Preliminary Unaudited First Quarter 2023
Results Exceed Expectations
Company Receives Non-Compliance Notice from
NYSE
a.k.a. Brands Holding Corp. (NYSE: AKA) (the “Company”)
today announced preliminary unaudited financial results for the
first quarter ended March 31, 2023. The Company also announced that
it plans to release its first quarter results after the market
close on Wednesday, May 10, 2023.
For the first quarter of 2023 the Company expects to
report:
- Net sales of approximately $120 million, exceeding the high end
of its previously provided outlook of between $113 million and $116
million.
- Net loss of approximately $9.7 million to $9.6 million, within
management’s expectations.
- Adjusted EBITDA1 of approximately $2.0 million to $2.2 million,
exceeding the high end of its previously provided outlook of
between $1.5 million and $1.8 million.
“I’m proud of our solid performance in the first quarter of
2023, which exceeded our expectations on both the top line and on
an Adjusted EBITDA basis,” said Ciaran Long, Interim Chief
Executive Officer and Chief Financial Officer of a.k.a. Brands.
“I’m pleased with the strength of our brands and our disciplined
execution during the quarter. We remain laser-focused on balancing
growth and profitability, and we are confident that our growth
strategies, flexible operating model and talented teams will drive
profitable growth.”
The Company also announced today that it received notice from
the New York Stock Exchange (the “NYSE”) on April 12, 2023 that the
price of its common stock has fallen below the NYSE’s continued
listing standard, which requires the average closing price of a
listed company’s common stock to be at least $1.00 per share over a
consecutive 30-day trading period.
The Company plans to timely notify the NYSE that it intends to
cure the deficiency, which may include, if necessary, effecting a
reverse stock split, subject to approval by the Board of Directors
and stockholders of the Company. The Company has six months
following the receipt of the non-compliance notice to cure the
deficiency and regain compliance with the minimum share price
requirement. During the cure period, the Company’s common stock
will continue to be listed and traded on the NYSE, subject to
compliance with the other listing standards. The NYSE notice does
not affect the Company’s business operations or its reporting
obligations with the Securities and Exchange Commission, nor does
it trigger any violation of its debt obligations.
Webcast and Conference Call Information
A conference call to discuss the Company’s first quarter results
is scheduled for May 10, 2023, at 4:30 p.m. ET. Those who wish to
participate in the call may do so by dialing (877) 858-5495 (or
(201) 689-8853 for international callers). The conference call will
also be webcast live at https://ir.aka-brands.com in the Events and
Presentations section. A recording will be available shortly after
the conclusion of the call. To access the replay, please dial (877)
660-6853 (or (201) 612-7415 for international callers), conference
ID 13737879. An archive of the webcast will be available on a.k.a.
Brands’ investor relations website.
Use of Non-GAAP Financial Measures
We have provided Adjusted EBITDA in this release as a non-GAAP
performance measure used by management for purposes of evaluating
ongoing operations and for internal planning and forecasting
purposes. We believe that this non-GAAP operating measure, when
reviewed collectively with our GAAP financial information, provides
useful supplemental information to investors in assessing our
operating performance. See additional information at the end of
this release.
Preliminary Financial Information
The Company has not yet filed its Quarterly Report on Form 10-Q
for the quarter ended March 31, 2023. The preliminary financial
results provided above, and in particular, the preliminary range of
adjustments to Adjusted EBITDA, are subject to the completion of
the Company’s review processes, final adjustments (if any), and any
other developments that may arise between now and the time the
financial results for the first quarter of 2023 are finalized.
Therefore, this information, including the preliminary range of
adjustments to Adjusted EBITDA, represents management estimates
that constitute forward-looking statements subject to risks and
uncertainties. As a result, the preliminary financial results and
other information provided herein may materially differ from the
actual results that will be reflected in the consolidated financial
statements for the quarter when they are completed and publicly
disclosed. The Company undertakes no obligation to update or
supplement the information provided herein until the Company
reports its final financial results for the fiscal quarter ended
March 31, 2023.
About a.k.a. Brands Holding Corp.
a.k.a. Brands is a brand accelerator of next generation fashion
brands. Each brand in the a.k.a. portfolio targets a distinct Gen Z
and millennial audience, creates authentic and inspiring social
content and offers quality exclusive merchandise. a.k.a. Brands
leverages its next-generation retail platform to help each brand
accelerate its growth, scale in new markets and enhance its
profitability. Current brands in the a.k.a. Brands portfolio
include Princess Polly, Culture Kings, mnml and Petal &
Pup.
Cautionary Statement Concerning Forward-Looking
Statements
Certain statements made in this release are “forward-looking
statements” within the meaning of the “safe harbor” provisions of
the United States Private Securities Litigation Reform Act of 1995.
