S-1 Journal

The 10 Questions
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Every S-1, decoded through the same 10 questions.

It Paid Out $90 Million.
Eight Days Later, It Filed an S-1.

On July 20, 2026, Reformation filed an S-1/A with the SEC and disclosed, for the first time, a price range of $15.00 to $17.00 per share. Its listing on the New York Stock Exchange has been approved, under the ticker “REF.” The company began in Los Angeles in 2009 as a womenswear brand built around sustainability.

But this prospectus records something that happened eight days before the original S-1 was filed with the SEC. On June 17, 2026, the company added $92 million to its credit facility and drew the full amount that same day. On or about June 17, it paid a dividend to its shareholders. The dividend the company declared totaled approximately $90 million.

Where that money goes is written in the same document. At an assumed price of $16.00, the company receives about $134.5 million. More than 90% of it disappears into repaying debt. The $92 million drawn on June 17 is part of that debt. The remainder is used to buy shares and options from the CEO, the COO and certain other employees.

Borrow, pay out, repay with the offering. All three moves are written in the same volume. And four of the securities firms underwriting the deal have affiliates that are lenders of that debt.

Ten questions. We lay out only what the S-1 says.

Question 1

What is this company, really?

In one line: a womenswear brand built on sustainability.

It started with dresses and now sells bottoms, tops, sweaters and accessories. A single order runs about $315.

The selling is mostly done in-house. About 90% of net revenue comes through the company’s own website and its own stores. Together these two are called direct-to-consumer. There are 70 stores, spread across the United States, Canada, the United Kingdom and France.

The brand’s billboard is printed on the very first page of the prospectus.

“

Being naked is the #1 most sustainable option. We’re #2.

REFORMATION S-1/A (JULY 2026) — COVER ART

The mission is “sustainable fashion for all.” The first line of the company’s self-introduction begins this way: “Hi, we’re Reformation, the largest sustainable womenswear brand on the planet — that we know of, anyways.”

That last clause is worth not skipping. It is a disclaimer that this is the company’s own claim, not a ranking measured and certified by a third party.

Some of it is verified from outside. Products have been carbon neutral since 2015, and the prospectus says the company’s climate targets and its in-house environmental accounting tool undergo third-party verification each year. More than 97% of the materials it uses are recycled, regenerative, or renewable.

So is the billboard without a crack? In the Risk Factors of the same document, this appears.

“

For example, the organization known as People for the Ethical Treatment of Animals chose to label Reformation as “Greenwasher of the Year” in 2023 based on the use of animal-derived materials in some of our products.

REFORMATION S-1/A (JULY 2026) — RISK FACTORS, P.27+

The company discloses this criticism itself, as a material risk to its brand and reputation. The page that raises the billboard and the page that records the billboard being struck sit next to each other in one volume.

The language of the billboard and the language of statutory disclosure live in the same volume.

Question 2

What does it compete on?

Do not try to guess the hit. Multiply the one that already hit, fast.

The hard part of the clothing business is that whether something sells is decided after it is made. This company’s design is concentrated on reversing that order.

A brand that says what it wants to say

The casting is distinctive. The names in the prospectus are the country singer Kacey Musgraves, the actor Pete Davidson, and Monica Lewinsky. There is also a project called “The Divorce Collection,” made with the divorce attorney Laura Wasser.

This way of building a voice feeds straight into holding marketing costs down. Marketing has run at about 9% of net revenue for four straight years. Even so, about 75% of new direct-to-consumer customers arrived through channels other than paid online advertising.

In the company’s own survey, 77% of customers said Reformation is “one of their favorite brands, or their favorite.”

New designs are only 10% of direct-to-consumer apparel revenue

This is the most distinctive part. The prospectus breaks out direct-to-consumer apparel revenue by how the product was made, in four buckets.

2025 direct-to-consumer apparel net revenue, by the company’s own classification:

So 90% of direct-to-consumer apparel revenue comes either from a style that already hit or from something derived from it. Unproven new designs are only 10%.

The procedure runs like this. New styles are made in small runs, dropped twice a week on the website and once a week in stores, and watched. Demand is read within hours, and the ones that hit are chased and produced in volume. Small drops also create stockouts — which, the company explains, becomes its own reason to buy now.

