BOBS 10-K & 10-Q changes, risk factors and insider trading

Bob’s Discount Furniture is a rapidly growing, nationally proven omnichannel retailer of value home furnishings with 214218 showrooms as of MarchJune 29,28, 2026 across 2627 U.S. states. We offer quality, stylish products at everyday low prices below our value-oriented furniture competitors’ lowest promoted prices. Our value proposition is made possible by our curated merchandising strategy, with SKU counts approximately one-third narrower than value-oriented furniture competitors, longstanding sourcing relationships and efficient supply chains.

We have a proven, profitable and portable store model that has produced consistent financial returns across vintages, geographic regions and population densities. Nearly all of our stores were profitable on a four-wall basis in fiscal year 2025 and ourwe expect new stores haveto achievedachieve average unit volumes (“AUVs”) of $9$9.0 million, cash-on-cash returns exceeding 80% by their fifth year of operation, with returns exceeding 60% by year two and a payback period of approximately two years. We believe our business model and new store unit economics, plus the expansive and fragmented home furnishings industry, provides us with an opportunity to expand our store base in both existing and new geographies to over 500 stores by 2035. Our ability to open profitable new stores depends on multiple factors, including our ability to identify suitable markets and sites, negotiate leases with acceptable terms, support new locations with qualified managers and achieve brand awareness in new markets. For further information see “Item 1A. Risk Factors—Risks Related to Our Business” in our 2025 Annual Report.

During the firstsecond quarter of fiscal year 2026, we continued to make progress to support our key long-term growth strategies. Accomplishments within the quarter include the following:

•delivering comparable sales growth of 1.2%2.3% through increases in conversion and average order value (“AOV”) in both our retail and eCommerce channels.conversion.

In early 2025, the U.S. Government began imposing significant new or increased tariffs on goods imported into the U.S. from numerous countries from which the Company sources merchandise. The global trade environment remains fluid and highly uncertain in 2026. The U.S. Government imposed a 25% tariff on imports of certain upholstered wooden furniture, which is scheduled to increase to 30% on January 1, 2027. In February 2026, the U.S. Supreme Court ruled that many of the tariffs recently imposed by the U.S. Government exceeded its statutory authority, thereby invalidating many, but not all, of such tariffs. The U.S. presidential administration has indicated that it will seek to reinstate all or a portion of these tariffs under alternative legal authorities or mechanisms. These rulings have also introduced uncertainty regarding the timing and ultimate realization of potential refunds of tariffs previously paid, although U.S. Customs and Border Protection has established a process to administer such refund claims. As of March 29, 2026, the Company has not recognized an asset related to any potential refund. The Company will recognize any recovery as a reduction to cost of sales or inventory as applicable in the period in which recovery becomes realized or realizable. In April 2026, the President issued a proclamation that reduced the tariff rate on steel and aluminum derivative products from 50% to 25%, while modifying the duty application from applying only the metal content in metal-containing products to applying the duty to the full customs value of the imported product. The proclamation excluded certain products, including the Company's covered products from the Section 232 steel and aluminum duties; as a result, the Company's affected products are nowbecame subject to the temporary 10% surcharge imposed under Section 122. Effective July 24, 2026, the Section 122 temporary surcharge expired and affected products are now subject to tariffs under Section 301 at rates generally ranging from 10% to 12.5%, depending on country of origin. We will continue to monitor developments related to trade policy andpolicy, tariffs and tariff refund claims, evaluate their impact on the Company, including the potential recovery of previously paid tariffs,Company and make appropriate sourcing, pricing and other operational decisions as appropriate to manage the potential impact on our financial condition andcondition, results of operations.operations and cash flows.

