0001865107FALSE00018651072024-05-082024-05-08

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
  
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 8, 2024
 
a.k.a. Brands Holding Corp.
(Exact name of Registrant as Specified in Its Charter)
  
Delaware001-4082887-0970919
(State or Other Jurisdiction
of Incorporation)		(Commission File Number)(IRS Employer
Identification No.)
100 Montgomery Street, Suite 2270
San Francisco, California 94104
(Address of Principal Executive Offices, including Zip Code)
415-295-6085
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class: Trading Symbol(s): Name of each exchange on which registered:
Common Stock, par value $0.001 per share AKA New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒


Item 2.02    Results of Operations and Financial Condition.
On May 8, 2024, a.k.a. Brands Holding Corp. (the "Company") issued a press release announcing its financial results for its first quarter ended March 31, 2024. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
In accordance with General Instructions B.2 and B.6 of Form 8-K, the information included in Items 2.02 and 7.01 of this Current Report on Form 8-K and Exhibit 99.1 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 7.01    Regulation FD Disclosure.
The disclosure contained in Item 2.02 is incorporated herein by reference.
Item 9.01    Financial Statements and Exhibits.
(d)    Exhibits.
The following exhibits are filed as part of this report:
Exhibit No.Description
99.1
104Cover page interactive data file (embedded within the inline XBRL document)

1

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 a.k.a. Brands Holding Corp.
   
Date: May 8, 2024
By:/s/ Ciaran Long
 Name:Ciaran Long
 Title:Interim Chief Executive Officer and Chief Financial Officer
2

Exhibit 99.1
a.k.a. Brands Holding Corp. Reports First Quarter 2024 Financial Results
U.S. Net Sales Grew 6% Compared to the First Quarter of 2023
Active Customer Growth of 5.5% on a Trailing Twelve-Month Basis Compared to the First Quarter of 2023
Strengthened Balance Sheet Year-over-Year Through Inventory Reduction of 19% and Debt Reduction of 22%
On Track to Open Three Princess Polly Stores in 2024

SAN FRANCISCO – May 8, 2024 – a.k.a. Brands Holding Corp. (NYSE: AKA), a brand accelerator of next generation fashion brands, today announced financial results for the first quarter ended March 31, 2024.
Results for the First Quarter
•Net sales decreased 3.0% to $116.8 million, compared to $120.5 million in the first quarter of 2023; down 1% on a constant currency basis1.
•In the U.S., net sales increased 6.2% compared to the first quarter of 2023.
•Net loss was $(8.9) million, or $(0.85) per share in the first quarter of 2024, compared to net loss of $(9.6) million, or $(0.89) per share in the first quarter of 2023.
•Adjusted EBITDA2 was $0.9 million in the first quarter of 2024, compared to $2.2 million in the first quarter of 2023.
“2024 is off to a great start, and I’m pleased that we delivered a solid first quarter that exceeded the high end of our net sales and adjusted EBITDA outlook. We continue to deliver growth in the U.S. with net sales growth of 6.2% in the first quarter. Importantly, we also continue to attract and retain customers, and I’m proud that we grew our active customer base by 5.5% year over year. Our strong performance is a direct result of our teams’ steadfast execution of our strategic priorities, and I am grateful for their unwavering dedication and commitment to building next-generation brands for next generation consumers,” said Ciaran Long, Interim Chief Executive Officer and Chief Financial Officer.
“Our brands continued to deliver innovative retail strategies in the first quarter, including Princess Polly’s well-received introduction of an activewear collection, a strong launch of Petal & Pup on Nordstrom’s website, further expanding our omni-channel marketplace presence, and another quarter of strong double-digit net sales growth in our Culture Kings U.S. business.
“Our operating framework for 2024 is anchored on three key strategic priorities, retaining existing, and attracting new customers, remaining committed to showing up for our customers wherever they choose to shop with us, and continuing to streamline our operations to deliver financial benefits across the company. I am extremely confident in the many profitable future growth opportunities we see for a.k.a. Brands, particularly the tremendous whitespace we see in the U.S. to expand our brand portfolio reach and total addressable market,” concluded Long.
Brand Highlights
•Princess Polly is on track to open a store in the Scottsdale Fashion Square, a store on Newbury Street in Boston and another in the Fashion Valley Mall in San Diego, all in the third quarter.
•Following successful launches on both Macy's and Target sites, Petal & Pup expanded its distribution on Nordstrom's website, exceeding initial expectations.
•Culture Kings U.S. registered another quarter of strong double-digit net sales growth and its owned first party brands including Loiter, American Thrift and mnml, accounted for more than 50% of total Culture Kings U.S. sales in the first quarter.
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, 2023, 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.


