U.S. Net Sales Grew ~12% Compared to the
Fourth Quarter of 2022
Strengthened Balance Sheet Through $50.7
Million Debt Paydown in FY23
Scaling Omnichannel Strategy through
Additional Stores, Marketplace and Wholesale Opportunities in
2024
a.k.a. Brands Holding Corp. (NYSE: AKA), a brand
accelerator of next generation fashion brands, today announced
financial results for the fourth quarter and full year ended
December 31, 2023.
Fourth Quarter Financial
Highlights
- Net sales decreased 0.1% to $148.9 million, compared to
$149.1 million in the fourth quarter of 2022; and was flat on a
constant currency basis1.
- In the U.S., net sales increased 11.6% compared to the
fourth quarter of 2022.
- Net loss was $(13.9) million, or $(1.31) per share, and
(9.3%) of net sales in the fourth quarter of 2023, compared to net
loss of $(173.9) million, or $(16.26) per share, and (116.6%) of
net sales in the fourth quarter of 2022.
- Adjusted EBITDA2 was $1.3 million, or 0.9% of net sales,
compared to $6.1 million, or 4.1% of net sales in the fourth
quarter of 2022.
Fiscal 2023 Financial
Highlights
- Net sales decreased 10.7% to $546.3 million, compared to
$611.7 million in 2022; and decreased 8.7% on a constant currency
basis1.
- Net loss was $(98.9) million, or $(9.24) per share, and
(18.1%) of net sales in 2023, compared to net loss of $(176.7)
million, or $(16.47) per share, and (28.9%) of net sales in
2022.
- Adjusted EBITDA2 was $13.8 million, or 2.5% of net
sales, compared to $31.9 million, or 5.2% of net sales in
2022.
“2023 was a transformational year for a.k.a. Brands, and I want
to thank our teams for their continued dedication to building
next-generation fashion brands for the next generation of
consumers,” said Ciaran Long, Interim Chief Executive Officer and
Chief Financial Officer. “I’m pleased that we delivered net sales
growth in the U.S. in the fourth quarter of 2023, which marks the
second consecutive quarter of growth in our largest market. I’m
proud of the teams’ strong execution across regions, which enabled
us to reduce our year-end inventory by 28% compared to last year.
Additionally, we continued to manage the business prudently and
strengthened our balance sheet - we paid off more than $50 million
of debt this year, effectively reducing our debt by 35% in fiscal
2023.”
“As we look ahead, we will continue to deepen our relationships
with customers by delivering fashion newness, launching new
categories and leveraging innovative technologies. Additionally,
based on the success of our omnichannel tests in 2023, we are
expanding our omnichannel initiatives in 2024 with the opening of
three to four Princess Polly stores and new marketplace and
wholesale opportunities to attract new customers and expand our
total addressable market. And lastly, we remain committed to
streamlining our operations to deliver long-term profitable
growth,” concluded Long.
Recent Brand Highlights
- Princess Polly will expand its omnichannel strategy and open
three to four stores in the second half of 2024, including signed
leases for stores in Boston and San Diego.
- Culture Kings U.S. registered double-digit net sales growth in
2023 and continues to disrupt the streetwear market with its
one-of-a-kind store experience and marketing activations.
- Petal & Pup continues to expand its marketplace presence
and launched on Nordstrom’s website in the first quarter of 2024,
adding to the brands successful marketplace tests on Macy’s and
Target’s websites.
- mnml continues to be a highly-sought after streetwear brand and
remains a top-selling brand at the Culture Kings store in the
U.S.
Fourth Quarter Financial
Details
- Net sales decreased 0.1% to $148.9 million, compared to
$149.1 million in the fourth quarter of 2022. The decrease was
driven by a decline in the number of orders and average order value
during the quarter, primarily driven by adverse macroeconomic
conditions in Australia and New Zealand. On a constant currency1
basis, net sales were flat.
- Gross margin was 51.3% in the fourth quarter of 2023,
compared to 52.8% in the same period last year. The decline was
primarily driven by targeted discounting in Culture Kings Australia
and a higher merchandise return rate, partially offset by lower
freight expenses.
- Selling expenses were $42.3 million, compared to $39.0
million in the fourth quarter of 2022. Selling expenses were 28.4%
of net sales, compared to 26.2% of net sales in the fourth quarter
of 2022. The increase was primarily due to softness in Australia
and New Zealand.
- Marketing expenses were $17.3 million, compared to $15.4
million in the fourth quarter of 2022. Marketing expenses were
11.6% of net sales, compared to 10.3% of net sales in the fourth
quarter of 2022.
- General and administrative (“G&A”) expenses were
$22.3 million, compared to $26.1 million in the fourth quarter of
2022. G&A expenses were 15.0% of net sales, compared to 17.5%
of net sales in the fourth quarter of 2022. The decline in G&A
expenses as a percentage of net sales was primarily due to a
decrease in wages and benefits and a decrease in insurance
costs.
- Adjusted EBITDA2 was $1.3 million, or 0.9% of net sales,
compared to $6.1 million, or 4.1% of net sales in the fourth
quarter of 2022.
Full year 2023 financial details are included in the Company’s
Form 10-K for the year ended December 31, 2023.
