– Quarter Highlighted by Year-over-Year
Increase in Revenue of 82% and Opening of 25 Stores –
Company Surpasses 2017 Target of
122 Stores –
MONTREAL, Nov. 9, 2017 /CNW/ - LXRandCo, Inc.
("LXRandCo" or the "Company") (TSX: LXR, LXR.WT), an
international omni-channel retailer of branded vintage luxury
handbags and accessories, today reported its financial results for
the third quarter and nine-month period ended September 30, 2017.
"The third quarter saw strong year-over-year top line
growth, driven by a tripling of our store count from a year ago as
we continue to successfully execute our international omni-channel
strategy with a specific focus on expanding our retail network,"
said Fred Mannella, Chief Executive
Officer, LXRandCo. "Since the end of the second quarter, we
have announced four new partners and opened 67 new stores, and at
this time, we have surpassed our stated goal of having 122 stores
open at the end of 2017. I'm tremendously proud of the hard work
and dedication of all the people across our organization that are
responsible for making this very aggressive goal a reality. The
upcoming holiday season is our busiest period of the year and now
with 128 stores in six countries, we look forward to our best
ever."
"We look forward to building on our strong momentum throughout
the remainder of the year and into 2018. As we do, profitability
remains a top priority. As per our plan, we are investing in the
short-term to capitalize on our unique market opportunity and
rapidly build out our store network and add new partners. We expect
to improve profitability in 2018 as our recently opened stores
ramp to full productivity and we start to benefit from the
operating leverage in our business."
"At LXRandCo, we are changing the way people shop. We are
a smarter way for consumers to buy personal luxury. At the same
time, we are bringing department stores and other retailers an
attractive, space-efficient, high-traffic, high-productivity
solution as they navigate an evolving retail landscape. All
of this positions our Company very well in both the short and long
term."
Unless otherwise indicated, all amounts are expressed in
Canadian dollars. Certain metrics, including those expressed on an
adjusted basis, are non-IFRS measures. See "Non-IFRS Measures"
further below. For a reconciliation of non-IFRS measures to their
most directly comparable measure calculated in accordance with
IFRS, see "Select Consolidated Financial Information" further
below.
Financial Highlights for the Third Quarter ended September 30, 2017
(all comparable
figures are for the third quarter ended September 30, 2016)
- Net revenue increased 82% to $8.8
million from $4.8
million;
- E-Commerce revenue increased to 4.1% of net revenue from
3.5%:
- Gross profit increased 99% to $2.9
million, or 32.5% or revenue, from $1.4 million, or 29.8% of revenue;
- Adjusted EBITDA (a non-IFRS measure) was $(0.8) million, compared to $0.1 million; and,
- Adjusted Net Loss (a non-IFRS measure) was $0.9 million, compared to $0.1 million.
Q3 2017 Operational Highlights
- The opening of 25 stores in the quarter, expanding its retail
network to 86 stores at September 30,
2017 compared with 29 stores at September 30, 2016.
- The addition of a new retail partner in Europe and three new retail partnerships in
the United States.
- The expansion of the Company's vintage luxury product offering
to include apparel and shoes at five locations.
- The diversification of its supply sourcing through a new
supplier agreement with a U.S.-based vendor.
- The appointment of veteran international retail executive
Todd Howard as Executive Vice
President, Global Business Development.
- Subsequent to September 30, 2017,
the opening of 42 stores which increases the Company's existing
retail network to 128 as of November 9,
2017.
Discussion of Third Quarter Results
The following provides an overview of LXRandCo's financial
results during the third quarter ended September 30, 2017 compared to the third quarter
ended September 30, 2016.
Net Revenue
Net revenue increased by 82% to $8.8
million in the three-month period ended September 30, 2017 from $4.8 million in the three-month period ended
September 30, 2016. E-Commerce
revenue as a percentage of net revenue was 4.1% in the three-month
period ended September 30, 2017,
compared to 3.5% in the three-month period ended September 30, 2016.
The increase in net revenue was primarily attributable to the
increase in sales from LXRandCo operating 57 more stores by the end
of the three-month period ended September
30, 2017 compared to the number of stores at the end of the
three-month period ended September 30,
2016. LXRandCo's retail network consisted of 86 stores as at
September 30, 2017, compared to a
retail network of 29 stores as at September
30, 2016. Store openings in the three-month period ended
September 30, 2017 consisted of 25
Retail Stores. The increase in net revenue was also due to another
quarter of revenue growth from existing wholesale customers, as
well as an increase in e-Commerce revenue.
