Net Sales Increased 6.4% Compared to the
Third Quarter of 2023, with U.S. Net Sales Up 19.5%
Active Customer Growth of 14.1% on a
Trailing Twelve-Month Basis Compared to the Third Quarter of
2023
Princess Polly to Open NYC Store in Soho in
Early 2025
a.k.a. Brands Holding Corp. (NYSE: AKA), a brand
accelerator of next generation fashion brands, today announced
financial results for the quarter ended September 30, 2024.
Results for the Third Quarter
- Net sales increased 6.4% to $149.9 million, compared to
$140.8 million in the third quarter of 2023; up 5.2% on a constant
currency basis1.
- In the U.S., net sales increased 19.5% compared to the
third quarter of 2023.
- Net loss was $(5.4) million, or $(0.51) per share, in
the third quarter of 2024, compared to net loss of $(70.4) million,
or $(6.58) per share, in the third quarter of 2023.
- Adjusted EBITDA2 was $8.2 million in the third quarter
of 2024, compared to $4.7 million in the third quarter of
2023.
“I’m proud that we delivered another strong quarter, exceeding
top and bottom-line expectations, while further advancing our
strategic growth initiatives," said Ciaran Long, Interim Chief
Executive Officer and Chief Financial Officer. "We grew net sales
to ~$150 million, a 6.4% increase year over year, fueled by
particularly strong performance in the U.S. market where sales grew
19.5% to $100 million. Importantly, we delivered adjusted EBITDA of
over $8 million, which is an impressive 75% increase compared to
last year. Our strong third quarter performance reflects our teams’
unwavering commitment to building next-generation brands and
executing at the highest level to drive growth and
profitability.”
"In addition to the strength across our brands’ direct to
consumer channels, our omnichannel expansion initiatives are
gaining momentum, further increasing our brand reach. Princess
Polly has opened three stores in San Diego, Scottsdale and Boston
this year, and as previously announced, Princess Polly is expected
to open its first New York City store in Soho early next year.
Additionally, we’re thrilled that Petal & Pup has expanded into
40 Nordstrom stores based on the success of Petal & Pup’s
performance on Nordstrom.com. As we look ahead, we are
well-positioned for continued profitable growth, and I’m confident
in our ability to execute and deliver sustainable long term
shareholder value.”
Brand Highlights:
- Princess Polly opened three stores in San Diego, Scottsdale and
Boston year to date. The brand plans to open two more stores in
California in the fourth quarter. As previously announced, Princess
Polly is expected to open its first store in New York City early
next year.
- Based on the success of Petal & Pup on Nordstrom.com, the
partnership was expanded to feature Petal & Pup in 40 Nordstrom
stores in the fourth quarter.
- Culture Kings continues to deliver growth in the U.S. with its
in-house brands, including mnml, contributing as top
performers.
- Loiter, one of Culture Kings' flagship in-house brands,
transitioned to ‘test and repeat’ merchandising strategy resulting
in triple-digit revenue growth with outpaced margin dollar growth
in the third quarter.
Third Quarter Financial
Details
- Net sales increased 6.4% to $149.9 million, compared to
$140.8 million in the third quarter of 2023. The increase was
driven by a 6.4% increase in the number of orders, due to growth in
the U.S. On a constant currency basis1, net sales increased
5.2%.
- Gross margin was 58.0%, compared to 55.4% in the third
quarter of 2023. The improvement was primarily driven by the impact
of more full price selling and improved inventory position,
partially offset by the effect of growing wholesale
initiatives.
- Selling expenses were $41.9 million, compared to $36.7
million in the third quarter of 2023. Selling expenses were 27.9%
of net sales, compared to 26.0% of net sales in the third quarter
of 2023. The increases were driven by the impact of opening
additional stores.
- Marketing expenses were $19.3 million, compared to $18.5
million in the third quarter of 2023. Marketing expenses were 12.9%
of net sales, compared to 13.1% of net sales in the third quarter
of 2023.
