning with Germany.

The broadest wholesale pipeline in Petal & Pop's history and a new Culture Kings store in the U.S. I'm confident in our strategy and in the long-term growth opportunity across our portfolio. I want to thank our teams for their hard work and commitments. These results are a direct reflection of their dedication to our brands and our customers.

With that, I'll turn it over to Kevin.

Kevin Grant

Thanks, Karan. Net sales were $161.3 million for the third quarter, an increase of 9.7% compared to $147.1 million a year ago. On a constant currency basis, net sales increased 7.6%. By region, sales in the U.S. increased 14% to $112.6 million, which, as Kiran noted, marks our first quarter of double-digit U.S. growth since our sourcing transition last year.

Sales in the Rest of World increased 78.9% to $7.6 million, driven by the continued success of Princess Polly in the U.K. In the Australia and New Zealand region, sales declined 6.7% to $41.2 million, an improvement from the 12% decline in the second quarter. Consumers in the region remained under pressure from the macro environment, and we were lapping sales from unproductive units as we completed the Culture Kings merchandising transition.

Total orders were $2.12 million, up 12.8% year-over-year. Trailing 12-month active customers, excluding wholesale, increased 8.8% to $4.43 million compared to $4.07 million a year ago. And average order value was $76 compared to $78 last year. As mentioned, we're particularly proud of the approximate 100 basis point gross margin expansion to 60.1%, driven by our continued discipline and focus on full price selling, led by our streetwear brands.

These gross margin improvements were partially offset by approximately 140 basis points year-over-year headwind in inbound freight costs or roughly a $2.3 million adjusted EBITDA impact. Selling expenses were $52.3 million or 32.4% of net sales compared to $43.2 million or 29.4% of net sales a year ago.

As Ciaran discussed, we completed our distribution center relocation during the quarter. The associated one-time charges of $5.3 million were higher than we anticipated and are excluded from adjusted EBITDA.

Starting in 2027, we expect faster delivery times and lower shipping costs as we continue to build the foundation for online stores and wholesale growth. Marketing expenses were $21.1 million or 13.1% of net sales compared to $18.5 million or 12.6% of net sales a year ago, reflecting continued investment in customer acquisition and brand awareness.

General and administrative expenses were $27.7 million or 17.1% of net sales compared to $26.7 million or 18.1% of net sales a year ago. And as mentioned, adjusted EBITDA increased 16.6% to $8.2 million compared to $7 million a year ago, and our adjusted EBITDA margin expanded 30 basis points to 5.1%, marking our third consecutive quarter of double-digit adjusted EBITDA growth.

Turning to the balance sheet. We ended the quarter with $15.6 million in cash and cash equivalents. Total debt at the end of the quarter declined 8.5% to $101.9 million from $111.3 million a year ago, and net leverage improved to 3.5x compared to 3.8x a year ago. We ended the quarter with $95.4 million in inventory, down 1.3% from $96.7 million a year ago, while net sales grew nearly 10%. Importantly, we are pleased with both the composition and freshness of our inventory heading into the fourth quarter.

Turning now to our outlook. We are tightening our full year net sales guidance to $626 million to $632 million to be in line with our quarter-to-date net sales trend of mid-single-digit growth. For the fourth quarter, we expect net sales to be between $172 million to $178 million.

We are confident in the momentum across our growth initiatives, and our outlook implies an acceleration in net sales growth from the third quarter to the fourth quarter on a 2 year stack. At the same time, we continue to face increasing air freight rates and surcharges, which we expect to weigh on fourth quarter gross margin by an additional 80 basis points compared to our prior outlook.

The midpoint of our fourth quarter guide contemplates a 57% gross margin. As a result, we now expect fourth quarter adjusted EBITDA of $7 million to $8 million, bringing our full year adjusted EBITDA outlook to $29 million to $30 million. These freight costs are a near-term headwind and do not change the structural gross margin improvements we have made across the business.