Since late February 2026, the conflict in Iran has resulted in heightened volatility in fuel prices and geopolitical uncertainty. Geopolitical events, increased fuel prices and geopolitical uncertainty, including changes in U.S. tariff policy, has in the past resulted in supply chain disruptions, increased costs and impacts on consumer spending. Such events could materially increase the cost and reduce or delay the supply of our products and impacted discretionary consumer spending, which may adversely affect our business, financial condition, results of operations, liquidity and stock price. See “Item 1A. Risk Factors” in our 2025 Annual Report, including the risk factorsfactor titled “Our business, results of operations and financial condition may be adversely affected by global economic conditions and the effect of economic pressures, including inflation, and other business factors on discretionary consumer spending and consumer preferences” and “Our business, results of operations and financial condition may be adversely affected by global economic conditions and the effect of economic pressures, including inflation, and other business factors on discretionary consumer spending and consumer preferences.” We will continue to monitor developments in, and the impacts of, such conflicts and geopolitical events and uncertainties and evaluate their impact on the Company, and make appropriate sourcing and pricing decisions in an effort to minimize any impacts on our financial condition and results of operations.

We consider a variety of performance and financial measures in assessing the performance of our business. In addition to our results determined in accordance with U.S. GAAP, we regularly review key performance indicators (“KPIs”) and certain non-GAAP financial measures, including Adjustedadjusted gross profit, adjusted net income and Adjustedadjusted earnings before interest, tax expense/(benefit), depreciation and amortization (“Adjustedadjusted EBITDA”), to evaluate our business, measure our performance, identify trends in our business, prepare projections and make strategic decisions. We believe that these non-GAAP financial measures and KPIs are useful to our investors as they present an informative supplemental view of our results from period to period by removing the effect of non-recurring items. The non-GAAP financial measures and KPIs presented herein are specific to us and may not be comparable to similar measures disclosed by other companies because of differing methods used by other companies in calculating them. The key measures we use to determine how our business is performing are: net revenues, gross profit and gross margin, SG&A, operating income, net income, comparable sales growth, number of new stores, number of stores, Adjustedadjusted gross profit, adjusted net income and Adjustedadjusted EBITDA.

Operating income is gross profit less SG&A expenses, pre-opening expenses, loss (gain) on disposal of fixed assets, impairment of long-lived assets, restructuring charges and insurance recoveries. Operating income excludes interest income or expense, and income tax expense. We use operating income as an indicator of the productivity of our business and our ability to manage expenses.

Comparable sales growth measures performance during the current reporting period against the performance of the comparable store sales and of the eCommerce sales in the corresponding period of the previous fiscal year. Comparable store sales consist of net revenues from our stores beginning on the first day of the 14th full fiscal month following the store’s opening, which is when we believe comparability is achieved. eCommerce sales consist of net revenues from online purchases during the current reporting period. Any change in the square footage of an existing comparable store, including for remodels and relocations within the same primary trade area of the existing store being relocated, does not eliminate that store from inclusion in the calculation of comparable store sales.

Adjusted net income is defined as net income less items that are not indicative of the operating performance of the business, including, but not limited to, IEEPA tariff refunds and related interest income, restructuring charges, insurance recoveries, gains on hedge accounting de-designation of interest rate cap, gains on sale of Connecticut income tax credits, gains and losses on disposal of fixed assets, impairment of long-lived assets, senior executive termination benefits, management fee and other expenses and income not indicative of ongoing business operations and performance.

We define EBITDA as net income before interest expense, interest income, income tax expense/(benefit), and depreciation and amortization expenses. Adjusted EBITDA represents EBITDA as further adjusted for items that are not indicative of the operating performance of the business, including but not limited to, stock-based compensation expense, IEEPA tariff refunds, restructuring charges, insurance recoveries, gains on hedge accounting de-designation of interest rate cap, gains on sale of Connecticut income tax credits, gains and losses on disposal of fixed assets, impairment of long lived assets, senior executive termination benefits, management fee and other expenses or income not indicative of ongoing business operations and performance.

__________________ (1)NM refers to a value that is not meaningful.

__________________ (1)Our KPIs are discussed and defined in the section titled "—Key Performance Indicators and Non-GAAP Financial Measures."

(2)Adjusted gross profit, adjusted net income and adjusted EBITDA are non-GAAP financial measures. Refer to "—Reconciliation of Non-GAAP Financial Measures" for reconciliation to the most comparable GAAP financial measures.

