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a.k.a. Brands (AKA) - 2024 Q4 - Earnings Call Transcript
a.k.a. Brands a.k.a. Brands (US:AKA)2025-03-07 01:36

Financial Data and Key Metrics Changes - In 2024, the company achieved $575 million in net sales, a 5.2% increase year-over-year, with a notable 17% growth in the US market [10][12] - Adjusted EBITDA for the year was $23.3 million, reflecting a significant year-over-year growth of 69% [12] - For Q4 2024, net sales increased 6.8% to $159 million, driven by a 21.6% increase in the US, while Australia and New Zealand saw a 9.6% decline [35][36] - Gross margin expanded 460 basis points to 55.9% in Q4 compared to 51.3% in the same period last year [37] Business Line Data and Key Metrics Changes - The trailing twelve-month active customer base grew by 9% to over 4 million customers [11][36] - Princess Polly, the largest brand, continues to perform well with innovative merchandising and marketing strategies, contributing significantly to overall sales growth [19][20] - Culture Kings has seen improvements in sales and margin performance due to the transition to a test-and-repeat merchandising model [30][31] Market Data and Key Metrics Changes - The US market showed strong performance with a 17% growth in net sales, while the Australia and New Zealand region experienced a decline [10][35] - The company anticipates improving trends in Australia for 2025, supported by operational optimizations [36] Company Strategy and Development Direction - The company plans to open seven new Princess Polly stores in 2025, expanding its physical retail presence [16][25] - Focus on enhancing direct-to-consumer channels and expanding wholesale partnerships to increase brand awareness and market reach [14][16] - Emphasis on leveraging AI-driven solutions to optimize customer experiences and operational efficiencies [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, citing strong performance in the US and improving trends in Australia [10][88] - The company expects full-year sales for 2025 to be between $600 million and $610 million, representing growth of 4% to 6% [43] - Management acknowledged the impact of tariffs but believes the business model allows for price adjustments without significantly affecting volume [54][56] Other Important Information - The company ended Q4 2024 with $24.2 million in cash and cash equivalents and $111.7 million in debt, having reduced leverage significantly over the past two years [40][42] - The stock buyback program continues, with $1.3 million remaining in the authorization [42] Q&A Session Summary Question: What gives confidence in a rebound outside the US? - Management noted improving comps in Australia and the success of the test-and-repeat model for Culture Kings, which is expected to drive performance [49][50] Question: How will tariffs impact pricing and volume? - Management indicated that the guidance accounts for tariffs and that the business model allows for price adjustments without significant volume loss [54][56] Question: Insights on gross margin guidance? - Management expects gross margin to be roughly flat to FY 2024, with impacts from tariffs and wholesale penetration considered [61][62] Question: Thoughts on wholesale channel expansion? - Management sees significant opportunities in wholesale, particularly with successful tests at Nordstrom, and anticipates it will be a meaningful contributor in the future [66][68] Question: Performance indicators for Culture Kings' US expansion? - Management highlighted strong online performance and customer reactions to new products as indicators for potential US store openings [72][74] Question: Infrastructure needs for Princess Polly stores? - Management emphasized the importance of maintaining quality control and brand building as they expand the number of stores [76][78] Question: General thoughts on the current operating environment? - Management expressed satisfaction with stabilization trends and improvements in customer engagement, particularly in the US market [84][88]