When used in this release, the words “estimates,” “projected,”
“expects,” “anticipates,” “forecasts,” “plans,” “intends,”
“believes,” “seeks,” “may,” “will,” “should,” “future,” “propose”
and variations of these words or similar expressions (or the
negative versions of such words or expressions) are intended to
identify forward-looking statements. These forward-looking
statements include statements related to the Company’s results for
the first quarter and long-term expectations and the Company’s
plans with respect to the NYSE notice of non-compliance, including
a potential reverse stock split. Forward-looking statements are not
guarantees of future performance, conditions or results, and
involve a number of known and unknown risks, uncertainties,
assumptions and other important factors, many of which are outside
the Company’s control, that could cause actual results or outcomes
to differ materially from those discussed in the forward-looking
statements. Important factors, among others, that may affect actual
results or outcomes include the risk that the Company’s preliminary
results differ from the actual results that will be reflected in
the consolidated financial statements for the quarter when they are
completed and publicly disclosed; economic downturns and unstable
market conditions; the Company’s ability to regain compliance with
the minimum share price requirement within the applicable cure
period; the Company’s ability in the future to comply with the NYSE
listing standards and maintain the listing of its common stock on
the NYSE; risks related to doing business in China; the Company’s
ability to anticipate rapidly-changing consumer preferences in the
apparel, footwear and accessories industries; the Company’s ability
to acquire new customers, retain existing customers or maintain
average order value levels; the effectiveness of the Company’s
marketing and the Company’s level of customer traffic; merchandise
return rates; the Company’s ability to manage its inventory
effectively; the Company’s success in identifying brands to
acquire, integrate and manage on its platform; the Company’s
ability to expand into new markets; the global nature of the
Company’s business; interruptions in or increased costs of shipping
and distribution, which could affect the Company’s ability to
deliver its products to the market; the Company’s use of social
media platforms and influencer sponsorship initiatives, which could
adversely affect the Company’s reputation or subject the Company to
fines or other penalties; fluctuating operating results; the
inherent challenges in measuring certain of the Company’s key
operating metrics, and the risk that real or perceived inaccuracies
in such metrics may harm the Company’s reputation and negatively
affect its business; the potential for tax liabilities that may
increase the costs to the Company’s consumers; the Company’s
ability to attract and retain highly qualified personnel, including
key members of its leadership team; fluctuations in wage rates and
the price, availability and quality of raw materials and finished
goods, which could increase costs; foreign currency fluctuations;
and other risks and uncertainties set forth in the sections
entitled “Risk Factors,” “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and “Forward-Looking
Statements” in the Company’s Annual Report on Form 10-K filed with
the Securities and Exchange Commission on March 9, 2023. a.k.a.
Brands does not undertake any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
a.k.a. BRANDS HOLDING
CORP.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(in thousands)
(unaudited)
Adjusted EBITDA
Adjusted EBITDA is a key performance measure that management
uses to assess our operating performance. Because Adjusted EBITDA
facilitates internal comparisons of our historical operating
performance on a more consistent basis, we use it for business
planning purposes. We also believe this information will be useful
for investors to facilitate comparisons of our operating
performance and better identify trends in our business.
We calculate Adjusted EBITDA as net income (loss) adjusted to
exclude: interest and other expense; provision for income taxes;
depreciation and amortization expense; equity-based compensation
expense; costs to establish or relocate distribution centers;
transaction costs; costs related to severance from headcount
reductions; goodwill and intangible asset impairment; sales tax
penalties; insured losses, net of recovery; and one-time or
non-recurring items. Adjusted EBITDA is considered a non-GAAP
financial measure under the SEC’s rules because it excludes certain
amounts included in net income (loss), the most directly comparable
financial measure calculated in accordance with GAAP.
The preliminary results, and in particular the adjustments
provided below, are subject to the completion of the Company’s
review processes, final adjustments (if any), and other
developments. A reconciliation of preliminary non-GAAP Adjusted
EBITDA range to preliminary net loss range for the three months
ended March 31, 2023 is as follows:
Three Months Ended March 31,
2023
Low End
High End
Net loss
$
(9,735
)
$
(9,552
)
Add (deduct):
Total other expense, net
3,885
3,885
Benefit from income tax
(901
)
(884
)
Depreciation and amortization expense
5,440
5,440
Equity-based compensation expense
1,936
1,936
Severance
264
264
Sales tax penalties
483
483
Insured losses, net of recovery
614
614
Adjusted EBITDA
$
1,986
$
2,186
1 See additional information at the end of this release
regarding non-GAAP financial measures.
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