Comparison of the three monththree-month fiscal periods ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025

Net revenues increased $45.3$50.0 million or 8.5%,8.8%, in the three months ended MarchJune 29,28, 2026 compared to the corresponding prior year period. Our retail channel increased $34.2$29.2 million, or 7.6%,6.0%, and our eCommerce channel increased $11.1$20.8 million, or 13.5%24.1% for the three months ended MarchJune 29,28, 2026 compared to the corresponding prior year period. The increase in total net revenues was primarily due to non-comparable sales of $43.3$41.0 million and comparable sales growth.

Comparable sales increased 1.2%2.3% in the three months ended MarchJune 29,28, 2026, predominately driven by increases in conversionAOV and AOVhigher in both our retail and eCommerce channels. These improvements wereconversion, partially offset by lower in-store traffic, particularly during periods that were impacted by the effects of exceptional winter weather.traffic.

Gross profit increased $19.9$54.7 million or 8.4%20.7% in the three months ended MarchJune 29,28, 2026 compared to the corresponding prior year period. This increase was primarily driven by $37.9 million in IEEPA tariff refunds and the impact of higher net revenues.revenues, partially offset by higher freight costs. Our results in the corresponding prior year benefited from unusually favorable freight rates.

SG&A increased $19.5$20.0 million or 9.0%9.3% in the three months ended MarchJune 29,28, 2026 compared to the corresponding prior year period, primarily due to increases in payroll-related expenses of $6.0$5.6 million mostly related to new store growth, higher occupancy costs of approximately $6.0$5.4 million related to new stores and increases in rent in existing stores, and growth in marketing spend of $4.8$6.0 million. Additionally contributing to higher SG&A was a $2.0 million fee associated with the termination of our advisory agreement with Bain Capital upon consummation of our IPO.

SG&A as a percentage of revenue of 40.7%37.9% in the three months ended MarchJune 29,28, 2026 increased slightly compared to 40.5%37.7% in the corresponding prior year period. The increase was primarily driven by incremental marketing,marketing and occupancy expense associated with new storesstore growth, particularly greenfield expansion, and greenfieldwas market expansion and the $2.0 million termination fee associated with the advisory agreement with Bain Capital, substantiallypartially offset by efficiencies at existing stores.

Pre-opening expenses increased $1.8$1.9 million or 58.8% in the threesix months ended MarchJune 29,28, 2026 compared to the corresponding prior year period duedriven toby the timing of new store openings in the current year.

In the first quarter of fiscal year 2025, managementthe Company identified efficiencies to optimize overhead costs,costs which resultedresulting in workforce reductions.reductions at the corporate headquarters. Restructuring costs of $0.3 million were recognized in the three-monthsix month fiscal period ended MarchJune 30,29, 2025 for these workforce reductions. TheNo Companysignificant did not recognize any costs attributable to theserestructuring actions in subsequent periods. There were noinitiated restructuring charges induring the first quarter ofsix-month fiscal yearperiod ended June 28, 2026.

In the threesix-month monthsfiscal periods ended MarchJune 28, 2026 and June 29, 2026,2025, wethe Company received $0.7 million and $4.5 million, respectively, in insurance recoveries for lost profits associated with an information technology system outage and the related interruption of our business that occurred at the end of September 2024. The Company did not recognize any insurance recoveries in the first quarter of fiscal year 2025.

Interest expense in the threesix-month monthsfiscal period ended MarchJune 29,28, 2026 increased $14.4$15.1 million compared to the corresponding prior year period primarilydriven due toby the acceleration of $10.7 million in debt issuance costs in connection with the pay down of the Term Loan and interest expense associated with thehigher Term Loan and Revolving Credit Facilityaverage outstanding inborrowings, thepartially period.offset Thereby wasa nolower outstandingweighted debtaverage ininterest the first quarter of fiscal year 2025.rate.

Interest income in the threesix-month monthsfiscal period ended MarchJune 29,28, 2026 decreasedincreased $0.2$1.2 million compared to the corresponding prior year period, primarily related to incomeinterest earned on lowerduties balancespreviously inpaid ourunder money market funds.IEEPA.