Significant Sequential Quarterly Net Revenue Comp Improvement with Q3 Reaching Negative Low Single Digits
Updated Outlook for Q4 and Fiscal Year 2024
CHICO, Calif., Nov. 13, 2024 (GLOBE NEWSWIRE) -- Lulu's Fashion Lounge Holdings, Inc. ("Lulus” or the "Company”) (Nasdaq: LVLU) today reported financial results for the third quarter ended September 29, 2024.
Crystal Landsem, CEO of Lulus, said:
"Third quarter net revenue came in ahead of our outlook, driven by record growth in special occasion and bridesmaid dress categories, boosting overall dress sales and reinforcing our strength in event apparel. This gain was offset by continued softness in our casual wear business, which we are strategically reevaluating to better align with our core focus on event attire. As a result, we took a proactive approach to inventory management, leveraging markdowns and promotions to end the quarter with a 7% decline in inventory, outpacing our 3% decline in net revenue. While these actions weighed on gross margins, they support our efforts to sustain demand and drive top line growth.
To that end, our ongoing strategic initiatives and cost reduction efforts are firmly in place and we are working towards securing more flexible, longer term options in place of our existing revolving credit facility to support the near term financial flexibility and long-term growth of Lulus. We remain confident in our brand, the opportunities ahead, and the value we deliver to our customers, and are committed to building a strong foundation for sustainable growth.”
Third Quarter 2024 Highlights:
- Net revenue of $80.5 million, a decrease of 3% compared to $83.1 million in the same period last year, driven by a 3% decrease in Total Orders Placed and a 2% decrease in Average Order Value ("AOV”) from $133 to $131, offset by reduced return rates.
- Active Customers of 2.7 million, a decrease of 10% compared to 3.0 million in the same period last year and flat compared to the second quarter of 2024.
- Gross profit decreased 9% to $30.6 million and Gross Margin decreased 220 basis points to 38.1%, in each case compared to the same period last year.
- Net loss of $6.9 million, compared to $3.9 million in the same period last year.
- Adjusted EBITDA* of ($3.6) million, compared to $1.0 million in the same period last year.
- Net cash used in operating activities of $5.5 million, compared to net cash provided by operating activities of $12.7 million in the same period last year.
- Free Cash Flow* of ($6.3) million, compared to $11.6 million in the same period last year.
- Total debt increased by $11.5 million and $3.5 million during the thirteen and thirty-nine weeks ended September 29, 2024, respectively.
- Net Debt* increased by $7.0 million and decreased by $0.3 million during the thirteen and thirty-nine weeks ended September 29, 2024, respectively.
"Our focus through Q4 is on generating additional liquidity, maintaining healthy inventory turns, and accelerating a reset of our shoes and separates assortments. Amid ongoing macro uncertainties and consumer pressures, we are taking a disciplined approach to cost management to ensure we maintain a healthy financial position. Our fourth quarter and full-year net revenue outlook contemplates continued momentum in our special occasion and event wear categories, balanced by a targeted product assortment reset in underperforming casual categories, the latter of which tempers our Q4 sales expectations. Continued macroeconomic pressures and our product assortment reset introduce some uncertainty in Q4 margin and profitability expectations; therefore, we are not issuing a fourth quarter Adjusted EBITDA outlook at this time. Our confidence remains high in achieving our long-term sales and profitability targets.”
Updated Financial Outlook:
- Fourth quarter 2024 net revenue is expected to be between approximately $67.5 million and $70.0 million, compared to $75 million in the same period last year. Full year 2024 net revenue is expected to be between approximately $317.5 million and $320 million, compared to $355.2 million in fiscal year 2023.