•mnml launched its spring collection with a first-ever campaign featuring dynamic NBA star Tre Mann, driving strong customer reception and engagement.
First Quarter Financial Details
•Net sales decreased 3.0% to $116.8 million, compared to $120.5 million in the first quarter of 2023. The decrease was driven by a decline in the average order value during the quarter, primarily driven by adverse macroeconomic conditions in Australia and New Zealand. On a constant currency basis1, net sales decreased 1%.
•Gross margin was 56.2%, compared to 56.9% in the first quarter of 2023. The decline was primarily driven by targeted inventory actions in Culture Kings Australia and the impact of growing wholesale and marketplace initiatives.
•Selling expenses were $34.2 million, compared to $34.4 million in the first quarter of 2023. Selling expenses were 29.3% of net sales compared to 28.6% of net sales in the first quarter of 2023.
•Marketing expenses were $14.9 million, compared to $14.8 million in the first quarter of 2023. Marketing expenses were 12.7% of net sales compared to 12.3% of net sales in the first quarter of 2023.
•General and administrative (“G&A”) expenses were $22.7 million, compared to $25.9 million in the first quarter of 2023. G&A expenses were 19.4% of net sales compared to 21.5% of net sales in the first quarter of 2023. The decrease in G&A expenses, as well as G&A expenses as a percent of net sales, during the quarter were primarily driven by decreases in sales tax penalties and interest, professional fees, intangible amortization and insurance costs.
•Adjusted EBITDA2 was $0.9 million, or 0.7% of net sales, compared to $2.2 million, or 1.8% of net sales in the first quarter of 2023. 
Balance Sheet and Cash Flow
•Cash and cash equivalents at the end of the first quarter totaled $21.9 million, which was consistent with cash and cash equivalents at the end of fiscal year 2023.
•Inventory at the end of the first quarter totaled $91.5 million, compared to $91.0 million at the end of fiscal year 2023, or compared to $112.5 million at the end of the first quarter of 2023.
•Debt at the end of the first quarter totaled $103.6 million, compared to $93.4 million at the end of fiscal year 2023, or compared to $132.4 million at the end of the first quarter of 2023
•Cash flow used in operations for the three months ended March 31, 2024 was $7.7 million, compared to cash flow used in operations of $3.0 million for the three months ended March 31, 2023.
Outlook
For the second quarter year of 2024, the Company expects:
•Net sales between $133 million and $138 million
•Adjusted EBITDA3 between $4.5 million and $5.5 million
•Weighted average diluted share count of 10.5 million
For the full year fiscal 2024, the Company now expects:
•Net sales between $545 million and $555 million
•Adjusted EBITDA3 between $17 million and $19 million
•Weighted average diluted share count of 10.6 million
The above outlook is based on several assumptions, including but not limited to, foreign exchange rates remaining at the current levels, the opening of three to four Princess Polly stores and continued macroeconomic pressures, specifically in Australia and New Zealand. See “Forward-Looking Statements” for additional information.
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.


Conference Call
A conference call to discuss the Company’s first quarter results is scheduled for May 8, 2024, 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 13745390. 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 and Adjusted EBITDA margin 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 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 New York Stock Exchange’s (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 Russia-Ukraine and Israel-Palestine 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, 2023, 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.
Investor Contact
investors@aka-brands.com
Media Contact
media@aka-brands.com


a.k.a. BRANDS HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share data)
(unaudited)
 Three Months Ended March 31,
 20242023
Net sales$116,840 $120,485 
Cost of sales51,166 51,985 
Gross profit65,674 68,500 
Operating expenses:
Selling34,215 34,406 
Marketing14,879 14,777 
General and administrative22,673 25,868 
Total operating expenses71,767 75,051 
Loss from operations(6,093)(6,551)
Other expense, net:
Interest expense(2,278)(2,851)
Other expense
(543)(1,034)
Total other expense, net(2,821)(3,885)
Loss before income taxes(8,914)(10,436)
(Provision for) benefit from income tax
(19)883 
Net loss$(8,933)$(9,553)
Net loss per share:
Basic and diluted*
$(0.85)$(0.89)
Weighted average shares outstanding:
Basic and diluted*
10,520,458 10,753,384 

* 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)
 
March 31,
2024		December 31,
2023
Assets  
Current assets:  
Cash and cash equivalents$21,939 $21,859 
Accounts receivable, net
4,084 4,796 
Inventory
91,489 91,024 
Prepaid expenses and other current assets16,099 18,016 
Total current assets133,611 135,695 
Property and equipment, net25,076 27,154 
Operating lease right-of-use assets40,159 37,465 
Intangible assets, net61,018 64,322 
Goodwill92,123 94,898 
Deferred tax assets1,538 1,569 
Other assets2,229 618 
Total assets$355,754 $361,721 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$23,454 $28,279 
Accrued liabilities23,695 25,223 
Sales returns reserve7,335 9,610 
Deferred revenue14,991 11,782 
Income taxes payable269 257 
Operating lease liabilities, current8,020 7,510 
Current portion of long-term debt4,725 3,300 
Total current liabilities82,489 85,961 
Long-term debt98,826 90,094 
Operating lease liabilities37,376 35,344 
Other long-term liabilities1,553 1,704 
Total liabilities220,244 213,103 
Stockholders’ equity:
Preferred stock— — 
Common stock128 128 
Additional paid-in capital466,977 466,172 
Accumulated other comprehensive loss(55,249)(50,269)
Accumulated deficit(276,346)(267,413)
Total stockholders’ equity135,510 148,618 
Total liabilities and stockholders’ equity$355,754 $361,721 



