We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Share Name | Share Symbol | Market | Type |
---|---|---|---|
aka Brands Holding Corp | NYSE:AKA | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.51 | 3.15% | 16.71 | 17.24 | 15.7101 | 16.20 | 5,376 | 21:00:06 |
U.S. Net Sales Grew 2% Compared to the Third Quarter of 2022
Strengthens Balance Sheet Through Inventory Reduction and $13.4 Million Debt Paydown
Princess Polly Store in Los Angeles Outperforming Expectations After Strong September Opening
a.k.a. Brands Holding Corp. (NYSE: AKA), a brand accelerator of next generation fashion brands, today announced financial results for the third quarter ended September 30, 2023.
Results for the Third Quarter
“I am pleased to report that the improvements we have made to our operating model enabled us to generate positive operating cash flow of $11 million and deliver net sales growth in the U.S. in the third quarter,” said Ciaran Long, Interim Chief Executive Officer and Chief Financial Officer. "We continue to strengthen our balance sheet by reducing debt by 26% year-to-date, coupled with a strategic reduction in our inventory position, which is down 21% year-to-date. I am also very pleased with the progress we are making in the U.S. where we registered third quarter net sales growth of 2%. Accounting for approximately 60% of total net sales, the U.S. region represents our greatest opportunity for growth and brand expansion. And lastly, we are very encouraged by the success of our omnichannel initiatives. The opening of our first Princess Polly store in Los Angeles has outperformed our expectations, fueling profitable in-store revenue generation, a halo effect in our e-commerce business and resulting in 30% of in-store customers new to the Princess Polly brand providing a significant runway for potential growth."
"Despite the growth in the U.S., we continue to face macroeconomic pressures in Australia, which led to lower-than-expected adjusted EBITDA. We are taking clear and decisive actions to improve our operations in the region, including rightsizing inventory to make way for product newness and rapidly transitioning Culture Kings to a data-driven, short lead time merchandising cycle. I’m confident that the actions we are taking will set our brands up for long-term success and that we will deliver both growth and profitability in 2024."
The company also today announced that Chief Executive Officer, Jill Ramsey, has made the personal decision to transition to a Strategic Advisory role effective immediately. Jill will remain an active board member on a.k.a. Brands’ Board of Directors. Ciaran Long, Interim Chief Executive Officer and Chief Financial Officer will remain Interim CEO while the Board of Directors conducts a search.
Recent Brand Highlights
Third Quarter Financial Details
Balance Sheet and Cash Flow
Outlook
For the full year of 2023, the Company now expects:
The above outlook is based on several assumptions, including but not limited to, foreign exchange rates remaining at the current levels 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 8, 2023, at 4:30 p.m. ET. Those who wish to participate in the call may do so by dialing (877) 858-5495 or (201) 689-8853 for international callers. 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 13741456. 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, Adjusted EBITDA margin, net income (loss), as adjusted, net income (loss) per share, as adjusted and pro forma net sales 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 brand accelerator of next generation fashion brands. 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 include statements related to our financial and operational results for the third quarter and long-term expectations, as well as our brands’ omnichannel expansion initiatives.
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 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 Ukraine and Israel 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, 2022, 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,
2023
2022
2023
2022
Net sales
$
140,833
$
155,822
$
397,346
$
462,612
Cost of sales
62,865
68,965
173,522
204,112
Gross profit
77,968
86,857
223,824
258,500
Operating expenses:
Selling
36,660
41,450
106,998
127,068
Marketing
18,511
16,532
51,642
51,301
General and administrative
24,622
26,133
74,681
76,614
Goodwill impairment
68,524
—
68,524
—
Total operating expenses
148,317
84,115
301,845
254,983
(Loss) income from operations
(70,349
)
2,742
(78,021
)
3,517
Other expense, net:
Interest expense
(2,798
)
(1,835
)
(8,490
)
(4,487
)
Other expense
(541
)
(923
)
(2,325
)
(2,035
)
Total other expense, net
(3,339
)
(2,758
)
(10,815
)
(6,522
)
Loss before income taxes
(73,688
)
(16
)
(88,836
)
(3,005
)
Benefit from (provision for) income tax
3,278
(98
)
3,833
204
Net loss
$
(70,410
)
$
(114
)
$
(85,003
)
$
(2,801
)
Net loss per share:
Basic and diluted*
$
(6.58
)
$
(0.01
)
$
(7.92
)
$
(0.26
)
Weighted average shares outstanding:
Basic and diluted*
10,695,621
10,723,859
10,736,628
10,721,995
* Adjusted for the one-for-12 reverse stock split, effective as of September 29, 2023.
