Lulu’s Fashion Lounge Holdings, Inc. (“Lulus” or the
“Company”) (Nasdaq: LVLU) today announced preliminary unaudited
financial results for the second quarter ended July 2, 2023. The
Company also announced that it plans to release its second quarter
results after the market close on Tuesday, August 8, 2023, at 5:00
p.m. Eastern Time.
Preliminary Second Quarter 2023 Highlights:
- We expect net revenue of approximately $104.5 million to $106.0
million, which would represent a decline of approximately 20.5% to
19.4% compared to the same period last year.
- We expect Adjusted EBITDA of approximately $3.4 million to $4.2
million, compared to $14.8 million during the same period last
year.
- We expect a loss before income taxes of approximately $2.6
million to $1.8 million, compared to income before income taxes of
$10.8 million during the same period last year. We are providing
pre-tax income estimates as we have not completed our standard
review of our quarterly income tax provision.
Crystal Landsem, CEO of Lulus, said:
“We started seeing signs of stabilizing consumer
trends early in the second quarter and observed sequential monthly
improvement in our year-over-year net revenue comparisons as the
quarter progressed. However, topline demand fell short of our
expectations and return rates increased more than anticipated as
the quarter progressed, which drove a year-over-year net revenue
decline in the second quarter in line with what we observed in the
first quarter. Adjusted EBITDA also declined more than our
expectations primarily due to lower topline demand and higher
returns. On a positive note, we expect to realize sequential and
year-over-year improvement in our per order shipping costs driven
by actions taken to optimize our shipping network. We expect the
shipping cost improvements along with higher anticipated
merchandise margins, to drive meaningful sequential Gross Margin
rate improvement from the first quarter to the second quarter and a
Gross Margin rate consistent with pre-pandemic levels.
As we expect continued choppiness in consumer
demand, macroeconomic uncertainties and elevated return rates, we
are withdrawing our full year 2023 guidance. We will provide an
update on our revised fiscal 2023 outlook on our upcoming earnings
call to allow additional time to observe business trends through
early August.
Lastly, while we are disappointed with our
second quarter results, we remain focused on adapting to changing
customer behaviors, closely managing inventory and discretionary
expenses, and continuing to drive brand awareness. Our balance
sheet remains strong, reflected by continued sequential reduction
in Net Debt and an increase in net cash generated by operating
activities from the first quarter 2023 to the second quarter 2023.
We have also made some exciting progress on our distribution
channel expansion and look forward to updating everyone on our
upcoming earnings call.”
Webcast & Conference Call
Information
The Company will host a conference call and live
webcast with the investment community at 5:00 p.m. Eastern Time on
Tuesday, August 8, 2023, to discuss its second quarter 2023
results. The live webcast will be accessible through the Investor
Relations section of the Company’s website at
https://investors.lulus.com/. To access the call through a
conference line, dial 1-877-407-0792 (in the U.S.) or
1-201-689-8263 (international callers). A replay of the conference
call will be posted shortly after the call and will be available
for seven days following the call. To access the replay, dial
1-844-512-2921 (in the U.S.) or 1-412-317-6671 (international
callers). The access code for the replay is 13739396.
Financial Disclosure
Advisory
The preliminary unaudited financial results
included in this press release are based on information available
as of July 25, 2023 and management’s initial review of operations
and financial results for the second quarter 2023. They remain
subject to change based on the completion of the Company’s
customary quarterly financial closing and review procedures and are
forward-looking statements. The Company assumes no obligation to
update these statements, except as may be required by law. The
actual results may be materially different and are affected by the
risk factors and uncertainties identified in this press release and
in the Company's annual and quarterly filings with the Securities
and Exchange Commission. Further, the Company’s independent auditor
has not reviewed or performed any procedures on the preliminary
unaudited financial results.
About Lulus
Lulus is a customer driven, digitally native
fashion brand for women. Based in California and serving millions
of customers worldwide, Lulus develops styles with the customer in
mind, using direct consumer feedback and insights to refine its
products. With fresh inventory hitting the site almost daily, Lulus
features on-trend, high-quality, must-have pieces, at affordable
prices. As a brand built on customer feedback, Lulus puts an
extreme focus on providing exceptional customer service and a
personalized shopping experience. The brand’s world class personal
stylists, bridal concierge, and customer care team take pride in
offering a personalized shopping experience to every customer.
Lulus was founded in 1996. Lulus is a registered trademark of
Lulu’s Fashion Lounge, LLC. All rights reserved.
