Cost Reductions Resulted in 175bp Reduction of Total Expenses as a Percent of Net Revenue in 4Q'24
Outlook for Fiscal Year 2025 Emphasizes Growth in Operating Cash Flow
CHICO, Calif., March 27, 2025 (GLOBE NEWSWIRE) -- Lulu's Fashion Lounge Holdings, Inc. ("Lulus” or the "Company”) (Nasdaq: LVLU) today reported financial results for the fourth quarter and fiscal year ended December 29, 2024 and issued its financial outlook for the fiscal year ending December 28, 2025.
Crystal Landsem, CEO of Lulus, said:
"In the fourth quarter, we delivered positive sales growth in our special occasion, bridesmaid, and bridal categories, reinforcing our strength in event dressing despite the seasonally slower sales period. These gains in our occasion dress categories were offset by continued softness in casual wear, which we are actively repositioning to better align with our core focus on event attire. Building on our cost reduction efforts, we successfully completed the consolidation of our West Coast distribution facilities in late February 2025.
We have also expanded our strategic wholesale partnerships to support our focus on meeting customers across diverse shopping channels, while maintaining an efficient, scalable growth model. With continued investment in our brand and diversification of our supply chain and selling channels, optimization of product margin, and a more streamlined cost structure, we believe we can drive a pronounced growth in operating cash flow in 2025.”
Fiscal Year 2024 Highlights:
- Net revenue of $315.9 million, an 11% decrease compared to 2023, driven by a 12% decrease in Total Orders Placed and higher return rates offset by a 3% increase in Average Order Value ("AOV”) from $133 to $137, compared to 2023.
- Active Customers of 2.6 million, a 7% decrease compared to 2.8 million in 2023.
- Gross profit decreased 12% to $130.2 million and Gross Margin decreased 50 basis points to 41.2%, in each case compared to 2023.
- Net loss of $55.3 million, compared to net loss of $19.3 million in 2023. Included in this net loss was a non-cash goodwill impairment charge of $28.4 million. Excluding the non-cash goodwill impairment charge, our net loss was $26.9 million.
- Adjusted EBITDA* of ($9.7) million, compared to $3.2 million in 2023.
- Net cash provided by operating activities of $2.6 million, compared to $15.4 million in 2023.
- Free Cash Flow* of ($0.3) million, compared to $11.5 million in 2023.
- Total debt and Net Debt* increased by $5.1 million and $3.1 million, respectively, during the fifty-two weeks ended December 29, 2024.
Tiffany Smith, CFO of Lulus, said:
"The implementation of our cost reduction plans allowed us to deliver the narrowest quarterly net loss, excluding goodwill impairment, of the past six quarters. Selling, marketing, and general and administrative expenses in Q4 were $5.5 million lower year-over-year, a 15% decline that outpaced our 12% decline in net revenue. To further optimize costs, we consolidated our West Coast distribution facilities, a process which began in late Q4 2024 and was completed in Q1 2025. With major cost reduction initiatives in place, we remain committed to ongoing and disciplined cost management.
Looking ahead, in 2025, we remain focused on strengthening our cash position, returning to profitability, and maintaining healthy inventory turns. Our 2025 net revenue outlook reflects our expectation of continued momentum in special occasion and event wear, tempered by the ongoing repositioning of our casual categories. With a healthy inventory position, we anticipate reduced markdowns and margin expansion. Direct-to-factory initiatives can further bolster our margins in the latter part of 2025, and more significantly in 2026, giving us confidence in our long-term sales and profitability targets.”
Fourth Quarter 2024 Highlights:
- Net revenue of $66.1 million, a decrease of 12% compared to $75.0 million in the same period last year, driven by a 12% decrease in Total Orders Placed and a 5% decrease in AOV from $136 to $129, which was offset by improved return rates.
- Gross profit decreased 15% to $25.1 million and Gross Margin decreased 120 basis points to 37.9%, in each case compared to the same period last year.
- Net loss of $31.9 million, compared to net loss of $7.2 million in the same period last year. Included in this net loss was a non-cash goodwill impairment charge of $28.4 million. Excluding the non-cash goodwill impairment charge, our net loss was $3.5 million.
- Adjusted EBITDA* of ($3.3) million, compared to ($2.0) million in the same period last year.
- Net cash used in operating activities of $2.5 million, improved from $5.7 million in the same period last year.
- Free Cash Flow* of ($3.0) million, improved from ($6.7) million in the same period last year.
Financial Outlook for Fiscal Year 2025:
- We expect net revenue to be between $280 million and $310 million, which represents a decrease of between 11% and 2% compared to 2024.