- General and administrative (“G&A”) expenses were
$27.8 million, compared to $24.6 million in the third quarter of
2023. G&A expenses were 18.6% of net sales, compared to 17.5%
of net sales in the third quarter of 2023. The increase in G&A
expenses as a percent of net sales during the quarter was primarily
driven by a $2.0 million accrual for a legal matter and higher
incentive compensation.
- Adjusted EBITDA2 was $8.2 million, or 5.5% of net sales,
compared to $4.7 million, or 3.3% of net sales, in the third
quarter of 2023.
Balance Sheet and Cash
Flow
- Cash and cash equivalents at the end of the third
quarter totaled $23.1 million.
- Inventory at the end of the third quarter totaled $106.0
million, compared to $91.0 million at the end of fiscal year 2023
and $100.0 million at the end of the third quarter of 2023.
- Debt at the end of the third quarter totaled $111.9
million, compared to $93.4 million at the end of fiscal year 2023
and $106.7 million at the end of the third quarter of 2023. The
increase in debt at the end of the third quarter was primarily to
purchase additional inventory to meet demand across multiple sales
channels, as well as to invest in stores.
- Cash flow used in operations for the nine months ended
September 30, 2024 was $6.3 million, compared to cash flow from
operations of $18.0 million for the nine months ended September 30,
2023.
Outlook
For the full fiscal 2024 year, the Company now
expects:
- Net sales between $567 million and $572 million
- Adjusted EBITDA3 between $22 million and $23 million
- Weighted average diluted share count of 10.6 million
The above outlook is based on several assumptions, including but
not limited to, foreign exchange rates remaining at the current
levels, the opening of three Princess Polly stores in the fourth
quarter of 2024 and continued macroeconomic pressures, specifically
in Australia and New Zealand. See “Forward-Looking Statements” for
additional information.
Conference Call
A conference call to discuss the Company’s third quarter results
is scheduled for November 7, 2024, at 4:30 p.m. ET. Those who wish
to participate in the call may do so by dialing (800) 715-9871 or
(646) 307-1963, conference ID 2198544. The conference call will
also be webcast live at https://ir.aka-brands.com in the Events and
Presentations section. A recording will be available shortly after
the conclusion of the call. To access the replay, please dial (877)
660-6853 or (201) 612-7415 for international callers, conference ID
13749065. An archive of the webcast will be available on a.k.a.
Brands’ investor relations website.
Use of Non-GAAP Financial Measures and Other Operating
Metrics
In addition to results determined in accordance with accounting
principles generally accepted in the United States of America
(GAAP), management utilizes certain non-GAAP financial measures
such as Adjusted EBITDA and Adjusted EBITDA margin for purposes of
evaluating ongoing operations and for internal planning and
forecasting purposes. We believe that these non-GAAP financial
measures, when reviewed collectively with our GAAP financial
information, provide useful supplemental information to investors
in assessing our operating performance. The non-GAAP financial
measures should not be considered in isolation or as a substitute
for the GAAP financial measures. The non-GAAP financial measures
used by the Company may be different from similarly-titled non-GAAP
financial measures used by other companies. See additional
information at the end of this release regarding non-GAAP financial
measures.
About a.k.a. Brands
a.k.a. Brands is a portfolio of next-generation fashion brands
for the next generation of consumers. Each brand in the a.k.a.
portfolio targets a distinct Gen Z and millennial audience, creates
authentic and inspiring social content and offers quality exclusive
merchandise. a.k.a. Brands leverages its next-generation retail
platform to help each brand accelerate its growth, scale in new
markets and enhance its profitability. Current brands in the a.k.a.
Brands portfolio include Princess Polly, Culture Kings, mnml and
Petal & Pup.
Forward-Looking Statements
Certain statements made in this release are “forward-looking
statements” within the meaning of the “safe harbor” provisions of
the United States Private Securities Litigation Reform Act of 1995.