Gross Profit
Gross profit increased by 99% to $2.9
million in the three-month period ended September 30, 2017 from $1.4 million in the three-month period ended
September 30, 2016. The change was
primarily attributable to the increase in net revenue.
Gross profit margin was 32.5% of net revenue in the three-month
period ended September 30, 2017,
compared to 29.8% of net revenue in the three-month period ended
September 30, 2016. The increase in
gross profit margin was primarily due to the Company adopting an
improved pricing methodology and an overall more profitable product
mix in the quarter which was partially off-set by certain one-time
wholesale sales made at lower margins and a lower US dollar
exchange rate against the Canadian dollar.
Net Loss
Net loss was $1.4 million in the
three-month period ended September 30,
2017, compared to a net loss of $0.1
million in the three-month period ended September 30, 2016. The increase in net loss was
driven primarily by higher SG&A expenses in the period as a
result of the Company's continued retail expansion.
Adjusted Net Loss
Adjusted Net Loss was $0.9 million
in the three-month period ended September
30, 2017, compared to adjusted net loss of $0.1 million in the three-month period ended
September 30, 2016. This increase was
the result of the factors discussed above, primarily higher
SG&A expenses.
Adjusted EBITDA
Adjusted EBITDA was $(0.8) million
in the three-month period ended September
30, 2017, compared to $0.1
million in the three-month period ended September 30, 2016. This decrease was primarily
due to the factors discussed above.
Adjusted EBITDA Margin was (9.5)% of net revenue in the
three-month period ended September 30,
2017, compared to 2.3% of net revenue in the three-month
period ended September 30, 2016. This
decrease was primarily due to the factors discussed above.
Consolidated Financial Statements and Management's Discussion
and Analysis
The Company's unaudited interim condensed consolidated financial
statements for the three-month and nine-month periods ended
September 30, 2017 and Management's
Discussion and Analysis ("MD&A") thereon are available on the
Company's web site at
http://investors.lxrco.com/quarterly-financials and under the
Company's profile on SEDAR at www.sedar.com.
Conference Call
A conference call to discuss the Company's third quarter results
is scheduled for tomorrow, Friday, November
10, 2017 at 8:30 a.m.
(ET). Participants can access the conference call by
telephone by dialing 647-427-7450 or 1-888-231-8191, or via the
Internet at http://investors.lxrco.com/events-and-webcasts.
The conference call will be archived for replay both by
telephone and via the Internet beginning approximately one hour
following completion of the call. To access the archived conference
call by telephone, dial 1-855-859-2056 or 416-849-0833 and enter
the pass code 2594909 followed by the pound key. The
telephone replay will be available until Friday, November 17, 2017 at midnight. To access
the archived conference call via the Internet, go to
http://investors.lxrco.com/events-and-webcasts.
About LXRandCo
LXRandCo is a rapidly growing, international omni-channel
retailer of branded vintage luxury handbags and other personal
luxury products. LXRandCo sources and authenticates high-quality,
pre-owned products from iconic brands such as Hermès, Louis Vuitton, Gucci and Chanel, among others,
and sells them at attractive prices through: a retail network of
stores located in major department stores in Canada, the United
States and Europe;
wholesale operations primarily in the
United States; and its own e-Commerce website,
www.lxrco.com.
Caution Regarding Forward-Looking Statements
Certain statements in this press release are prospective in
nature and constitute forward-looking information and/or
forward-looking statements within the meaning of applicable
securities laws (collectively, "forward-looking
statements"). Forward-looking statements generally, but not
always, can be identified by the use of forward-looking terminology
such as "outlook", "objective", "may", "could", "would", "will",
"expect", "intend", "estimate", "forecasts", "project", "seek",
"anticipate", "believes", "should", "plans" or "continue", or
similar expressions suggesting future outcomes or events and the
negative of any of these terms. Forward-looking statements in this
news release include, but are not limited to, statements concerning
future objectives and strategies to achieve those objectives,
including, without limitation, store openings, as well as other
statements with respect to management's beliefs, plans, estimates
and intentions, and similar statements concerning anticipated
future events, results, outlook, circumstances, performance or
expectations that are not historical facts. Forward-looking
statements reflect management's current beliefs, expectations and
assumptions and are based on information currently available to
management, which includes assumptions about continued revenues
based on historical past performance, management's historical
experience, perception of trends and current business conditions,
expected future developments and other factors which management
considers appropriate. With respect to the forward-looking
statements included in this press release, management has made
certain assumptions with respect to, among other things, the
Company's ability to meet its future objectives and strategies, the
Company's ability to achieve its future projects and plans and that
such projects and plans will proceed as anticipated, the expected
growth of the Company's e-Commerce revenue, the expected number and
timing of store openings in North
America and internationally, entering into new and/or
expanded retail partnerships in North
America and internationally, the Company's ability to source
products, the Company's competitive position in the vintage luxury
industry, and beliefs and intentions regarding the ownership of
material trademarks and domain names used in connection with the
marketing, distribution and sale of the Company's products as well
as assumptions concerning general economic and market growth rates,
currency exchange and interest rates and competitive intensity.