A supply chain that turns in 60 days

This way of making things only works if you can make things fast. Over the past three years, half of all products arrived at the distribution center within 60 days of being ordered. Narrow it to reorders and just over 60% were produced within 60 days. The prospectus says production lead times in the apparel industry generally can run “up to 12 months or longer.”

What supports the speed is an owned factory and distribution center in Los Angeles, plus a spread of production locations.

2025 production by location (unit basis):

• Asia 51%
• North America 34% (including the owned factory)
• Europe 10%
• South America 5%

In 2025 the company reorganized production to blunt the impact of tariffs, and the prospectus says it “reduced concentration in any one country, China, by 19%.” Even so, China still accounts for about 32%.

One of each product on the floor

The store design is unusual too. It is a system the company calls Retail X™, introduced in 2017 and now in three quarters of its stores.

Each product is displayed one at a time on the floor. Customers assemble a fitting room digitally, using a touchscreen or a QR code on the item, and staff restock from the back through a patented two-way closet. Customers never hunt for their size.

Stores with this system saw order values about 8.5% higher than stores without it, and higher conversion as well.

The design is not to guess the hit, but to multiply the one that hit, fast.

Question 3

How big is the market?

Not one dollar figure for market size appears in this prospectus.

Companies going public usually write that their market is worth some number of trillions. That is absent here. What is offered instead is only a denominator and a numerator.

There are about 854,000 U.S. customers. The company sizes U.S. women aged 18 to 60 at about 94 million and writes that its penetration is “less than 1%.” It is a way of writing that shows not the size of the market but the smallness of the company.

The industry position is dispatched in a single phrase — “highly fragmented” — and competitors are described only by format. Department stores, specialty retail, independent brands, vintage shops, resale, online marketplaces. There is no list of named competitors.

The tailwind it cites is rising demand for sustainable fashion. The numbers behind that claim are the other thing worth reading in this chapter.

The numbers the prospectus uses to back its brand value (all from its own July 2025 customer survey):

• 73% of customers appreciate the company’s commitment to sustainability
• Customers who cite it as an important value spend about 39% more
• About 82% of EU customers say they would pay more for apparel made using sustainable practices

What matters is the source. These are all answers the company collected from its own customers. There is also a study of wear occasions, but that one rests on a report from an outside consulting firm the company commissioned. Neither is the same kind of certainty as audited revenue or profit.

That demand tracks the economy is something the company writes itself. The first item in the Risk Factors is discretionary spending, and the body of it opens this way: “Our products may be considered discretionary items for consumers.”

The evidence is in its own record. Net revenue fell year over year from 2019 to 2020. In the disclosed history going back to 2015, that is the only decline. That same 2020 was also the only year since 2018 with a net loss. The prospectus attributes it to COVID-19.

A prospectus that shows not the size of the market, but the small number of its customers.

Question 4

Who actually uses it?

70% of direct revenue is generated by people who started buying before last year.

An “active customer,” as the company counts them, is someone who has made at least one purchase in the preceding 12 months. That count is up about 30% in three years and has now passed one million.

What draws the eye is the mix, not the growth. About 70% of direct revenue comes from people who first bought in a prior year. That share is up 21 points from 2021.

The prospectus also breaks customers out by the year they were acquired. Revenue from customers acquired in prior years held at 80% of the year before. Narrow it to those acquired in 2023 or earlier and it is 98%.

New customers buy a little more than once a year; customers from prior years buy 2.6 times. About 20% of the cohort that first bought in 2015 is still buying nearly a decade on.

Who is buying

The customer picture is disclosed in detail too. More than 70% are between 25 and 50, and newer customers are spreading outward, under 25 and over 50. About 67% have household income above $100,000.

Geography is not lopsided either. One in five is outside the United States, and within the U.S. there are more customers outside the coasts than on them. The prospectus makes a point of saying this is not a coastal-only phenomenon.

The way people buy is widening as well. About 74% of direct revenue came from customers who bought across multiple categories. Nearly 80% of repeat purchases include multiple categories, and close to 70% include a category different from the first purchase.

In wholesale, there is concentration in one account

There is a second kind of customer: retailers who buy the product to sell it. The company has 15 wholesale accounts and 142 doors, 80% of them in the United States.

