Lulu's Fashion Lounge (LVLU) - 2026 Q3 - Quarterly Report

Financial Performance - Net revenue for the thirteen weeks ended September 28, 2025, was $73,591,000, a decrease of 8.5% compared to $80,515,000 for the same period in 2024[23]. - Gross profit for the thirty-nine weeks ended September 28, 2025, was $94,133,000, down 10.6% from $105,178,000 in the prior year[23]. - The company reported a net loss of $2,317,000 for the thirteen weeks ended September 28, 2025, compared to a net loss of $6,879,000 for the same period in 2024, indicating an improvement[23]. - For the thirty-nine weeks ended September 28, 2025, the net loss was $13.31 million, a decrease from the net loss of $23.41 million for the same period in 2024, representing a 43.5% improvement[30]. - The net loss for the thirteen weeks ended September 28, 2025, was $2.3 million, a significant improvement from a net loss of $6.9 million in the same period of 2024[134]. - Adjusted EBITDA for the thirteen weeks ended September 28, 2025, was $364,000, compared to a loss of $3.6 million in the same period of 2024[134]. - Net revenue for the thirty-nine weeks ended September 28, 2025, decreased by $30.5 million, or 12%, compared to the same period in the prior year[170]. - Gross profit decreased by $11.0 million, or 11%, for the thirty-nine weeks ended September 28, 2025, primarily driven by lower sales volume[172]. Assets and Liabilities - Total current assets increased to $55,757,000 as of September 28, 2025, from $51,501,000 as of December 29, 2024, reflecting a growth of 8.7%[20]. - Total liabilities rose to $100,823,000 as of September 28, 2025, compared to $94,830,000 as of December 29, 2024, marking an increase of 6.5%[20]. - The company’s total stockholders' equity decreased to $2,519,000 as of September 28, 2025, from $13,368,000 as of December 29, 2024, a decline of 81.2%[20]. - The company reported total equity of $2.52 million as of September 28, 2025, down from $43.77 million as of September 29, 2024, indicating a significant decline in stockholders' equity[27]. - The net property and equipment as of September 28, 2025, is $2,649,000, down from $3,642,000 as of December 29, 2024[74]. Cash Flow and Financing - Cash provided by operating activities was $5.15 million for the thirty-nine weeks ended September 28, 2025, slightly up from $5.13 million in the prior year[30]. - The company experienced a net cash used in financing activities of $6.04 million for the thirty-nine weeks ended September 28, 2025, compared to a net cash provided of $1.08 million in the same period of 2024[30]. - Cash and cash equivalents at the end of the period were $1.94 million, a decrease from $6.31 million at the end of the same period in 2024, marking a decline of 69%[30]. - The company entered into a 2025 Credit Agreement with a $20.0 million commitment, bearing interest at the 30-day SOFR rate plus 3.95%[79]. - As of September 28, 2025, outstanding borrowings under the 2025 Credit Agreement were $9.2 million, with unused availability of $6.8 million[188]. - The company repurchased common stock amounting to $886,000 during the thirty-nine weeks ended September 28, 2025, compared to $276,000 in the same period of 2024[30]. Expenses - Selling and marketing expenses for the thirty-nine weeks ended September 28, 2025, were $54,843,000, down 8.8% from $60,231,000 in the previous year[23]. - General and administrative expenses decreased by $3.5 million, or 18%, for the thirteen weeks ended September 28, 2025, primarily due to a reduction in fixed labor and benefits costs[167]. - Interest expense increased by $0.2 million, or 79%, for the thirteen weeks ended September 28, 2025, primarily due to higher average borrowings[168]. - The company incurred equity-based compensation expenses of $3.58 million for the thirty-nine weeks ended September 28, 2025, compared to $6.15 million in the same period of 2024, reflecting a 41% decrease[30]. Customer and Market Insights - Active customers as of September 28, 2025, were 2,380, consistent with the previous year, while the average order value increased to $141 from $131[134]. - The company has taken pricing and promotional actions in response to changing macroeconomic factors affecting consumer spending[131]. - The company experienced moderate seasonal fluctuations in sales volume, with net revenue typically highest in the second and third quarters[177]. Governance and Compliance - The company has alleviated substantial doubt about its ability to continue as a going concern by entering into a Loan and Security Agreement with White Oak Commercial Finance, LLC[37]. - The Chief Executive Officer concluded that the company's disclosure controls and procedures were effective as of September 28, 2025[211]. - There were no changes in the internal control over financial reporting during the quarter ended September 28, 2025, that materially affected the internal control[212]. - The company does not believe that the outcome of various legal proceedings will have a material adverse effect on its business or financial condition[214]. Accounting and Reporting - The company plans to adopt new accounting standards issued by FASB in the fourth quarter of fiscal 2025, which are not expected to have a material impact on financial statements[63][64]. - The company has not made significant changes to its critical accounting policies and estimates as disclosed in the 2024 10-K[205]. - There has been no material change in the company's exposure to market risk from that discussed in the 2024 10-K[209].