Readers are cautioned not to place undue reliance on
forward-looking statements, as there can be no assurance that the
future circumstances, outcomes or results anticipated or implied by
such forward-looking statements will occur or that plans,
intentions or expectations upon which the forward-looking
statements are based will occur.
All forward-looking statements included in and incorporated into
this press release are qualified by these cautionary statements.
Unless otherwise indicated, the forward-looking statements
contained herein are made as of the date of this press release, and
except as required by applicable law, the Company does not
undertake any obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
Readers are cautioned that the actual results achieved will vary
from the information provided herein and that such variations may
be material. Consequently, there are no representations by LXRandCo
that actual results achieved will be the same in whole or in part
as those set out in the forward-looking statements.
Selected Consolidated Financial Information
The following table summarizes LXRandCo's recent results for the
periods indicated:
|
|
For the
Three-Months Ended
September
30,
|
|
For the
Nine-Months Ended
September
30,
|
Consolidated
statements of loss and comprehensive loss:
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
|
$8,793,081
|
|
$4,823,124
|
|
$22,113,766
|
|
$12,804,951
|
|
Cost of
sales
|
|
5,933,099
|
|
3,386,181
|
|
15,411,125
|
|
8,841,214
|
Gross
profit
|
|
2,859,982
|
|
1,436,943
|
|
6,702,641
|
|
3,963,737
|
|
Selling, general and
administrative
expenses
|
|
3,956,358
|
|
1,324,725
|
|
8,912,153
|
|
4,052,629
|
|
Amortization and
depreciation expenses
|
|
74,255
|
|
38,910
|
|
230,642
|
|
168,594
|
Results from
operating activities
|
|
(1,170,631)
|
|
73,308
|
|
(2,440,154)
|
|
(257,486)
|
|
Finance
costs
|
|
73,288
|
|
188,221
|
|
740,081
|
|
589,362
|
|
Debt extinguishment
costs
|
|
—
|
|
—
|
|
612,939
|
|
—
|
|
Foreign exchange
loss
|
|
96,908
|
|
53,880
|
|
93,633
|
|
33
|
|
Convertible
redeemable preferred share dividends
|
|
—
|
|
—
|
|
61,308
|
|
—
|
|
Non-recurring gain on
loss of control of a
subsidiary
|
|
—
|
|
—
|
|
—
|
|
(363,948)
|
|
Non-recurring gain
from a step business
combination
|
|
—
|
|
—
|
|
(2,070,422)
|
|
—
|
|
Excess of fair value
over net assets acquired
|
|
—
|
|
—
|
|
14,765,080
|
|
—
|
|
Non-recurring
acquisition costs
|
|
40,000
|
|
—
|
|
814,785
|
|
—
|
|
Gain on expiration of
warrants
|
|
—
|
|
—
|
|
(3,195,459)
|
|
—
|
Loss before income
taxes
|
|
(1,380,827)
|
|
(168,793)
|
|
(14,262,099)
|
|
(482,932)
|
Income tax expense
(recovery)
|
|
|
|
|
|
|
|
|
|
Current
|
|
(97,050)
|
|
(37,937)
|
|
(8,472)
|
|
(210,119)
|
|
Deferred
|
|
20,263
|
|
(22,482)
|
|
(177,224)
|
|
163,754
|
|
|
(76,787)
|
|
(60,419)
|
|
(185,696)
|
|
(46,365)
|
Net loss for the
period
|
|
(1,304,040)
|
|
(108,374)
|
|
(14,076,404)
|
|
(436,567)
|
Other
comprehensive loss
|
|
|
|
|
|
|
|
|
Cumulative
translation adjustment
|
|
12,748
|
|
7,901
|
|
45,011
|
|
77,023
|
Comprehensive loss
for the period
|
|
(1,316,788)
|
|
(116,275)
|
|
(14,121,414)
|
|
(513,590)
|
The following table provides a reconciliation of net loss to