a.k.a. BRANDS HOLDING CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
September 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
20,742
$
46,319
Restricted cash
1,862
2,054
Accounts receivable
3,312
3,231
Inventory, net
99,950
126,533
Prepaid income taxes
10,270
6,089
Prepaid expenses and other current assets
18,027
13,378
Total current assets
154,163
197,604
Property and equipment, net
27,680
28,958
Operating lease right-of-use assets
37,270
37,317
Intangible assets, net
66,345
76,105
Goodwill
91,281
167,731
Deferred tax assets
1,009
1,070
Other assets
657
853
Total assets
$
378,405
$
509,638
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
27,480
$
20,903
Accrued liabilities
27,502
39,806
Sales returns reserve
7,482
3,968
Deferred revenue
10,938
11,421
Operating lease liabilities, current
7,046
6,643
Current portion of long-term debt
7,700
5,600
Total current liabilities
88,148
88,341
Long-term debt
98,985
138,049
Operating lease liabilities
35,273
34,404
Other long-term liabilities
1,540
1,483
Deferred income taxes
241
284
Total liabilities
224,187
262,561
Stockholders’ equity:
Preferred stock
—
—
Common stock
128
129
Additional paid-in capital
465,212
460,660
Accumulated other comprehensive loss
(57,592
)
(45,185
)
Accumulated deficit
(253,530
)
(168,527
)
Total stockholders’ equity
154,218
247,077
Total liabilities and stockholders’ equity
$
378,405
$
509,638
a.k.a. BRANDS HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended September 30,
2023
2022
Cash flows from operating activities:
Net loss
$
(85,003
)
$
(2,801
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation expense
5,912
4,121
Amortization expense
8,782
11,252
Amortization of inventory fair value adjustment
—
707
Amortization of debt issuance costs
470
487
Lease incentives
1,499
1,384
Loss on disposal of businesses
1,533
—
Non-cash operating lease expense
5,786
7,211
Equity-based compensation
5,478
4,448
Deferred income taxes, net
3
(2,343
)
Goodwill impairment
68,524
—
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable
111
(1,339
)
Inventory
20,428
(31,067
)
Prepaid expenses and other current assets
(5,448
)
2,965
Accounts payable
7,495
9,430
Income taxes payable
(4,528
)
(6,987
)
Accrued liabilities
(10,912
)
641
Returns reserve
3,714
(415
)
Deferred revenue
(4
)
(3,294
)
Lease liabilities
(5,798
)
(5,817
)
Net cash provided by (used in) operating activities
18,042
(11,417
)
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired
—
(2,095
)
Purchase of intangible assets
(59
)
(164
)
Purchases of property and equipment
(5,462
)
(13,946
)
Net cash used in investing activities
(5,521
)
(16,205
)
Cash flows from financing activities:
Payments of costs related to initial public offering
—
(1,142
)
Proceeds from line of credit, net of issuance costs
—
25,000
Repayment of line of credit
(33,100
)
—
Proceeds from issuance of debt, net of issuance costs
—
(121
)
Repayment of debt
(4,200
)
(4,200
)
Taxes paid related to net share settlement of equity awards
(107
)
(84
)
Proceeds from issuances under equity-based compensation plans
90
—
Repurchase of shares
(910
)
—
Net cash (used in) provided by financing activities
(38,227
)
19,453
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(63
)
211
Net decrease in cash, cash equivalents and restricted cash
(25,769
)
(7,958
)
Cash, cash equivalents and restricted cash at beginning of period
48,373
41,018
Cash, cash equivalents and restricted cash at end of period
$
22,604
$
33,060
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents
$
20,742
$
31,114
Restricted cash
1,862
1,946
Total cash, cash equivalents and restricted cash
$
22,604
$
33,060
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)
2023
2022
2023
2022
Gross margin
55
%
56
%
56
%
56
%
Net loss
$
(70,410
)
$
(114
)
$
(85,003
)
$
(2,801
)
Net loss margin
(50
)%
—
%
(21
)%
(1
)%
Adjusted EBITDA2
$
4,697
$
9,236
$
12,451
$
25,779
Adjusted EBITDA margin2
3
%
6
%
3
%
6
%
Key Operational Metrics and Regional Sales
Three Months Ended September 30,
Nine Months Ended September 30,
(metrics in millions, except AOV; sales in thousands)
2023
2022
% Change
2023
2022
% Change
Key Operational Metrics
Active customers1
3.6
3.8
(5.3
)%
3.6
3.8
(5.3
)%
Average order value
$
81
$
85
(4.7
)%
$
81
$
84
(3.6
)%
Number of orders
1.7
1.8
(5.6
)%
4.9
5.5
(10.9
)%
Sales by Region
U.S.