- The full-year 2024 capital expenditure plan has been reduced to approximately $3.2 million, a reduction of $0.3 million relative to our previous estimate.
| LULU'S FASHION LOUNGE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (In thousands, except share and per share data) | |||||||||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | ||||||||||||||
| September 29, | October 1, | September 29, | October 1, | ||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Net revenue | $ | 80,515 | $ | 83,118 | $ | 249,740 | $ | 280,216 | |||||||
| Cost of revenue | 49,866 | 49,593 | 144,562 | 161,334 | |||||||||||
| Gross profit | 30,649 | 33,525 | 105,178 | 118,882 | |||||||||||
| Selling and marketing expenses | 17,624 | 16,825 | 60,231 | 60,984 | |||||||||||
| General and administrative expenses | 19,869 | 21,575 | 62,416 | 70,319 | |||||||||||
| Loss from operations | (6,844 | ) | (4,875 | ) | (17,469 | ) | (12,421 | ) | |||||||
| Interest expense | (305 | ) | (442 | ) | (958 | ) | (1,391 | ) | |||||||
| Other income, net | 281 | 270 | 779 | 716 | |||||||||||
| Loss before benefit (provision) for income taxes | (6,868 | ) | (5,047 | ) | (17,648 | ) | (13,096 | ) | |||||||
| Income tax benefit (provision) | (11 | ) | 1,158 | (5,763 | ) | 992 | |||||||||
| Net loss and comprehensive loss | $ | (6,879 | ) | $ | (3,889 | ) | $ | (23,411 | ) | $ | (12,104 | ) | |||
| Basic loss per share | $ | (0.16 | ) | $ | (0.10 | ) | $ | (0.57 | ) | $ | (0.31 | ) | |||
| Diluted loss per share | $ | (0.16 | ) | $ | (0.10 | ) | $ | (0.57 | ) | $ | (0.31 | ) | |||
| Basic weighted-average shares outstanding | 41,702,122 | 40,103,152 | 41,358,919 | 39,672,938 | |||||||||||
| Diluted weighted-average shares outstanding | 41,702,122 | 40,103,152 | 41,358,919 | 39,672,938 | |||||||||||
| LULU'S FASHION LOUNGE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share and per share data) | |||||||
| September 29, | December 31, | ||||||
| 2024 | 2023 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 6,308 | $ | 2,506 | |||
| Accounts receivable | 4,467 | 3,542 | |||||
| Inventory, net | 38,477 | 35,472 | |||||
| Assets for recovery | 4,852 | 3,111 | |||||
| Income tax refund receivable | 2,562 | 2,510 | |||||
| Prepaids and other current assets | 8,655 | 5,379 | |||||
| Total current assets | 65,321 | 52,520 | |||||
| Property and equipment, net | 4,376 | 4,712 | |||||
| Goodwill | 35,430 | 35,430 | |||||
| Tradename | 18,509 | 18,509 | |||||
| Intangible assets, net | 2,850 | 3,263 | |||||
| Lease right-of-use assets | 25,508 | 29,516 | |||||
| Other noncurrent assets | 1,539 | 5,495 | |||||
| Total assets | $ | 153,533 | $ | 149,445 | |||
| Liabilities and Stockholders' Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 11,371 | $ | 8,900 | |||
| Accrued expenses and other current liabilities | 26,621 | 18,343 | |||||
| Returns reserve | 15,308 | 7,854 | |||||
| Stored-value card liability | 16,042 | 13,142 | |||||
| Revolving line of credit | 11,500 | 8,000 | |||||
| Lease liabilities, current | 5,793 | 5,648 | |||||
| Total current liabilities | 86,635 | 61,887 | |||||
| Lease liabilities, noncurrent | 21,020 | 25,427 | |||||
| Other noncurrent liabilities | 2,109 | 1,179 | |||||
| Total liabilities | 109,764 | 88,493 | |||||
| Stockholders' equity: | |||||||
| Preferred stock: $0.001 par value, 10,000,000 shares authorized, and no shares issued or outstanding | - | - | |||||
| Common stock: $0.001 par value, 250,000,000 shares authorized; and 41,912,709 and 40,618,206 shares issued and outstanding as of September 29, 2024 and December 31, 2023, respectively | 42 | 41 | |||||
| Additional paid-in capital | 260,619 | 254,116 | |||||
| Accumulated deficit | (216,616 | ) | (193,205 | ) | |||
| Treasury stock, at cost, 178,143 shares and zero shares as of September 29, 2024 and December 31, 2023, respectively | (276 |
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