a.k.a. BRANDS HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended March 31,
20242023
Cash flows from operating activities:
Net loss$(8,933)$(9,553)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense1,536 2,452 
Amortization expense2,762 2,988 
Amortization of debt issuance costs153 158 
Lease incentives— 334 
Loss on disposal of businesses673 951 
Non-cash operating lease expense2,075 1,753 
Equity-based compensation1,956 1,936 
Deferred income taxes, net— (9)
Changes in operating assets and liabilities:
Accounts receivable688 (107)
Inventory(4,898)11,536 
Prepaid expenses and other current assets2,118 (602)
Accounts payable(4,058)(4,010)
Income taxes payable10 (1,120)
Accrued liabilities(1,058)(8,463)
Returns reserve(2,073)1,026 
Deferred revenue3,470 (314)
Lease liabilities(2,108)(1,916)
Net cash used in operating activities(7,687)(2,960)
Cash flows from investing activities:
Purchases of intangible assets
(1)(26)
Purchases of property and equipment(754)(1,854)
Net cash used in investing activities
(755)(1,880)
Cash flows from financing activities:
Proceeds from line of credit, net of issuance costs
16,500 — 
Repayment of line of credit(6,000)(10,000)
Repayment of debt(450)(1,400)
Taxes paid related to net share settlement of equity awards(88)(43)
Repurchase of shares(1,063)— 
Net cash (used in) provided by financing activities
8,899 (11,443)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(590)154 
Net decrease in cash, cash equivalents and restricted cash
(133)(16,129)
Cash, cash equivalents and restricted cash at beginning of period
24,029 48,373 
Cash, cash equivalents and restricted cash at end of period
$23,896 $32,244 
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents
$21,939 $30,224 
Restricted cash, included in prepaid expenses and other current assets
295 2,020 
Restricted cash, included in other assets
1,662 — 
Total cash, cash equivalents and restricted cash$23,896 $32,244 



a.k.a. BRANDS HOLDING CORP.
KEY FINANCIAL AND OPERATING METRICS AND NON-GAAP MEASURES
(unaudited)
Three Months Ended March 31,
(dollars in thousands)20242023
Gross margin
56 %57 %
Net loss
$(8,933)$(9,553)
Net loss margin
(8)%(8)%
Adjusted EBITDA2
$874 $2,186 
Adjusted EBITDA margin2
1 %2 %
Key Operational Metrics and Regional Sales
 Three Months Ended March 31,
(metrics in millions, except AOV; sales in thousands)20242023% Change
Key Operational Metrics
Active customers4
3.83 3.63 5.5 %
Average order value
$77 $80 (3.8)%
Number of orders
1.52 1.50 1.3 %
Sales by Region
U.S.$77,138 $72,626 6.2 %
Australia/New Zealand33,516 41,446 (19.1)%
Rest of world6,186 6,413 (3.5)%
Total$116,840 $120,485 (3.0)%
Year-over-year growth on a constant currency basis1
(0.9)%
Active Customers
We view the number of active customers as a key indicator of our growth, our 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.
4 Trailing twelve months.


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 (benefit from) 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. We calculate 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 loss for the three months ended March 31, 2024 and 2023 is as follows:
 Three Months Ended March 31,
(dollars in thousands)20242023
Net loss$(8,933)$(9,553)
Add (deduct):
Total other expense, net
2,821 3,885 
Provision for (benefit from) income tax
19 (883)
Depreciation and amortization expense4,298 5,440 
Equity-based compensation expense1,956 1,936 
Non-routine items5713 1,361 
Adjusted EBITDA$874 $2,186 
Net loss margin(8)%(8)%
Adjusted EBITDA margin1 %2 %
5 Non-routine items include costs to establish or relocate distribution centers; severance from headcount reductions; sales tax penalties; insured losses, net of recoveries; and non-routine legal matters.

v3.24.1.u1
Cover
May 08, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date May 08, 2024
Entity Registrant Name a.k.a. Brands Holding Corp.
Entity Incorporation, State or Country Code DE
Entity File Number 001-40828
Entity Tax Identification Number 87-0970919
Entity Address, Address Line One 100 Montgomery Street, Suite 2270
Entity Address, City or Town San Francisco
Entity Address, State or Province CA
Entity Address, Postal Zip Code 94104
City Area Code 415
Local Phone Number 295-6085
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $0.001 per share
Trading Symbol AKA
Security Exchange Name NYSE
Entity Emerging Growth Company true
Entity Ex Transition Period true
Amendment Flag false
Entity Central Index Key 0001865107
aka Brands (NYSE:AKA)
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