$
83,846
$
82,172
2.0
%
$
236,439
$
242,117
(2.3
)%
Australia/New Zealand
50,022
67,038
(25.4
)%
139,505
196,638
(29.1
)%
Rest of world
6,965
6,612
5.3
%
21,402
23,857
(10.3
)%
Total
$
140,833
$
155,822
(9.6
)%
$
397,346
$
462,612
(14.1
)%
Year-over-year growth on a constant currency basis1
(7.7
)%
(11.5
)%
Sales by Region - Two-Year Stack
Three Months Ended September 30,
Nine Months Ended September 30,
2023
2021
% Change
2023
2021
% Change
U.S.
$
83,846
$
76,435
9.7
%
$
236,439
$
190,470
24.1
%
Australia/New Zealand
50,022
79,140
(36.8
)%
139,505
169,878
(17.9
)%
Rest of world
6,965
6,187
12.6
%
21,402
19,420
10.2
%
Total
$
140,833
$
161,762
(12.9
)%
$
397,346
$
379,768
4.6
%
Active Customers
We view the number of active customers as a key indicator of our growth, the 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 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, and 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 income (loss) for the three and nine months ended September 30, 2023 and 2022 is as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
(dollars in thousands)
2023
2022
2023
2022
Net loss
$
(70,410
)
$
(114
)
$
(85,003
)
$
(2,801
)
Add (deduct):
Total other expense, net
3,339
2,758
10,815
6,522
(Benefit from) provision for income tax
(3,278
)
98
(3,833
)
(204
)
Depreciation and amortization expense
4,533
4,566
14,694
15,373
Equity-based compensation expense
1,719
1,586
5,478
4,448
Inventory step-up amortization expense
—
—
—
707
Distribution center relocation costs
—
12
—
1,303
Transaction costs
—
39
—
140
Severance
211
291
894
291
Goodwill impairment
68,524
—
68,524
—
Sales tax penalties
55
—
586
—
Insured (gains) losses
4
—
296
—
Adjusted EBITDA
$
4,697
$
9,236
$
12,451
$
25,779
Net loss margin
(50
)%
—
%
(21
)%
(1
)%
Adjusted EBITDA margin
3
%
6
%
3
%
6
%
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. 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.
We have calculated net loss, as adjusted and net loss per share, as adjusted for the three and nine months ended September 30, 2023 by adjusting net loss and net loss per share for the following:
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 are as follows:
Three Months Ended September 30, 2023
Nine Months Ended September 30, 2023
Net loss
$
(70,410
)
$
(85,003
)
Adjustments:
Loss on disposal of the Rebdolls reporting unit
—
951
Goodwill impairment
68,524
68,524
Loss on extinguishment of debt
—
—
Tax effects of adjustments
—
—
Net loss, as adjusted
$
(1,886
)
$
(15,528
)
Net loss per share, as adjusted
$
(0.18
)
$
(1.45
)
Weighted-average shares, diluted
10,695,621
10,736,628
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 nine months ended September 30, 2022 are as follows:
Nine Months Ended September 30, 2022
Net loss
$
(2,801
)
Adjustments:
Inventory step-up amortization expense
707
Tax effects of adjustments
(212
)
Net loss, as adjusted
$
(2,306
)
Net loss per share, as adjusted
$
(0.22
)
Weighted-average shares, diluted*
10,721,995
* Adjusted for the one-for-12 reverse stock split, effective as of September 29, 2023.
Pro Forma Net Sales
Pro forma net sales is considered a non-GAAP financial measure under the SEC’s rules calculated in accordance with Article 11 of Regulation S-X. We believe that pro forma net sales is useful information for investors as it provides a better understanding of sales performance, and relative changes therein, on a comparable basis. We calculate pro forma net sales as net sales including the historical net sales relating to the pre-acquisition periods of Culture Kings, assuming that the Company acquired Culture Kings at the beginning of the period presented. Pro forma net sales is not necessarily indicative of what the actual results would have been if the acquisition had in fact occurred on the date or for the periods indicated nor does it purport to project net sales for any future periods or as of any date. A reconciliation of non-GAAP pro forma net sales to net sales, disaggregated by geography, which is the most directly comparable financial measure calculated in accordance with GAAP, for the nine months ended September 30, 2023 and 2021, is as follows:
Nine Months Ended
September 30, 2023
Nine Months Ended September 30, 2021
Two-year Growth Rate
Actual
Actual
Culture Kings
Pro Forma
Actual
Pro Forma
U.S.
$
236,439
$
190,470
$
7,669
$
198,139
24.1
%
19.3
%
Australia/New Zealand
139,505
169,878
43,314
213,192
(17.9
)%
(34.6
)%
Rest of world
21,402
19,420
280
19,700
10.2
%
8.6
%
Total
$
397,346
$
379,768
$
51,263
$
431,031
4.6
%
(7.8
)%
______________________
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, 2022, 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20231108217365/en/
Investor Contact investors@aka-brands.com
Media Contact media@aka-brands.com
1 Year aka Brands Chart |
1 Month aka Brands Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions