Lulu's Fashion Lounge (US:LVLU)2024-11-13 21:01Financial Performance - Total net revenue for the thirteen weeks ended September 29, 2024, was $83,118 thousand, a decrease from $280,216 thousand for the thirty-nine weeks ended October 1, 2023, representing a decline of approximately 70.3%[17] - Gross profit for the thirteen weeks ended September 29, 2024, was $33,525 thousand, compared to $118,882 thousand for the thirty-nine weeks ended October 1, 2023, indicating a decrease of about 71.8%[17] - The company reported a net loss of $3,889 thousand for the thirteen weeks ended September 29, 2024, compared to a net loss of $12,104 thousand for the thirty-nine weeks ended October 1, 2023, reflecting an improvement in loss[17] - For the thirty-nine weeks ended September 29, 2024, the company incurred a net loss of $23.4 million, compared to a net loss of $12.1 million for the same period in 2023[21] - The company reported a basic net loss per share attributable to common stockholders, with no potentially dilutive securities impacting diluted loss per share due to net losses for all periods presented[48] - The company reported a pre-tax loss of $6.868 million for the thirteen weeks ended September 29, 2024, compared to a loss of $5.047 million for the same period in the previous year[102] - The net loss for the thirteen weeks ended September 29, 2024 was $(6,879) thousand, compared to $(3,889) thousand for the same period in 2023, reflecting an increase in losses of approximately 76.5%[151] - The company incurred a net loss of $23.4 million for the thirty-nine weeks ended September 29, 2024, compared to a net loss of $12.1 million for the same period in the previous year[114] Assets and Liabilities - Total current assets increased to $65,321 thousand as of September 29, 2024, from $52,520 thousand as of December 31, 2023, marking a growth of approximately 24.3%[15] - Total liabilities rose to $109,764 thousand as of September 29, 2024, compared to $88,493 thousand as of December 31, 2023, representing an increase of about 24.0%[15] - The company’s accumulated deficit increased to $(216,616) thousand as of September 29, 2024, from $(193,205) thousand as of December 31, 2023[19] - The company had total liabilities of $185.975 million as of October 1, 2023, reflecting ongoing financial challenges[20] - The company’s accrued expenses and other current liabilities totaled $26.6 million as of September 29, 2024, compared to $18.3 million as of December 31, 2023[62] Cash Flow and Financing - Cash and cash equivalents increased to $6,308 thousand as of September 29, 2024, from $2,506 thousand as of December 31, 2023, showing a significant increase of approximately 151.5%[15] - The company reported net cash provided by operating activities of $5.1 million for the thirty-nine weeks ended October 1, 2023, down from $21.1 million in the prior year[21] - Total cash and cash equivalents at the end of the period were $6.3 million, a decrease from $12.9 million at the end of the previous year[22] - The company entered into a credit agreement with a revolving facility of up to $50 million, which was reduced to $15 million as of July 22, 2024[28] - The company borrowed $31.5 million under the 2021 Credit Agreement and the 2024 Amended Credit Agreement during the thirty-nine weeks ended September 29, 2024, with a weighted average interest rate of 7.5% on the outstanding balance[66] - The company reported total cash and cash equivalents of $6.3 million as of September 29, 2024, with $11.5 million due under the 2024 Amended Credit Agreement classified within total current liabilities[115] - The company is actively seeking alternative debt financing and implementing cash conservation measures to meet its obligations[118] Operational Expenses - Selling and marketing expenses for the thirteen weeks ended September 29, 2024, were $16,825 thousand, slightly down from $60,984 thousand for the thirty-nine weeks ended October 1, 2023[17] - Advertising costs for the thirteen weeks ended September 29, 2024, were $13.1 million, compared to $12.4 million for the same period in 2023, indicating a year-over-year increase of approximately 5.6%[47] - For the thirty-nine weeks ended September 29, 2024, advertising costs totaled $46.2 million, slightly down from $46.9 million in the same period in 2023, reflecting a decrease of about 1.5%[47] - General and administrative expenses for the thirteen weeks ended September 29, 2024, were $19,869 thousand, a decrease from $21,575 thousand for the same period in 2023, indicating a reduction of approximately 7.9%[151] Customer Metrics - Active Customers as of September 29, 2024, totaled 2,670,000, consistent with the previous year, while the average order value was $131, slightly down from $133[121] - Active Customers decreased to 2.7 million for the trailing 12 months ended September 29, 2024, down from 3.0 million for the trailing 12 months ended October 1, 2023, indicating a decline in customer retention[137] Compliance and Regulatory - As of September 29, 2024, the Company was not in compliance with its preliminary financial covenants for Q3 2024, requiring an extension for reporting to December 16, 2024[29] - The Company has no further access to revolving commitments under the November 2024 Amended Credit Agreement until financial statements are delivered or by December 16, 2024[30] - If the Company does not refinance its revolving credit facility or obtain a waiver by December 16, 2024, it expects to be in default of its 2024 Amended Credit Agreement[30] - The Company is currently not in compliance with its preliminary financial covenants for the third quarter of 2024, as required by the 2024 Amended Credit Agreement[116] Accounting and Valuation - The company is currently evaluating the effects of recently issued accounting pronouncements on its consolidated financial statements[56] - The effective tax rate for the thirteen weeks ended September 29, 2024, was 0.2%, significantly lower than the federal income tax rate of 21% due to a valuation allowance for deferred tax assets[105] - The Company has a valuation allowance of $5.4 million for deferred tax assets as of September 29, 2024, due to cumulative losses impacting realizability[106] Stock and Equity - As of September 29, 2024, the company had $2.2 million remaining under the 2024 Repurchase Program, with a total of 178,143 shares repurchased at an average price of $1.55 per share[51] - The Company has reserved 161,397 shares of common stock for issuance upon the exercise of stock options as of September 29, 2024[80] - The total number of stock options outstanding as of September 29, 2024, was 161,397, with a weighted average exercise price of $11.35[94] - The Company granted 350,000 Performance Stock Units (PSUs) during the thirty-nine weeks ended September 29, 2024, with an average fair value of $1.81 per share[101] Future Outlook - The company plans to continue investing in operations and infrastructure to enhance operational efficiencies and support growth while managing expenses[140] - The company anticipates that macroeconomic factors, including inflation and consumer confidence, will continue to impact sales and overall business performance[113]