This wholesale channel carries concentration. A note to the financial statements says one customer accounted for 23% of consolidated accounts receivable. The prior year it was 15%.

Wholesale is only about 10% of total revenue, but nearly a quarter of the receivables waiting to be collected leans on a single account.

A company that gets the people it already has to buy again, rather than chasing new ones.

Question 5

How does it make money?

Make the clothes, sell most of them at full price, and sell them yourself.

How it earns is plain. What is complicated is the selling; the revenue sources themselves are easy to follow.

90% of net revenue is direct, the rest wholesale and other. Within direct, the website accounts for two thirds.

The prospectus also stresses a structure that does not lean on discounting. From 2021 through 2025, consistently, about 80% of direct revenue was sold at full price. The explanation is that small drops and reorders reduce leftover inventory.

The economics of each selling surface (2025):

The relationship between the website and the stores is shown in numbers too. Customers who buy on both generate 3.1 times the revenue of customers who buy on only one. The share of revenue from customers who buy on both rose from 19% in 2021 to 34% in 2025.

So a store is not a standalone revenue machine. In markets with a new store, new customer acquisition the following year rose as much as six times, and the prospectus says more than 30% of new customers were acquired in stores.

And there is still a lot of white space. Of the 50 largest U.S. metropolitan areas by population, the company says it has stores in only half.

The more stores it opens, the more online customers it gets.

Question 6

Are the numbers healthy?

Line up the numbers and two things look odd.

The surface looks good. Net revenue is up more than 40% in three years, and the first quarter of 2026 was up 30.4% year over year. That makes 20 straight quarters of double-digit growth.

But follow the lines below it and the story changes.

Oddity 1: revenue grew, and net income fell 60%

Net income in 2025 fell 61.6% from the prior year. Revenue grew 15.7% over the same stretch.

Follow the table and the order becomes visible. First, cost of revenue grew faster than revenue, and gross margin fell 4.3 points. Tariffs are inside that.

Bigger still is selling, general and administrative expense. It rose $40.56 million and made up 87% of the increase in operating expenses. Operating income is carved down by those two.

Interest expense rose too. But set against the fall in operating income it is one sixth the size, and not the lead actor. The 2025 decline is, first of all, a story about SG&A and gross margin.

Oddity 2: retained earnings, built up over years, vanish in one recapitalization

Retained earnings at the end of March 2026 were $70.35 million. The brand was born in 2009, but the entity now going public was incorporated in 2019, and this balance accumulated after the August 2019 acquisition.

In the adjacent column of the capitalization table, that number flips negative. It is the column reflecting the June recapitalization and the stock compensation that vests on listing.

The sequence went like this. Add $92 million to the credit facility and draw it all the same day; push that money up from the subsidiary to the parent; pay shareholders $1.63 per share. On June 16 the company declared a cash dividend of an aggregate amount of approximately $90 million on the outstanding shares of its common stock. Separately from that figure, the aggregate of the dividend and the cash payments made in respect of certain options and restricted stock units is disclosed as about $89.6 million.

The same shape appeared two years earlier. In May 2024 the operating company took out a $165 million term loan, and the company received an equal dividend from the subsidiary and used it to buy back its own shares. Interest expense in 2023 was zero. Using debt to return money to shareholders is now the second time around.

The other three are short

First, gross margin in the first quarter of 2026 is the highest of the eight quarters disclosed. But business did not suddenly improve. In February 2026 the U.S. Supreme Court held unlawful the tariffs imposed under emergency presidential authority, and what had been paid came back — so the prospectus writes. Most of the improvement is explained by that refund. And most of what came back corresponds to 2025 revenue.

Second, the net loss in that same quarter more than doubled year over year. The cause is a modification to stock compensation terms, a one-time charge of $23.8 million. What was modified is taken up in Question 7. The Adjusted EBITDA the company reports alongside adds that charge back, so the same quarter appears profitable.

Third, what the assets consist of. Goodwill and trademarks make up 55% of total assets. Both were recorded when an investment firm acquired a controlling stake in August 2019, and neither has been written down since. Strip those two out and liabilities exceed assets.

The company also writes about its internal controls itself.

“

These material weaknesses resulted in immaterial revisions in the Company’s previously issued 2024 and 2023 consolidated financial statements.

