Reformation Q2 Earnings Beat
Reformation reports strong second-quarter revenue growth and rising profits, exceeding analyst expectations.
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Reformation said the quarter marked its 21st consecutive period of double-digit revenue growth, with CEO Hali Borenstein describing performance as broad-based across channels, geographies and product categories.
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Profitability improved through margin expansion: adjusted EBITDA margin increased 320 basis points to 16.4%, while gross margin rose 230 basis points to 66.7%. Reformation projected a 2026 adjusted EBITDA margin of 14% to 14.2%.
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The company expects 2026 capital expenditures of $23 million to $27 million, largely to support as many as 16 new store openings.
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Borenstein said wholesale growth reflected strong spring and summer product performance among existing customers and that the company sees room to expand within current accounts as well as add new retail doors.
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Eight analysts rate Reformation shares a Buy and two rate them Hold, according to MarketBeat, producing a consensus price target of $19.25; Citigroup and Royal Bank of Canada initiated coverage with price targets of $20 and $18, respectively.
Reformation posted strong second-quarter results that beat expectations, with revenue rising 24% to $155.2 million and net income jumping 79.4% to $12.4 million GuruFocus. The sustainable fashion company's adjusted EBITDA grew 53.9% to $25.4 million, marking its 21st consecutive quarter of double-digit growth GuruFocus. Despite solid performance, shares remain below the $15 IPO price, though they rose 3.4% to $13.60 in after-hours trading MarketWatch.
CEO Hali Borenstein highlighted broad-based growth across all channels, geographies, and product categories ScanX. The company now operates 70 stores globally and plans to open as many as 16 new locations in 2026, backed by capital spending of $23 million to $27 million Seeking Alpha.
Margins Expand as Profitability Surges
Reformation's bottom line strengthened through aggressive margin expansion. Adjusted EBITDA margin widened 320 basis points to 16.4%, while gross margin climbed 230 basis points to 66.7% ScanX. The company projects 2026 adjusted EBITDA margin of 14% to 14.2%, showing confidence in sustained profitability even as it scales Seeking Alpha.
Direct-to-Consumer and Wholesale Channels Power Growth
Direct-to-consumer revenue rose 21% as active customers increased nearly 23%, driving engagement and repeat purchases Yahoo Finance. Wholesale sales climbed 49% on stronger demand from existing partners, signaling traction beyond company-owned channels Yahoo Finance. Borenstein said the company sees room to expand within current accounts and add new retail doors to wholesale partners.
2026 Revenue Forecast Signals Sustained Momentum
Reformation forecasted 2026 revenue of $602 million to $606 million, reflecting continued confidence in its growth trajectory Seeking Alpha. Store expansion remains central to the plan. The company added four stores in Q2, bringing its global footprint to 70 locations, with as many as 16 new openings planned for 2026 Seeking Alpha.
Wall Street Remains Bullish Despite Stock Underperformance
Eight analysts rate Reformation shares a Buy and two rate them Hold, producing a consensus price target of $19.25 GuruFocus. Citigroup and Royal Bank of Canada recently initiated coverage with price targets of $20 and $18, respectively. The stock trades at $13.60, well below its $15 IPO price, leaving room for upside if the company delivers on its growth plans.
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