a.k.a. Brands (US:AKA)2025-11-05 21:09Customer Metrics - Active customers increased to 4.07 million for the three months ended September 30, 2025, compared to 4.05 million in the same period of 2024[95]. - For the nine months ended September 30, 2025, net sales increased by $20.6 million, or 5%, driven by a 6% increase in the number of processed orders[124]. Financial Performance - Net loss for the three months ended September 30, 2025, was $4.96 million, a slight improvement from a net loss of $5.44 million in the same period of 2024[99]. - Adjusted EBITDA for the three months ended September 30, 2025, was $7.02 million, compared to $8.21 million in the same period of 2024[99]. - Gross profit for the nine months ended September 30, 2025, was $238.6 million, an increase of $14.4 million or 6% compared to 2024, driven by a 5% increase in net sales[126]. - The net loss for the three months ended September 30, 2025, was $4.960 million, compared to a net loss of $5.439 million in 2024[115]. Sales and Margins - Average order value decreased to $78 for the three months ended September 30, 2025, from $81 in the same period of 2024[95]. - Gross margin improved to 59% for the three months ended September 30, 2025, compared to 58% in the same period of 2024[99]. - Net sales for the three months ended September 30, 2025, decreased by $2.8 million, or 2%, compared to the same period in 2024, primarily due to a 4% decrease in average order value[116]. - Gross profit remained flat at $86.983 million for the three months ended September 30, 2025, with gross margin increasing to 59% from 58% in 2024[118]. Expenses - Selling expenses increased by $1.3 million, or 3%, for the three months ended September 30, 2025, attributed to the opening of additional stores[119]. - Marketing expenses decreased by $0.8 million, or 4%, for the three months ended September 30, 2025, remaining flat as a percentage of net sales at 13%[120]. - General and administrative expenses decreased by $1.1 million, or 4%, for the three months ended September 30, 2025, primarily due to a reduction in non-routine legal expenses[121]. - Selling expenses rose by $9.5 million or 8% to $126.8 million, representing 29% of net sales, attributed to the opening of additional stores[127]. - Marketing expenses increased by $1.2 million or 2% to $53.6 million, accounting for 12% of net sales[128]. - General and administrative expenses grew by $3.5 million or 5% to $79.9 million, remaining flat at 18% of net sales[129]. Cash Flow and Investments - Free Cash Flow increased to $2.41 million for the nine months ended September 30, 2025, compared to a negative $14.03 million in the same period of 2024[104]. - Net cash provided by operating activities increased by $21.1 million for the nine months ended September 30, 2025, compared to the same period in 2024[105]. - Net cash provided by operating activities was $14.7 million, a significant increase of $21.1 million compared to a net cash used of $6.3 million in 2024[141][143]. - Net cash used in investing activities increased by $4.6 million to $12.3 million, primarily due to capital expenditures for new store openings[145]. - Net cash used in financing activities rose by $19.5 million to $3.3 million, mainly due to additional repayments under the senior secured credit facility[147]. Strategic Initiatives - The company plans to continue investing in performance marketing and brand awareness to drive future growth[108]. - The company plans to continue investing in operations, including headcount and logistics, to support growth and improve customer experience[112]. - The company is exploring sourcing products from suppliers outside of China to mitigate tariff impacts, which may affect gross margins and product quality[107]. Economic Environment - The macroeconomic environment, including inflation and tariffs, poses risks that could negatively impact consumer spending and operational results[107]. Goodwill and Accounting - As of June 30, 2025, the estimated fair value of the mnml reporting unit exceeded its carrying value by 4.6%, with the carrying value of related goodwill at $30.0 million[150]. - A 60 basis points increase in the selected discount rate would result in impairment for the mnml reporting unit[150]. - No goodwill impairment was required during the three or nine months ended September 30, 2025[150]. - There have been no significant changes in critical accounting estimates from those reported in the 2024 Form 10-K[151].