REFORMATION S-1/A (JULY 2026) — RISK FACTORS, P.27+

There are three kinds of weakness: the control environment, risk assessment procedures, and information system controls. The stated cause is that the company was private before the listing and did not have the structure a public company requires.

Operations are turning. The balance sheet, though, is made of the memory of an acquisition.

Question 7

Who runs it?

The founder now owns a different womenswear brand.

There are three executive officers: Hali Borenstein, Chief Executive Officer and President; Joshua Moore, Chief Financial Officer; and Ivan Tchakarov, Chief Operating Officer.

Borenstein has been at the company 12 years. She came up through merchandising and the President role before becoming CEO. Her total 2025 compensation was about $1.67 million. The company writes that half of its leadership team has been there more than seven years, and that more than half of employees and two thirds of its leaders are women.

The founder stepped down as CEO in 2020 and started another brand in 2023

Yael Aflalo founded Reformation in 2009 and served as CEO until June 2020. She remains one of the directors.

What came next is written down as well. From 2021, a principal at a fund focused on women founders. And in August 2023, she founded AFLALO, a women’s ready-to-wear company.

The prospectus sets those two facts side by side and then explains Aflalo’s qualification as a director as “her experience as our CEO, her knowledge of the sustainable fashion industry, and her expertise in e-commerce, retail and design.”

Note that the S-1 does not name AFLALO as a competitor. A sitting director runs a company in the same women’s ready-to-wear market — that is the relationship one can read, and no more.

Meanwhile, the reason she stepped down as CEO in 2020 is written nowhere in this document. That it is not written is the only certain thing here.

The vanished “1.75x to 2.5x”

Executive pay carries another story. A note to the financial statements records the original terms of the performance-based options.

“

The Company’s performance-based options were originally set to vest when the Company’s controlling shareholder achieves a multiple of invested capital ranging from 175% to 250% of invested capital, based on cash proceeds received by the investor.

REFORMATION S-1/A (JULY 2026) — NOTES TO FINANCIAL STATEMENTS

So management’s options were tied neither to the company’s profit nor to its share price, but to how many times over the controlling shareholder, Permira, recovered the money it put in.

That condition is gone. On March 27, 2026, the board removed the market condition and converted the options to vest with the passage of time. The company notes these were options “previously deemed improbable of vesting.” In accounting terms, this became the main driver of the quarterly loss seen in Question 6.

The new yardstick is the share price

In the same year as the removal, new compensation was prepared to coincide with the listing. The approval on July 9, 2026 has three parts.

The first is a one-time restricted stock grant, $10 million to Borenstein. In dollar terms this is the largest of the three. The second is an annual equity grant, $5 million to Borenstein.

The third is performance stock, granted to Borenstein alone. It is measured quarterly over five years from grant.

Vesting is set by how many times the offering price the share price reaches:

• Below 1.75x — 0%
• 1.75x — 25% of target
• 2.00x — 50%
• 2.25x — 75%
• 2.50x — 100%
• 2.75x — 150%
• 3.00x or above — 200%

Set the two conditions side by side. The removed condition was “175% to 250% of invested capital”; the new one is “1.75x to 3.00x the offering price.” The starting point of 1.75 and the 2.50 that marks 100% of target overlap. What is being referenced has moved from the controlling shareholder’s return multiple to the price in the public market.

One more thing. Part of the money raised in the offering is used to buy shares and options from Borenstein, Tchakarov and other employees. The company calls this a Synthetic Secondary.

The yardstick that vanished was the investor’s return multiple; the new one is the share price.

Question 8

Who controls it?

49.2% is not 50%. The gap is the point.

One class of stock is being issued. A single class, one share one vote; the multiple-voting structure many tech companies use is not adopted here. Preferred stock is authorized but none is issued. So who holds it?

Ownership after the listing

The investment firm Permira holds more than 60% before the listing and comes to 49.2% after this offering. The founder side’s Aflalo Family Trust goes to 19.8%. Only those two plus Stripes III, LP are selling into the offering.

Add the numbers up and it becomes visible. After listing, Permira and the Aflalo Family Trust together hold about 69%. Include the Aflalo-related entities and it is about 72%. Even after the offering, existing shareholders keep 76.2% of shares outstanding, and only a little over 20% newly reaches the market.