- We expect Adjusted EBITDA to be between $0 and $6 million, which represents an increase of between $9.7 million and $15.7 million compared to 2024.
- We expect capital expenditures to be between $2.5 million and $3.0 million, which represents a decrease of 13% or approximately flat compared to 2024.
- We expect our Net Debt position for the first quarter of 2025 to be between $3 million and $4 million, and we expect to be operating cash flow positive in 2025, including in the first quarter of 2025.
| LULU'S FASHION LOUNGE HOLDINGS, INC. | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (In thousands, except share and per share data) | ||||||||||||||||
| Fiscal Quarters Ended | Fiscal Years Ended | |||||||||||||||
| December 29, | December 31, | December 29, | December 31, | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (13 weeks) | (13 weeks) | (52 weeks) | (52 weeks) | |||||||||||||
| Net revenue | $ | 66,147 | $ | 74,959 | $ | 315,887 | $ | 355,175 | ||||||||
| Cost of revenue | 41,077 | 45,615 | 185,639 | 206,949 | ||||||||||||
| Gross profit | 25,070 | 29,344 | 130,248 | 148,226 | ||||||||||||
| Selling and marketing expenses | 12,696 | 15,328 | 72,927 | 76,312 | ||||||||||||
| General and administrative expenses | 18,918 | 21,810 | 81,334 | 92,129 | ||||||||||||
| Goodwill impairment | 28,374 | - | 28,374 | - | ||||||||||||
| Loss from operations | (34,918 | ) | (7,794 | ) | (52,387 | ) | (20,215 | ) | ||||||||
| Interest expense | (313 | ) | (337 | ) | (1,271 | ) | (1,728 | ) | ||||||||
| Other income, net | (74 | ) | 217 | 705 | 933 | |||||||||||
| Loss before benefit (provision) for income taxes | (35,305 | ) | (7,914 | ) | (52,953 | ) | (21,010 | ) | ||||||||
| Income tax benefit (provision) | 3,430 | 684 | (2,333 | ) | 1,676 | |||||||||||
| Net loss and comprehensive loss | (31,875 | ) | (7,230 | ) | (55,286 | ) | (19,334 | ) | ||||||||
| Basic loss per share | $ | (0.76 | ) | $ | (0.18 | ) | $ | (1.33 | ) | $ | (0.48 | ) | ||||
| Diluted loss per share | $ | (0.76 | ) | $ | (0.18 | ) | $ | (1.33 | ) | $ | (0.48 | ) | ||||
| Basic weighted-average shares outstanding | 41,799,301 | 40,451,597 | 41,468,903 | 39,879,121 | ||||||||||||
| Diluted weighted-average shares outstanding | 41,799,301 | 40,451,597 | 41,468,903 | $ | 39,879,121 | |||||||||||
| LULU'S FASHION LOUNGE HOLDINGS, INC. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (Unaudited) | ||||||||
| (In thousands, except share and per share data) | ||||||||
| December 29, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 4,460 | $ | 2,506 | ||||
| Accounts receivable | 2,158 | 3,542 | ||||||
| Inventory, net | 34,036 | 35,472 | ||||||
| Assets for recovery | 2,383 | 3,111 | ||||||
| Income tax refund receivable, net | 4,177 | 2,510 | ||||||
| Prepaids and other current assets | 4,287 | 5,379 | ||||||
| Total current assets | 51,501 | 52,520 | ||||||
| Property and equipment, net | 3,642 | 4,712 | ||||||
| Goodwill | 7,056 | 35,430 | ||||||
| Tradename | 18,509 | 18,509 | ||||||
| Intangible assets, net | 2,762 | 3,263 | ||||||
| Lease right-of-use assets | 24,030 | 29,516 | ||||||
| Other noncurrent assets | 698 | 5,495 | ||||||
| Total assets | $ | 108,198 | $ | 149,445 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 10,991 | $ | 8,900 | ||||
| Accrued expenses and other current liabilities | 15,985 | 18,343 | ||||||
| Returns reserve | 9,765 | 7,854 | ||||||
| Stored-value card liability | 17,883 | 13,142 | ||||||
| Revolving line of credit | 13,090 | 8,000 | ||||||
| Lease liabilities, current | 6,611 | 5,648 | ||||||
| Total current liabilities | 74,325 | 61,887 | ||||||
| Lease liabilities, noncurrent | 19,653 | 25,427 | ||||||
| Other noncurrent liabilities | 852 | 1,179 | ||||||
| Total liabilities | 94,830 | 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 42,068,124 and 40,618,206 shares issued and outstanding as of December 29, 2024 and December 31, 2023, respectively | 42 |
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