When used in this press release, the words “estimates,”
“projected,” “expects,” “anticipates,” “forecasts,” “plans,”
“intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,”
“propose” and variations of these words or similar expressions (or
the negative versions of such words or expressions) are intended to
identify forward-looking statements.
These forward-looking statements are not guarantees of future
performance, conditions or results, and involve a number of known
and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside the Company’s control, that
could cause actual results or outcomes to differ materially from
those discussed in the forward-looking statements.
Important factors, among others, that may affect actual results
or outcomes include the effects of economic downturns and unstable
market conditions; our ability in the future to continue to comply
with the New York Stock Exchange’s (NYSE) listing standards and
maintain the listing of our common stock on the NYSE; risks related
to doing business in China; our ability to anticipate
rapidly-changing consumer preferences in the apparel, footwear and
accessories industries; our ability to execute our strategic
initiatives, including transitioning Culture Kings to a
data-driven, short lead time merchandising cycle; our ability to
acquire new customers, retain existing customers or maintain
average order value levels; the effectiveness of our marketing and
our level of customer traffic; merchandise return rates; our
ability to manage our inventory effectively; our success in
identifying brands to acquire, integrate and manage on our
platform; our ability to expand into new markets; the global nature
of our business, including international economic, geopolitical
instability (including the ongoing Russia-Ukraine and
Israel-Palestine wars), legal, compliance and supply chain risks;
interruptions in or increased costs of shipping and distribution,
which could affect our ability to deliver our products to the
market; our use of social media platforms and influencer
sponsorship initiatives, which could adversely affect our
reputation or subject us to fines or other penalties; fluctuating
operating results; the inherent challenges in measuring certain of
our key operating metrics, and the risk that real or perceived
inaccuracies in such metrics may harm our reputation and negatively
affect our business; the potential for tax liabilities that may
increase the costs to our consumers; our ability to attract and
retain highly qualified personnel, including key members of our
leadership team; fluctuations in wage rates and the price,
availability and quality of raw materials and finished goods, which
could increase costs; foreign currency fluctuations; and other
risks and uncertainties set forth in the sections entitled “Risk
Factors,” “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and “Forward-Looking
Statements” in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2023, quarterly reports on Form 10-Q and
any other periodic reports that the Company may file with the
Securities and Exchange Commission (the SEC). a.k.a. Brands does
not undertake any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
a.k.a. BRANDS HOLDING
CORP.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(in thousands, except share
and per share data)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Net sales
$
149,903
$
140,833
$
415,674
$
397,346
Cost of sales
62,983
62,865
177,111
173,522
Gross profit
86,920
77,968
238,563
223,824
Operating expenses:
Selling
41,887
36,660
117,293
106,998
Marketing
19,278
18,511
52,432
51,642
General and administrative
27,827
24,622
76,367
74,681
Goodwill impairment
—
68,524
—
68,524
Total operating expenses
88,992
148,317
246,092
301,845
Loss from operations
(2,072
)
(70,349
)
(7,529
)
(78,021
)
Other expense, net:
Interest expense
(2,707
)
(2,798
)
(7,661
)
(8,490
)
Other expense
(750
)
(541
)
(1,048
)
(2,325
)
Total other expense, net
(3,457
)
(3,339
)
(8,709
