Afternoon, welcome to Lulu's Fashion Lounge Holdings Inc.'s 2026 annual meeting of stockholders. I will now turn the line over to Lulu's General Counsel and Corporate Secretary, Naomi Beckman-Straus.
Thank you, hello, everyone. It is my pleasure to welcome you to our 2026 annual meeting of stockholders, which is completely virtual and being conducted via live webcast. On behalf of Lulu, the board of directors, and company management, we thank you for your support of Lulu. Before the Chair of the meeting calls the meeting to order, I'd like to introduce the company officers who are on the line today. We have Crystal Landsem, our Chief Executive Officer, and a member of our board of directors; Mark Vos, our President and Chief Information Officer; and Heidi Crane, our Chief Financial Officer. Next, I'd like to welcome the other members of our board of directors who are in attendance today. We have our Board Chair, Dara Bazzano, who has served on our board since January 2022.
She is also the Chair of our audit committee and a member of our compensation committee. Anisa Kumar is also on the line today. Ms. Kumar has served on our board since November 2022. She is the Chair of our nominating and corporate governance committee and a member of our audit committee. Next, we have John Black, who has served on our board since October 2017. Mr. Black is a member of our audit, compensation, and nominating corporate governance committees. I'd also like to introduce Megan Gizatullin and Amber Bush of Deloitte & Touche LLP, the company's independent auditor, who will be available to respond to appropriate questions during the question and answer portion of the meeting. I will now turn the line over to the Chair of this meeting, Dara Bazzano.
Thank you, Naomi, hello, everyone. The meeting will now officially come to order. We will proceed with the formal business of the meeting as set forth in the notice of annual meeting and proxy statement. The polls opened today, June 9th, 2026, at 2:00 P.M. Eastern Time for voting on all matters before the meeting. If you have not already voted and wish to vote, the polls will remain open until we finish presenting the proposal and close the polls. You do not need to vote during the meeting if you have already voted and do not wish to change your vote. On the virtual meeting website, you will find the agenda for today's meeting. You will also find the rules of conduct and procedures for the meeting. Please review these rules carefully.
Note that only stockholders who are logged into the meeting using their unique control number will be able to vote and submit questions during today's meeting. You may submit a question under the Ask a Question section of the virtual meeting website by selecting a question topic and entering your question into the designated field. We have received proof of mailing by affidavit from Broadridge Financial Solutions that the notice of internet availability of proxy materials was mailed and the definitive proxy statement was made available beginning April 23rd, 2026, to every holder of common stock of record as of the close of business on April 15th, 2026. Ms. Beckman-Straus will file the proof of mailing with the records of the meeting. All stockholders of record at the close of business on April 15th, 2026, or holders of a valid proxy, are entitled to vote at the meeting.
A complete list of holders of record of the outstanding shares of the company's common stock on the record date for the meeting has been available for inspection for 10 days prior to the meeting and is available on the virtual meeting website if you've logged into the meeting using your unique control number. At this time, I'd like to introduce Janice Castillo, a representative of Broadridge Financial Solutions. The board of directors has appointed Ms. Castillo to act as the Inspector of Election at today's meeting. Ms. Castillo has signed the customary inspector oath of office to execute her duties with strict impartiality. We will file this oath with the records of the meeting.
As of April 15th, 2026, the record date for the annual meeting, there were 2,864,405 shares of common stock outstanding and entitled to vote at the meeting. There are present online or represented by proxy the holders of 2,720,565 shares of common stock, which constitutes a majority in voting power of the common stock issued, outstanding, and entitled to vote, and a quorum for the meeting. Therefore, I hereby declare this meeting to be duly constituted for the transaction of business. We will now proceed with the formal business of the meeting. There are four proposals to be considered by the stockholders at this meeting. The board of directors recommends that the stockholders vote for the nominees named in proposal one and for proposals two, three, and four.
The first item of business is the election of Ms. Kumar and Ms. Landsem to serve as Class II directors of the company for a term of office expiring at the 2029 annual meeting of stockholders and until their respective successors are elected and qualified. The second item of business is the ratification of the audit committee's appointment of Deloitte & Touche LLP as the company's independent registered public accounting firm for the year ending January 3rd, 2027. The third item of business is to approve an amendment to the company's fourth amended and restated certificate of incorporation to decrease the number of authorized shares of the company's common stock from 250 million to 15 million and decrease the number of authorized shares of the company's preferred stock from 10 million to 500,000.