EBITDA and Adjusted EBITDA for the periods indicated:
|
|
For the
Three-Months Ended
September
30,
|
|
For the
Nine-Months Ended
September
30,
|
Reconciliation
of net loss to EBITDA and Adjusted EBITDA:
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$(1,304,040)
|
|
$(108,374)
|
|
$(14,076,403)
|
|
$(436,567)
|
Amortization and
depreciation expense
|
|
74,255
|
|
38,910
|
|
230,642
|
|
168,594
|
Finance
Costs
|
|
73,288
|
|
188,221
|
|
740,081
|
|
589,362
|
Income tax
expense
|
|
(76,787)
|
|
(60,419)
|
|
(185,696)
|
|
(46,365)
|
EBITDA
|
|
(1,233,284)
|
|
58,338
|
|
(13,291,377)
|
|
275,024
|
Adjustments to
EBITDA:
|
|
|
|
|
|
|
|
|
|
Debt extinguishment
costs
|
|
—
|
|
—
|
|
612,939
|
|
—
|
|
Foreign exchange
loss
|
|
96,908
|
|
53,880
|
|
93,633
|
|
33
|
|
Convertible
redeemable preferred share dividends
|
|
—
|
|
—
|
|
61,308
|
|
—
|
|
Non-recurring gain on
loss of control of a subsidiary
|
|
—
|
|
—
|
|
—
|
|
(363,948)
|
|
Non-recurring gain
from a step business combination
|
|
—
|
|
—
|
|
(2,070,422)
|
|
—
|
|
Excess of fair value
over net assets acquired
|
|
—
|
|
—
|
|
14,765,080
|
|
—
|
|
Non-recurring
acquistion costs
|
|
40,000
|
|
—
|
|
814,785
|
|
—
|
|
Gain on expiration of
warrants
|
|
—
|
|
—
|
|
(3,195,459)
|
|
—
|
|
Stock-based
compensation
expense
|
|
263,731
|
|
—
|
|
500,356
|
|
—
|
Adjusted
EBITDA
|
|
(832,644)
|
|
112,218
|
|
(1,709,156)
|
|
(88,892)
|
Adjusted EBITDA
Margin
|
|
(9%)
|
|
2%
|
|
(8%)
|
|
(1%)
|
The following table provides a reconciliation of net loss to
Adjusted Net Loss for the periods indicated:
|
|
For the
Three-Months Ended
September
30,
|
|
For the
Nine-Months Ended
September
30,
|
Reconciliation
of net loss to Adjusted Net income (loss):
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$(1,304,040)
|
|
$(108,374)
|
|
$(14,076,403)
|
|
$(436,567)
|
Adjustments to net
loss:
|
|
|
|
|
|
|
|
|
|
Debt extinguishment
costs
|
|
—
|
|
—
|
|
612,939
|
|
—
|
|
Foreign exchange loss
(gain)
|
|
96,908
|
|
53,880
|
|
93,633
|
|
33
|
|
Convertible
redeemable preferred share
dividends
|
|
—
|
|
—
|
|
61,308
|
|
—
|
|
Non-recurring gain on
loss of control of a subsidiary
|
|
—
|
|
—
|
|
—
|
|
(363,948)
|
|
Non-recurring gain
from a step business combination
|
|
—
|
|
—
|
|
(2,070,422)
|
|
—
|
|
Excess of fair value
over net assets acquired
|
|
—
|
|
—
|
|
14,765,080
|
|
—
|
|
Non-recurring
acquisition costs
|
|
40,000
|
|
—
|
|
814,785
|
|
—
|
|
Gain on expiration of
warrants
|
|
—
|
|
—
|
|
(3,195,459)
|
|
—
|
|
Stock-based
compensation expense
|
|
263,731
|
|
—
|
|
500,356
|
|
—
|
|
Adjusted net
loss
|
|
(903,400)
|
|
(54,494)
|
|
(2,494,182)
|
|
(800,483)
|
|
|
|
|
|
|
|
|
|
The following table provides selected retail network data for
the periods indicated:
|
|
For the
Three-Months Ended
September
30,
|
|
For the
Nine-Months Ended
September
30,
|
Selected retail
network data:
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Number of stores,
beginning of period
|
|
61
|
|
22
|
|
46
|
|
15
|
|
Store
openings
|
|
25
|
|
8
|
|
43
|
|
15
|
|
Store
closures
|
|
0
|
|
1
|
|
3
|
|
1
|
Number of stores, end
of period
|
|
86
|
|
29
|
|
86
|
|
29
|
SOURCE LXRandCo, Inc.