)
(10,815
)
Loss before income taxes
(5,529
)
(73,688
)
(16,238
)
(88,836
)
Benefit from (provision for) income
tax
90
3,278
(395
)
3,833
Net loss
$
(5,439
)
$
(70,410
)
$
(16,633
)
$
(85,003
)
Net loss per share:
Basic and diluted
$
(0.51
)
$
(6.58
)
$
(1.58
)
$
(7.92
)
Weighted average shares outstanding:
Basic and diluted
10,595,526
10,695,621
10,538,591
10,736,628
a.k.a. BRANDS HOLDING
CORP.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
(unaudited)
September 30,
2024
December 31,
2023
Assets
Current assets:
Cash and cash equivalents
$
23,077
$
21,859
Accounts receivable, net
6,690
4,796
Inventory
106,030
91,024
Prepaid income taxes
1,369
—
Prepaid expenses and other current
assets
19,111
18,016
Total current assets
156,277
135,695
Property and equipment, net
29,382
27,154
Operating lease right-of-use assets
62,332
37,465
Intangible assets, net
56,130
64,322
Goodwill
96,012
94,898
Deferred tax assets
1,539
1,569
Other assets
2,429
618
Total assets
$
404,101
$
361,721
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
30,598
$
28,279
Accrued liabilities
33,198
25,223
Sales returns reserve
8,331
9,610
Deferred revenue
12,880
11,782
Income taxes payable
—
257
Operating lease liabilities, current
7,523
7,510
Current portion of long-term debt
6,300
3,300
Total current liabilities
98,830
85,961
Long-term debt
105,610
90,094
Operating lease liabilities
60,931
35,344
Other long-term liabilities
1,798
1,704
Total liabilities
267,169
213,103
Stockholders’ equity:
Preferred stock
—
—
Common stock
128
128
Additional paid-in capital
470,194
466,172
Accumulated other comprehensive loss
(49,344
)
(50,269
)
Accumulated deficit
(284,046
)
(267,413
)
Total stockholders’ equity
136,932
148,618
Total liabilities and stockholders’
equity
$
404,101
$
361,721
a.k.a. BRANDS HOLDING
CORP.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
September 30,
2024
2023
Cash flows from operating
activities:
Net loss
$
(16,633
)
$
(85,003
)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation expense
4,720
5,912
Amortization expense
8,303
8,782
Amortization of debt issuance costs
451
470
Lease incentives
—
1,499
Loss on disposal of businesses
673
1,533
Non-cash operating lease expense
6,524
5,786
Equity-based compensation
5,987
5,478
Deferred income taxes, net
16
3
Goodwill impairment
—
68,524
Changes in operating assets and
liabilities:
Accounts receivable, net
(1,803
)
111
Inventory
(16,725
)
20,428
Prepaid expenses and other current
assets
(397
)
(5,448
)
Accounts payable
2,276
7,495
Income taxes payable
(1,625
)
(4,528
)
Accrued liabilities
7,839
(10,912
)
Sales returns reserve
(1,199
)
3,714
Deferred revenue
1,083
(4
)
Lease liabilities
(5,828
)
(5,798
)
Net cash (used in) provided by operating
activities
(6,338
)
18,042
Cash flows from investing
activities:
Purchases of intangible assets
(5
)
(59
)
Purchases of property and equipment
(7,689
)
(5,462
)
Net cash used in investing activities
(7,694
)
(5,521
)
Cash flows from financing
activities:
Proceeds from line of credit, net of
issuance costs
34,500
—
Repayment of line of credit
(13,000
)
(33,100
)
Repayment of debt
(3,300
)
(4,200
)
Taxes paid related to net share settlement
of equity awards
(786
)
(107
)
Proceeds from issuances under equity-based
compensation plans
93
90
Repurchase of shares
(1,272
)
(910
)
Net cash provided by (used in) financing
activities
16,235
(38,227
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(674
)
(63
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
1,529
(25,769
)
Cash, cash equivalents and restricted cash
at beginning of period
24,029
48,373
Cash, cash equivalents and restricted cash
at end of period
$
25,558
$
22,604
Reconciliation of cash, cash
equivalents and restricted cash:
Cash and cash equivalents
$
23,077
$
20,742
Restricted cash, included in prepaid
expenses and other current assets
538
1,862
Restricted cash, included in other
assets
1,943
—
Total cash, cash equivalents and
restricted cash
$
25,558
$
22,604
a.k.a. BRANDS HOLDING
CORP.