For modeling purposes, we anticipate fiscal 2026 stock-based compensation of approximately $4.5 million to $5.5 million, depreciation and amortization expense of roughly $20 million to $21 million, interest and other expense of approximately $23 million to $25 million, which includes the DC relocation costs, an effective tax rate of negative 10% CapEx between $16 million to $17 million and a weighted average diluted share count of approximately 11 million.

In closing, our third quarter results reflect continued progress against our strategic plan with growth in our priority markets, structurally higher gross margins, a cleaner and more productive inventory position and a stronger balance sheet. We believe we are well positioned to execute through the holiday season and continue delivering long-term value for our shareholders.

With that, we'll open it up for questions.

Operator

[Operator Instructions] Our first question comes from the line of Randy Konik with Jefferies.

Phần hỏi đáp

Randal Konik

I guess just on the strong growth in the U.S., what is your feel for the holiday season and beyond in terms of just the environment out there and kind of how you think about the different companies you're witnessing in the environment, kind of what are they doing with promotionally, pricing architecture? And how are you guys thinking about kind of responding to that or navigating that as we get through holiday and beyond?

Ciaran Long

Yes. Thanks, Randy. I think certainly good to see us back to that double-digit growth. And I think it took us a while to -- like we had to make a huge effort last year to restructure and change our sourcing and supply chain. And I think we're really seeing the benefit of that now being back to that double-digit growth in the U.S. and doing it at a time when we're continuing to expand gross margins.

I think it was good for us as we went through the quarter, we saw the performance across all the brands and all the channels, be it direct-to-consumer, wholesale stores, TikTok. And so kind of really pleased to see that as well. As we think about the promotional environment, I think certainly, we see that from a macro perspective, there's a lot going on for the consumer.

I think we're very fortunate, and we can see it with the growth we had in Q3, right there. They are very interested in our brands. They like our product. They continue to come to the site. I think we do see that they are a little bit cautious in adding that last item to the basket or maybe that extra item to the basket. So we're very conscious of that. As we think about Q4, we certainly feel we're well set up for holiday.

And we've got growth going into the holiday as we've kind of reflected in the guidance. We're expecting it to be as promotional as last year, and that's kind of how we're set up for the holiday. But look, we're fortunate that with our short lead time and our test and repeat model, we can be very reactive to anything we see out there in the environment. So, I feel like we're in a good place and looking forward to executing against holiday.

Randal Konik

Super helpful. And then -- it looks like you've made good progress on the balance sheet. And I noticed on the outlook, you reduced your CapEx guide a few million. So I just want to understand, as we think about kind of just next year and beyond.

Maybe without giving actual numbers, maybe just qualitatively, how are you thinking about kind of debt paydown versus store expansion where it sounds like you've made some great progress and you're seeing like great response when you're putting stores in, especially around Princess Polly.

So just give me some -- I guess, also a culture change. So basically, just give us some thoughts on how you're weighing that store expansion, obviously, the CapEx for that, but also the debt paydown where you've done a nice job of starting to get that debt paid down relative to EBITDA.

Ciaran Long

Yes. I think it is great to see the performance of the stores. They're introducing new customers to the brand. We're getting great engagement there from existing customers. There's a halo from online, good performance from a four-wall profitability and paying back on track and even a little bit faster. So, I think from what we're seeing, it does give us more and more confidence to lean into that opportunity for Princess Polly and also for Culture Kings.

And we're really looking forward to having the -- finally having the second store in the U.S. open for Culture Kings in December. I think as it relates to the capital structure, I think, look, we want to continue to pay down debt, but also very much invest in the growth opportunity that we have. I think we've done a nice job of straddling both of those. We do think, look, we can certainly fuel and fund the growth we need with the operating cash that we have.

But look, one of the other initiatives that we have is just improving our turns and some of the early work that we've done with a proprietary tool that we've developed, leveraging AI, we feel there's an opportunity to improve our turns, unlock some capital there that can also help in our efforts to pay down debt and go after the growth opportunity. So, I feel like we have a good plan as it relates to that.