What 49.2% buys

This is where 49.2% matters. The prospectus states it plainly: this company is not a “controlled company” under the governance rules of the New York Stock Exchange.

A controlled company is one where an individual, a group or another company holds more than 50% of voting power. 49.2% sits below that. Because it does not qualify, the exemptions — from independent-director ratios and the like — are not available to it.

On the other hand, the certificate of incorporation sets a different threshold. For as long as Permira and the Aflalo Family Trust together hold at least half the voting power, shareholders may act by written consent without holding a meeting. Their combined roughly 69% sits above that threshold.

The board has eight seats. Four are Permira designees and one is an Aflalo Family Trust designee. The chair is a Permira-designated director as well.

A veto that survives down to 5%

What bites harder than ownership is contract. Under a stockholders agreement entered into at listing, so long as Permira holds at least 5% of shares outstanding, none of the following can be done without its consent.

• Entering into or completing a change-of-control transaction
• Removing, appointing or replacing the CEO
• Changing the size of the board
• Acquisitions, dispositions or borrowings above $100 million
• Making or committing to capital expenditures above $25 million
• Amending the certificate of incorporation or bylaws

The second to last one bites. For a retailer whose plan is to more than double its store count over five years, a $25 million capital expenditure line sits at a height that touches ordinary business.

Board designation rights step down with ownership too, and one seat remains even at 5%. Subject to applicable law and the listing requirements of the NYSE, it can also designate one member each to the audit, compensation and nominating committees.

The Aflalo Family Trust has rights of its own. So long as it holds at least 5%, it may designate Yael Aflalo as a director. The founder of the other brand from the previous chapter keeps a board seat by this provision.

Takeover defenses are built in as well. From the day Permira’s stake falls below 20%, the board becomes classified into three staggered terms and directors can be removed only for cause. It does not apply, though, if a majority of the board resolves against it before it takes effect.

A design that holds the company by contract rather than by votes.

Question 9

What is it afraid of?

Among the risks it wrote itself is the billboard.

Risk Factors begins on page 27. Picking the seven from the summary list that are particular to this company gives the following.

• It depends on consumer discretionary spending (first on the list)
• Risks tied to its sustainability efforts and disclosures, and to changing disclosure requirements
• Its focus on sustainable, high-quality materials may raise cost of revenue and hinder growth
• Tariffs, trade restrictions and trade wars may raise product costs
• Risks tied to operations and transactions in China
• Dependence on suppliers — the top 10 account for about 76% of production volume
• It has identified material weaknesses in internal control, and failure to remediate could impair the accuracy of financial reporting

A structure where the billboard becomes a cost

The second and third are what separate this company from other apparel brands.

“

Our focus on using sustainable high-quality materials and reducing environmental impacts in our manufacturing processes and supply chain practices may increase our cost of revenue and hinder our net revenue growth.

REFORMATION S-1/A (JULY 2026) — RISK FACTORS, P.27+

The reason is attached. Suppliers able to meet sustainability requirements are generally few, and key suppliers cannot always be replaced without substantial time and cost. For a business that competes on speed, having few partners to choose from is a weakness.

The May 2023 promise to become a circular business by 2030 is written down as well. The more public the goal, the more failure to meet it rebounds on brand and reputation — that is the order in which it is explained.

On supplier misconduct there is a distinctive sentence: because sustainability practices are important to the company’s brand and business, such issues could have a greater adverse effect on it. It is a self-awareness that the higher the billboard, the longer the fall.

Regulation is coming too. In 2024 Canada and the European Union implemented greenwashing rules, and in the United States Federal Trade Commission guidance may be updated, the prospectus says. Forced-labor regulation is spreading as well.

The tariffs came back, and are coming again

The tariff refund from Question 6 has a sequel. After the Supreme Court held those tariffs unlawful, the President imposed new tariffs under a different statute and signaled an intent to raise rates further, the prospectus says. The Trade Representative also opened new investigations into imports from a number of countries.

So the refund is not the end; the basis has simply moved to a different provision. The company writes that there is significant uncertainty in the U.S. market.

Seen from the supply chain, there is little room to run. Production was reorganized in 2025 to reduce reliance on China, and still about 32% is China. Concentration in the top 10 suppliers is about 76%.

A company where defending the billboard is itself the cost.