KEY FINANCIAL AND OPERATING
METRICS AND NON-GAAP MEASURES
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
(dollars in thousands)
2024
2023
2024
2023
Gross margin
58.0
%
55.4
%
57.4
%
56.3
%
Net loss
$
(5,439
)
$
(70,410
)
$
(16,633
)
$
(85,003
)
Net loss margin
(3.6
)%
(50.0
)%
(4.0
)%
(21.4
)%
Adjusted EBITDA2
$
8,208
$
4,697
$
17,094
$
12,451
Adjusted EBITDA margin2
5.5
%
3.3
%
4.1
%
3.1
%
Key Operational Metrics and Regional
Sales
Three Months Ended
September 30,
Nine Months Ended
September 30,
(metrics in millions, except AOV; sales
in thousands)
2024
2023
% Change
2024
2023
% Change
Key Operational
Metrics
Active customers4
4.05
3.55
14.1
%
4.05
3.55
14.1
%
Average order value
$
81
$
81
—
%
$
79
$
81
(2.5
)%
Number of orders
1.84
1.73
6.4
%
5.28
4.88
8.2
%
Sales by
Region
U.S.
$
100,180
$
83,846
19.5
%
$
272,693
$
236,439
15.3
%
Australia/New Zealand
43,938
50,022
(12.2
)%
123,103
139,505
(11.8
)%
Rest of world
5,785
6,965
(16.9
)%
19,878
21,402
(7.1
)%
Total
$
149,903
$
140,833
6.4
%
$
415,674
$
397,346
4.6
%
Year-over-year growth on a constant
currency basis1
5.2
%
4.9
%
Active Customers
We view the number of active customers as a key indicator of our
growth, our value proposition and consumer awareness of our brand,
and their desire to purchase our products. In any particular
period, we determine our number of active customers by counting the
total number of unique customer accounts who have made at least one
purchase in the preceding 12-month period, measured from the last
date of such period.
Average Order Value
We define average order value (“AOV”) as net sales in a given
period divided by the total orders placed in that period. AOV may
fluctuate as we expand into new categories or geographies or as our
assortment changes.
a.k.a. BRANDS HOLDING CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in
thousands, except per share data) (unaudited)
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP
financial measures that management uses to assess our operating
performance. Because Adjusted EBITDA and Adjusted EBITDA margin
facilitate internal comparisons of our historical operating
performance on a more consistent basis, we use these measures for
business planning purposes.
We also believe this information will be useful for investors to
facilitate comparisons of our operating performance and better
identify trends in our business. We expect Adjusted EBITDA margin
to increase over the long-term as we continue to scale our business
and achieve greater leverage in our operating expenses.
We calculate Adjusted EBITDA as net income (loss) adjusted to
exclude: interest and other expense; provision for income (benefit
from) taxes; depreciation and amortization expense; equity-based
compensation expense; costs to establish or relocate distribution
centers; transaction costs; costs related to severance from
headcount reductions; goodwill and intangible asset impairment;
sales tax penalties; insured losses, net of any recoveries; and
one-time or non-recurring items. We calculate Adjusted EBITDA
margin as Adjusted EBITDA as a percentage of net sales. Adjusted
EBITDA and Adjusted EBITDA margin are considered non-GAAP financial
measures under the SEC’s rules because they exclude certain amounts
included in net income (loss) and net income (loss) margin, the
most directly comparable financial measures calculated in
accordance with GAAP.