Randal Konik

Super helpful. Thanks.

Operator

Our next question comes from the line of Dana Telsey with Telsey Group.

Dana Telsey

Dana Telsey from Telsey Group. Can you hear me now? As you think about the freight impact, which I think was around a $2.3 million impact or 140 basis points, how are you planning that going forward? And then with the improvement of significance that Culture Kings, both stronger margins driving profit flow-through, how does that evolve going forward? And any history based to what it was?

Or is this just a new momentum? And what could that add to the overall architecture of the company overall? And then when you were talking about consumer caution, is that what you mean with the AOV, which is down, I think, nearly 3%. Is that more visible in any of the particular brands? And how does that impact wholesale orders? Are you seeing any change there?

Kevin Grant

Yes. Thanks, Dana, for the question. I'll take the first part of that on the impact of the freight, and I'll pass it to Kiran. Yes, no doubt, the impact of the elevated freight costs has had a significant impact, like you mentioned, $3 million in Q3. And for the back half, it's a $6 million impact that drops straight to EBITDA. So, despite that, we're really proud that we expanded the gross margin in Q3, up 100 basis points.

And then the guide for the Q4 gross margin is expanding another 150 basis points despite that headwind. So we're very proud of what we put in place structurally. And obviously, there would be upside too, if the freight rates normalize to historical levels next year.

Ciaran Long

And then Dana, let me -- I'll touch on Culture Kings Yes. Look, we are really glad to see the improvements the business has made in just getting on to that test and repeat model, much better product. Customers are reacting really well to it, seeing no better gross margins. And with that will come improving EBITDA and comps as well.

I think as we think about it, I think, look, there's just a lot of potential there. I think that the retail payment aspect of that brand is extremely strong. And then within there, the mix of the third-party products that they have, and they've got great brands with Adidas, ASICS, New Era, people like that and our own brands, Loiter, 73 Studios, Car, Minimal, they're all having a really nice impact. And we see big potential, I think, for each of those first-party brands.

And as we think about it, I think there is certainly huge growth opportunities under the umbrella of Culture Kings, and that will start when we open the next door for us in Puerto Rico. in December. But also, I think taking some of those brands on the journey that Princess Polly, Petal & Pup and Minimal have gone on to open.

Really take them into new channels, whether it be TikTok, wholesale or into other strategic partners. So look, I think there's a lot of opportunity there for them. And I think really, the foundations are there now, great product clean inventory and the team is -- I feel a really good team that can really kind of go after that opportunity.

And then I'll just touch on AOV. I think it's down a little bit year-over-year, but just really more coming from channel mix than anything else. And I think as we see -- I think we've talked a little bit really, really strong growth on TikTok, up 3x for Princess Polly versus last year and nearly 40% from Q2. That's a little bit lower AOV in that channel, and it's more kind of less basket building than you would see in others. So it's a little bit of that as it relates to that.

Ryan Meyers

Our next question comes from the line of Ryan Meyers with Lake Street Capital Markets.

First one for me. And Karen, I think you kind of mentioned it on the first question that you had had, but the U.S. business sounds like that remains strong headed into the fourth quarter. Did you say that, that's continuing at a double-digit growth rate? Just want to make sure I understand sort of the momentum that you guys are seeing in the U.S. business here in the fourth quarter.

Ciaran Long

Yes. What we've seen, Ryan, is that momentum continue, and it was great to see it up that 14% in Q2 and kind of continue into Q4. I would say, as we go through the quarter, the comps or yes, the compares get a little bit harder. We got into a better inventory position as we went through Q4 last year. But look, I think we feel really good about the catalysts that we have in place to continue growth, right?

We've got a couple of more stores opening for Princess Polly in the quarter. We'll have Culture Kings next door with great pipeline of wholesale and I think continuing that momentum that we're seeing in TikTok and other channels. So we feel good about the guidance that's out there.