Forward-Looking Statements
This press release contains “forward-looking
statements” within the Private Securities Litigation Reform Act of
1995. All statements other than statements of historical or current
fact included in this press release are forward-looking statements,
including but not limited to statements regarding our expectation
of continued choppiness in consumer demand, macroeconomic
uncertainties and elevated return rates, and our preliminary
financial results for the thirteen weeks ended July 2, 2023. These
statements are neither promises nor guarantees, but involve known
and unknown risks, uncertainties and other important factors that
may cause Lulus’ actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements, including but not limited to the following: risks
related to our operations and financial results; our ability to
successfully maintain our desired merchandise assortment or manage
our inventory effectively; demand for our products, including our
ability to anticipate, identify, measure, and respond quickly to
fashion trends, customer preferences and demands; our ability to
anticipate, measure and establish appropriate policies for customer
merchandise returns; general economic conditions, including
inflation; our fluctuating operating results; seasonality in our
business; our ability to acquire products on reasonable terms; our
e-commerce business model; our ability to attract and retain
customers in a cost effective manner; the strength of our brand;
competition; fraud; system interruptions; system security risks
including security breaches; our ability to fulfill orders; and the
continued impact of the COVID-19 pandemic on our business. These
and other important factors discussed under the caption “Risk
Factors” in Lulus’ Annual Report on Form 10-K for the fiscal year
ended January 1, 2023, and its other filings with the Securities
and Exchange Commission could cause actual results to differ
materially from those indicated by the forward-looking statements
made in this press release. Any such forward-looking statements
represent management’s estimates as of the date of this press
release. While Lulus may elect to update such forward-looking
statements at some point in the future, it disclaims any obligation
to do so, except as required by law, even if subsequent events
cause its views to change.
Use of Non-GAAP Financial Measures and Other Operating
Metrics
To supplement our condensed consolidated
financial statements, which are prepared and presented in
accordance with accounting principles generally accepted in the
United States of America (“GAAP”), we reference in this press
release the following non-GAAP financial measures: Adjusted EBITDA
and Adjusted EBITDA Margin. The presentation of this non-GAAP
financial information is not intended to be considered in isolation
or as a substitute for, or superior to, the financial information
prepared and presented in accordance with GAAP, and our non-GAAP
measures may be different from non-GAAP measures used by other
companies. We use these non-GAAP financial measures to evaluate our
operating performance, generate future operating plans and make
strategic decisions regarding the allocation of capital. Our
management believes that these non-GAAP financial measures provide
meaningful supplemental information regarding our performance and
liquidity by excluding certain expenses that may not be indicative
of our ongoing core operating performance. We believe that both
management and investors benefit from referring to these non-GAAP
financial measures in assessing our performance and when analyzing
historical performance and liquidity and when planning,
forecasting, and analyzing future periods. Definitions of our
non-GAAP financial measures and other operating metrics are
presented below.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure
that we calculate as (loss) income before income taxes,
depreciation and amortization, and interest expense, adjusted to
exclude the effects of equity-based compensation expense. Adjusted
EBITDA is a key measure used by management to evaluate our
operating performance, generate future operating plans and make
strategic decisions regarding the allocation of capital. In
particular, the exclusion of certain expenses in calculating
Adjusted EBITDA facilitates operating performance comparisons on a
period-to-period basis and, in the case of exclusion of the impact
of equity-based compensation, excludes an item that we do not
consider to be indicative of our core operating performance.
Adjusted EBITDA Margin
Adjusted EBITDA Margin is
a non-GAAP financial measure that we calculate as
Adjusted EBITDA (as defined above) as a percentage of our net
revenue.
Gross Margin
We define Gross Margin as gross profit as
a percentage of our net revenue. Gross profit is equal to our
net revenue less cost of revenue. Certain of our competitors and
other retailers report cost of revenue differently than we do. As a
result, the reporting of our gross profit and Gross Margin may not
be comparable to other companies.
A reconciliation to non-GAAP Adjusted EBITDA
from (loss) income before income taxes for the thirteen weeks ended
July 2, 2023 and July 3, 2022 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
|
|
|
July 2, 2023 |
|
|
July 3, 2022 |
|
|
|
|
(in thousands, except percentages) |
|
|
|
|
Low |
|
|
High |
|
|
|
|
(Loss) income before income taxes |
|
$ |
(2,600 |
) |
|
$ |
(1,800 |
) |
|
$ |
10,794 |
|
Excluding: |
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
1,200 |
|
|
|
1,200 |
|
|
|
1,009 |
|
Interest expense |
|
|
400 |
|
|
|
400 |
|
|
|
157 |
|
Equity-based compensation
expense (1) |
|
|
4,400 |
|
|
|
4,400 |
|
|
|
2,833 |
|
Adjusted EBITDA |
|
$ |
3,400 |
|
|
$ |
4,200 |
|
|
$ |
14,793 |
|
Net revenue |
|
$ |
104,500 |
|
|
$ |
106,000 |
|
|
$ |
131,512 |
|
Adjusted EBITDA Margin |
|
|
3.3 |
|
% |
|
4.0 |
|
% |
|
11.2 |
% |
|
(1) The ranges provided for the thirteen weeks ended July 2, 2023
include equity-based compensation expense for restricted stock unit
awards granted during the thirteen-week period, as well as
performance stock units, restricted stock and stock options granted
in prior periods. The thirteen weeks ended July 3, 2022 include
equity-based compensation expense for restricted stock unit awards
granted during the thirteen-week period, as well as restricted
stock, stock options and special compensation awards granted in
prior periods. |
|
Contact
Tiffany SmithChief Financial Officerinvestors@lulus.com
Lulus Fashion Lounge (NASDAQ:LVLU)
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