A reconciliation of non-GAAP Adjusted EBITDA to net loss for the
three and nine months ended September 30, 2024 and 2023, is as
follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(dollars in thousands)
2024
2023
2024
2023
Net loss
$
(5,439
)
$
(70,410
)
$
(16,633
)
$
(85,003
)
Add (deduct):
Total other expense, net
3,457
3,339
8,709
10,815
(Benefit from) provision for income
tax
(90
)
(3,278
)
395
(3,833
)
Depreciation and amortization expense
4,454
4,533
13,023
14,694
Equity-based compensation expense
2,136
1,719
5,987
5,478
Goodwill impairment
—
68,524
—
68,524
Non-routine items5
3,690
270
5,613
1,776
Adjusted EBITDA
$
8,208
$
4,697
$
17,094
$
12,451
Net loss margin
(3.6
)%
(50.0
)%
(4.0
)%
(21.4
)%
Adjusted EBITDA margin
5.5
%
3.3
%
4.1
%
3.1
%
Net Income (Loss), As Adjusted and Net Income (Loss) Per
Share, As Adjusted
Net income (loss), as adjusted and net income (loss) per share,
as adjusted are considered non-GAAP financial measures under the
SEC’s rules because they exclude certain amounts included in net
income (loss) and net income (loss) per share calculated in
accordance with GAAP, the most directly comparable financial
measures calculated in accordance with GAAP. We calculate net
income (loss), as adjusted as net income (loss) adjusted to exclude
significant, nonrecurring charges or gains such as: disposals,
goodwill impairment and significant individual legal matters. We
calculate net income (loss) per share, as adjusted as net income
(loss), as adjusted divided by the weighted-average shares,
diluted. Management believes that net income (loss), as adjusted
and net income (loss) per share, as adjusted are meaningful
measures to share with investors because they better enable
comparison of the performance with that of the comparable period.
In addition, net income (loss), as adjusted and net income (loss)
per share, as adjusted afford investors a view of what management
considers a.k.a.’s core earnings performance and the ability to
make a more informed assessment of such core earnings performance
with that of the prior year.
A reconciliation of non-GAAP net loss, as adjusted, to net loss,
as well as the resulting calculation of net loss per share, as
adjusted, for the three and nine months ended September 30, 2023
and 2024, is as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(dollars in thousands)
2024
2023
2024
2023
Net loss
$
(5,439
)
$
(70,410
)
$
(16,633
)
$
(85,003
)
Adjustments:
Loss on disposal of the Rebdolls reporting
unit
—
—
—
951
Goodwill impairment
—
68,524
—
68,524
Accrual for a pending legal matter
2,012
—
2,012
—
Tax effects of adjustments
(523
)
—
(523
)
—
Net loss, as adjusted
$
(3,950
)
$
(1,886
)
$
(15,144
)
$
(15,528
)
Net loss per share, as adjusted
$
(0.37
)
$
(0.18
)
$
(1.44
)
$
(1.45
)
Weighted-average shares, diluted
10,595,526
10,695,621
10,538,591
10,736,628
____________________ 1 In order to provide a framework for
assessing the performance of our underlying business, excluding the
effects of foreign currency rate fluctuations, we compare the
percent change in the results from one period to another period
using a constant currency methodology wherein current and
comparative prior period results for our operations reporting in
currencies other than U.S. dollars are converted into U.S. dollars
at constant exchange rates (i.e., the rates in effect on December
31, 2023, which was the last day of our prior fiscal year) rather
than the actual exchange rates in effect during the respective
periods. 2 See additional information at the end of this release
regarding non-GAAP financial measures. 3 The Company has not
provided a quantitative reconciliation of its Adjusted EBITDA
outlook to a GAAP net income outlook because it is unable, without
making unreasonable efforts, to project certain reconciling items.
These items include, but are not limited to, future equity-based
compensation expense, income taxes, interest expense and
transaction costs. These items are inherently variable and
uncertain and depend on various factors, some of which are outside
of the Company’s control or ability to predict. See additional
information at the end of this release regarding non-GAAP financial
measures. 4 Trailing twelve months. 5 Non-routine items include a
$2.0 million accrual in connection with a legal matter; severance
from headcount reductions; sales tax penalties; insured losses, net
of recoveries; and other non-routine legal matters.
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version on businesswire.com: https://www.businesswire.com/news/home/20241107934477/en/
Investor Contact investors@aka-brands.com
Media Contact media@aka-brands.com
aka Brands (NYSE:AKA)
過去 株価チャート
から 10 2024 まで 11 2024
aka Brands (NYSE:AKA)
過去 株価チャート
から 11 2023 まで 11 2024