Ryan Meyers

Okay. Got it. And then obviously, freight remains a headwind. But if we think of the business outside of the freight headwind and the improvements that you guys have made across inventory, sourcing, merchandising, I mean, how should we think about how much more operating leverage there is in the business as this -- where the revenue growth accelerates or kind of stays at this mid- to high single-digit rate?

Ciaran Long

Yes. We certainly long term, certainly see double-digit EBITDA profitability in this business. And I think, look, we've obviously done a lot of structural work to put the building blocks in place for that. But we think there's still a lot of opportunity. And I would say, look, across each of the lines, gross margin, obviously, we've seen a lot of improvement despite the headwinds of airfreight.

I think moving to our new DC, we feel great from a capacity and a service level, but there should also be savings there going forward. And I think as we just scale certainly from a marketing and the G&A potential, there's opportunities there as well. So look, I think some of it will come from scale, and I think some of it will come from the initiatives that we have going across all of the lines to continue to drive improvement and increase our profitability.

Operator

And our last question comes from the line of Eric Beder with SCC Research.

Eric Beder

I'll talk a little bit about Princess Polly. So, you're up to 17 stores by year-end. What are the learnings here? And what have you been changing in terms of Princess Polly business? I know you mentioned sweat and some more basics, those have been approved. What do you think you need to do to continue to kind of maximize the Princess Polly store base?

Ciaran Long

Yes. Thanks, Eric. We're really pleased with the performance of the brand. And I think the work the team there has is doing and continues to do has been phenomenal as they kind of go into these new channels and execute them and channels that are new to the brand, right? I think we've seen the stores performing really well.

As I mentioned, introducing new customers to the brand. We're getting a halo effect online and great for sales and profitability. And I think within that, they are evolving their model. And we talked a little bit last quarter about how they were going deeper in areas where they have more confidence. Sweats was a good example and sweats in the quarter were up 4x versus last year.

Knit category nearly doubled. And I think all of those things are giving them continued confidence to -- that they can play into new categories that they can evolve the model slightly as they move into stores. I think they are always going to be test and repeat. But I think there are places where they have more confidence to kind of make sure that they're in stock at all times in some of these kind of evergreen styles and evergreen winners.

And so, I feel we continue to see a lot of potential for the brand. As I mentioned last quarter, we could certainly see 100 stores for them in the U.S., but we're also getting a good view on the opportunity internationally with some of the growth we've seen in the U.K., up 40% year-to-date and other areas as well.

Eric Beder

Yes, I talk a little bit about that. So Yes. So, you put in the 3PL, which enables you to now ship to the U.K. and I guess, ship to Germany quicker. What are you seeing kind of in the potential differences in the customer bases there? Does it make sense? I guess, in the longer term to eventually have retail stores potentially in New York? How should we think about that opportunity as evolving going forward?

Ciaran Long

Yes. So, for the U.K. first, we have U.K. customized website. The app is customized for the U.K. and then we put product in there in that proximity of product. And I would say just that better customer offering, right, being more attuned to them is driving the growth there. I think we see that same opportunity in Europe, and that's what we're doing now in Germany.

The website and app first, and then we'll start putting product closer there as well, certainly delighted with the customer response we've seen. I think they've been -- I suppose the social channels that these consumers engage their content are global. So, the brand awareness has somewhat been there for Princess Polly and is there in the U.K. and Europe. So, they've been waiting for the brand nearly to come and kind of put that better service level out there so they can engage easy with the brand. And so, we're delighted to have done that and the response we see. I think it does give us confidence that there are absolutely a lot of growth opportunities for Princess Polly internationally, and we've confidence there.

I think, look, our focus is very much U.S. at the moment. That is -- continues to be a huge opportunity, and we're still very early days for the brand. But it's good to know that there are multiple growth levers out there.

Operator

And ladies and gentlemen, we have reached the end of the question-and-answer session. And this also concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.