The fourth item of business is to approve an amendment to the company's fourth amended and restated certificate of incorporation to provide exculpation to certain officers of the company as permitted by amendments to the Delaware General Corporation Law. If you wish to vote and haven't already, please vote now by clicking on the voting button on the web portal and following the instructions. You do not need to vote electronically if you've already sent in your signed proxy or if you have voted by telephone or internet. We will pause for approximately one minute before closing the voting polls. The time is now 2:10 P.M. Eastern Time on June 9, 2026, and the polls are now closed for voting. I received the preliminary report of the Inspector of Election earlier, which will be kept with the company's records of the annual meeting.
Based on this preliminary report of the Inspector of Election, Ms. Kumar and Ms. Landsem have been elected as class II directors by a plurality of the votes cast, and are therefore elected to hold office until the 2029 annual meeting of stockholders and until their respective successors are elected and qualified. The appointment of Deloitte & Touche LLP as the company's independent registered public accounting firm for the year ending January 3, 2027, has been ratified by the holders of a majority of the votes cast. The amendment of the company's fourth amended and restated certificate of incorporation to decrease the number of authorized shares of the company's common and preferred stock is approved by the holders of a majority of the voting power of the outstanding common shares of common stock entitled to vote.
The amendment to the company's fourth amended and restated certificate of incorporation to provide exculpation to certain officers of the company, as permitted by amendments to the Delaware General Corporation Law, is approved by the holders of at least 66 and 2/3% of the voting power of the outstanding shares of common stock entitled to vote. The final tally of votes will be published within four business days in a current report on Form 8-K, to be filed with the Securities and Exchange Commission. The formal portion of this meeting is now adjourned. Thank you for your time and continued support of Lulu, I will now turn the line back over to Ms. Beckman-Straus.
Thanks, Dara. The company's management team, as well as Deloitte & Touche, are now available to answer any questions. Please note that we will only be answering questions that are within the parameters of the rules of conduct and procedures, and only stockholders who have logged into the meeting using their unique control number are able to submit a question through the question area of the web portal. The first question is, "Tariffs are flagged as a 2026 headwind. What specific actions is management taking to recover tariff costs already incurred, both through duty drawback and HTSUS reclassification refunds, and by renegotiating with suppliers who pass tariff increases through to Lulu rather than absorbing their share?
Good afternoon, everyone. This is Mark Vos. I'll take this question. First, we've been actively engaged with our vendor base around shared responsibility. We have long-standing relationships with many of our suppliers. Discussions have included cost sharing, sourcing diversification, minimum order quantity optimization, and selective product engineering adjustments intended to mitigate inflationary and tariff-related pressures. Our gross margin improvements seen throughout 2025 and early 2026 show the success of these mitigation efforts. Second, we are pursuing available recovery mechanisms where appropriate. That work is ongoing. We expect any benefits to phase in over time rather than occur all at once. However, it is worth noting that our vendor partners absorbed most of the tariff impacts. We expect the opportunity for 2025 refunds to be small.
Third, our sourcing organization has continued to expand sourcing capabilities and diversify country exposure where possible and appropriate, which we believe will improve both flexibility and product margin over time. In summary, we're not relying on any single lever should further changes to tariffs go into effect. The mitigation plan includes sourcing actions, assortment and pricing discipline, freight and operational efficiencies, and inventory management.
Thank you, Mark. The next question is: Wholesale grew 143% year-over-year in fiscal 2025. Management has guided to continued material growth in 2026. Will the company commit to disclosing wholesale as a standalone reporting segment, including channel-level revenue, gross margin, and contribution margin?
Hi, everyone. This is Heidi Crane. I'll answer this question. We're very encouraged by the momentum we're seeing in wholesale. The growth in 2025 reflects both expanding partnerships and strong receptivity to the brand within our new retail partners. Our strategy continues to center on operating a business as a unified omni-channel brand. We evaluate performance holistically across channels, particularly because wholesale also supports customer acquisition, brand awareness, and broader ecosystem engagement that can benefit our direct business over time. As wholesale scales further, we will assess whether it meets the criteria for separate segment reporting under SEC guidance, balancing enhanced transparency for investors while preserving our competitive flexibility. For now, we plan to continue discussing the channel qualitatively and providing directional commentary around growth trends.
Our focus remains on profitable brand accretive partnerships that complement the core direct-to-consumer business rather than pursuing wholesale growth at the expense of margin or brand positioning. However, we regularly evaluate the segment reporting requirements, including the relevant quantitative and qualitative thresholds and the related incremental costs when determining the level of detail we provide publicly.
Thanks, Heidi. There are no further questions. This concludes our annual meeting. Thank you again for attending. We hope you have a great rest of your day.
This concludes today's meeting. Thank you for attending. You may now disconnect and have a wonderful rest of your day.