Question 10

What becomes of the money it raises?

Note: This analysis draws only on the facts in the S-1. The final IPO price, the listing date, post-listing share performance and trading demand are not in the filing and fall outside its scope.

Of the roughly $134.5 million the company receives, more than 90% disappears into repaying debt.

The terms of the offering took concrete shape only with the July 20 S-1/A. The range is $15.00 to $17.00 per share, midpoint $16.00. The New York Stock Exchange listing is approved, under the ticker “REF.”

At the midpoint, net proceeds to the company are about $134.5 million. Only two uses are written down. Most of it goes to repaying term loans under the Credit Agreement, and the rest to buying shares and options from the CEO, the COO and other employees.

The term loans being repaid stood at $246.7 million at the end of June 2026. The $92 million drawn on June 17 to fund the dividend is part of that same agreement.

There is no statement about using it for new equipment, inventory or stores. The prospectus describes the principal purpose of the offering as increasing capital and financial flexibility and creating a public market for the common stock.

The underwriters’ affiliates are also the lenders

Here another fact starts to bite. Some of the securities firms underwriting the offering have affiliates standing on the side being repaid.

“

The Conflicted Underwriters are lenders under the Credit Agreement. … affiliates of the Conflicted Underwriters will receive 5% or more of the net proceeds of this offering due to the repayment of the term loans.

REFORMATION S-1/A (JULY 2026) — UNDERWRITERS, P.179+

Four of the nine qualify. Affiliates of J.P. Morgan, Morgan Stanley, Citigroup and RBC Capital Markets are lenders under the Credit Agreement.

This arrangement is a conflict of interest under FINRA Rule 5121, and the offering requires a qualified independent underwriter. Guggenheim Securities takes that role and, the prospectus says, receives no additional compensation for it.

The numbers seen from the buyer’s side

The accounting side is disclosed too. For a new shareholder buying at the assumed price of $16.00, immediate dilution per share is $16.57.

Here is what that means. Even after reflecting the listing and the use of proceeds, net tangible book value per share — stripping out goodwill and trademarks — stays negative. So the immediate dilution exceeds the assumed offering price itself.

When shares can be sold is set as well. The company, all directors and executive officers, and nearly all existing shareholders have agreed to a 180-day lock-up. When it lifts, the roughly 45.01 million shares held by existing shareholders become eligible for sale to the extent conditions such as Rule 144 are met. Shares held by affiliates remain subject to volume and manner limits.

Management has a separate restriction. For six months after the lock-up lifts, an employment term bars disposing of more than 10% of holdings per quarter.

New shareholders’ money goes first to the debt. Inside that debt is the dividend.

In closing

Beyond the ten questions

What Reformation sells is not only clothes. It is a name, built over 17 years around one line: being naked is the most sustainable option, and we are second. Net revenue is up more than 40% in three years and customers have passed one million. About 80% of direct revenue is sold at full price, and 70% comes from returning customers. The numbers show the name genuinely sells.

But the same document also shows the inside of the design that holds the name up. 90% of direct apparel revenue comes from reorders of styles that already hit and their derivatives; unproven new designs are 10%. Goodwill and trademarks recorded when an investment firm bought the company in 2019 make up 55% of total assets. And net income in 2025 fell 60% even as revenue grew.

The moves leading to the S-1 are written down in sequence. On June 17 it borrowed and paid out; eight days later it filed the original S-1; and more than 90% of what the offering brings the company goes to repaying term loans that include that borrowing. In March, the “investor’s return multiple” condition came off management’s options, and in July compensation vesting at “1.75x to 3.00x the offering price” was approved. The billboard, the ledger and the pay each run on a different clock.

The prospectus writes that the company has proven it can deliver strong results both financially and environmentally. The company explains this offering with sustainability at the center of the brand. In the same document sit a sequence — borrow, pay out, repay with the offering — and the dates on which management’s yardstick was swapped. At the intersection of those two, Reformation sells stock. New shareholders’ money goes first to repaying debt. The term loans being repaid include the $92 million drawn eight days earlier to fund the dividend.

Source: All facts are drawn from Reformation Inc.’s S-1/A (accession 0001104659-26-084856, filed 2026-07-20), together with the company’s IPO roadshow presentation and factsheet where noted.