XpresSpa Group(US:XWEL)2019-05-16 01:10Financial Data and Key Metrics Changes - Revenue for Q1 2019 was $12.2 million, a decrease of 2.9% or $0.4 million compared to $12.6 million in the prior year [22] - Gross profit increased by 10.9% to $3.1 million from $2.8 million in the prior year, with gross profit margin rising 320 basis points to 25.6% [24] - General and administrative expenses decreased by 21.7% to $3.6 million compared to $4.6 million in the prior year [25] - Adjusted EBITDA loss narrowed to $364,000, reflecting a $1.1 million improvement compared to a $1.5 million adjusted EBITDA loss in the prior year [26] Business Line Data and Key Metrics Changes - Comparable store sales decreased by 1.3%, but showed improvement with a positive 0.9% in March and a positive 4.6% in April [10][11][23] - Cost of sales decreased to $9.1 million from $9.8 million in the prior year due to reduced occupancy costs and cost savings initiatives [24] Market Data and Key Metrics Changes - As of March 31, 2019, the company had 55 locations compared to 57 locations as of March 31, 2018, with one spa closed during Q1 [22] Company Strategy and Development Direction - The company aims to enhance customer experience, turn around negative comparable store sales, and identify cost-saving measures [9] - Initiatives include staffing improvements, launching a new XpresSpa App, and selectively opening new spas in high-traffic areas [14][19] - The company plans to refresh its brand with renovation projects to elevate customer experience [20] Management's Comments on Operating Environment and Future Outlook - Management views 2019 as a transitional year, with early signs of progress in improving comparable store sales and overall financial condition [9][29] - The focus is on maximizing existing spas, identifying strategic opportunities, and expanding wisely to achieve positive adjusted EBITDA and operating cash flow [30] Other Important Information - The company is working on restructuring its outstanding debt to address its going concern status and will need additional working capital to support growth [28] Q&A Session Summary Question: How have you been able to turnaround comp so quickly and is it sustainable? - Management attributes the turnaround to new middle management and a listening tour that improved employee engagement and morale [33] Question: Can you discuss the Easter calendar shift between Q1 and Q2 and its impact on March and April? - The Easter shift did not significantly impact sales, with April showing even higher comp sales than March [35] Question: Could you provide an update on the Calm relationship and if you expect to renew the partnership before it expires in July? - Management is in discussions to extend the partnership with Calm, which has been valuable [37] Question: What has changed regarding the strategy of opening a company-operated spa alongside a franchise in Austin? - The strategy remains the same, but the decision was made to support the first franchisee by opening a company-owned spa in the same airport [39] Question: How many more closures are planned for this year beyond the one that was closed in Q1? - Management is reviewing underperforming stores and may close a few more, but it will not be a significant number [41] Question: How much does it cost to do a remodel, what kind of sales lift do you project, and how much downtime is involved? - Remodel costs range from $15,000 to $250,000, with the goal of minimizing downtime during renovations [44][45]