Balance Sheet and Cash
Flow
- Cash and cash equivalents at the end of the fourth
quarter totaled $21.9 million, compared to $46.3 million at the end
of the fourth quarter of 2022.
- Inventory at the end of the fourth quarter totaled $91.0
million, compared to $126.5 million at the end of the fourth
quarter of 2022. Inventory decreased $8.9 million, or 9%, from the
end of the third quarter of 2023.
- Debt at the end of the fourth quarter totaled $93.4
million, compared to $143.6 million at the end of the fourth
quarter of 2022.
- Cash flow from operations for the year ended December
31, 2023 was $33.4 million, compared to cash used in operations of
$0.3 million for the year ended December 31, 2022.
Outlook
For the full year fiscal 2024, the Company expects:
- Net sales between $540 million and $555 million
- Adjusted EBITDA3 between $16 million and $18 million
- Weighted average diluted share count of 10.7 million
- Capital expenditures of approximately $10 million to $12
million
For the first quarter of 2024, the Company expects:
- Net sales between $108 million and $112 million
- Adjusted EBITDA3 between $0.3 million and $0.7 million
- Weighted average diluted share count of 10.5 million
The above outlook is based on several assumptions, including but
not limited to, foreign exchange rates remaining at the current
levels, the opening of three to four Princess Polly stores and
continued macroeconomic pressures, specifically in Australia and
New Zealand. See “Forward-Looking Statements” for additional
information.
Conference Call
A conference call to discuss the Company’s fourth quarter and
full year 2023 results is scheduled for March 7, 2024, at 4:15 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 13744095. An
archive of the webcast will be available on a.k.a. Brands’ investor
relations website.
Use of Non-GAAP Financial Measures and Other Operating
Metrics
In addition to results determined in accordance with accounting
principles generally accepted in the United States of America
(GAAP), management utilizes certain non-GAAP financial measures
such as Adjusted EBITDA, Adjusted EBITDA margin, net income (loss),
as adjusted, net income (loss) per share, as adjusted and pro forma
net sales for purposes of evaluating ongoing operations and for
internal planning and forecasting purposes. We believe that these
non-GAAP financial measures, when reviewed collectively with our
GAAP financial information, provide useful supplemental information
to investors in assessing our operating performance. The non-GAAP
financial measures should not be considered in isolation or as a
substitute for the GAAP financial measures. The non-GAAP financial
measures used by the Company may be different from similarly-titled
non-GAAP financial measures used by other companies. See additional
information at the end of this release regarding non-GAAP financial
measures.
About a.k.a. Brands
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.
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 press 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 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 effects of economic downturns and unstable
market conditions; our ability in the future to continue to comply
with the New York Stock Exchange’s (NYSE) listing standards and
maintain the listing of our common stock on the NYSE; risks related
to doing business in China; our ability to anticipate
rapidly-changing consumer preferences in the apparel, footwear and
accessories industries; our ability to execute our strategic
initiatives, including transitioning Culture Kings to a
data-driven, short lead time merchandising cycle; our ability to
acquire new customers, retain existing customers or maintain
average order value levels; the effectiveness of our marketing and
our level of customer traffic; merchandise return rates; our
ability to manage our inventory effectively; our success in
identifying brands to acquire, integrate and manage on our
platform; our ability to expand into new markets; the global nature
of our business, including international economic, geopolitical
instability (including the ongoing Russia-Ukraine and
Israel-Palestine wars), legal, compliance and supply chain risks;
interruptions in or increased costs of shipping and distribution,
which could affect our ability to deliver our products to the
market; our use of social media platforms and influencer
sponsorship initiatives, which could adversely affect our
reputation or subject us to fines or other penalties; fluctuating
operating results; the inherent challenges in measuring certain of
our key operating metrics, and the risk that real or perceived
inaccuracies in such metrics may harm our reputation and negatively
affect our business; the potential for tax liabilities that may
increase the costs to our consumers; our ability to attract and
retain highly qualified personnel, including key members of our
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 for the
year ended December 31, 2023, filed with the Securities and
Exchange Commission (SEC) on March 7, 2024. 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. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in
thousands, except share and per share data)
(unaudited)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Net sales
$
148,912
$
149,126
$
546,258
$
611,738
Cost of sales
72,456
70,379
245,978
274,491
Gross profit
76,456
78,747
300,280
337,247
Operating expenses:
Selling
42,309
39,002
149,307
166,070
Marketing
17,265
15,429
68,907
66,730
General and administrative
22,270
26,086
96,951
102,700
Goodwill impairment
—
173,786
68,524
173,786
Total operating expenses
81,844
254,303
383,689
509,286
Loss from operations
(5,388
)
(175,556
)
(83,409
)
(172,039
)
Other expense, net:
Interest expense
(2,676
)
(2,556
)
(11,165
)
(7,043
)
Other expense
(65
)
503
(2,391
)
(1,532
)
Total other expense, net
(2,741
)
(2,053
)
(13,556
)
(8,575
)
Loss before income taxes
(8,129
)
(177,609
)
(96,965
)
(180,614
)
(Provision for) benefit from income
tax
(5,754
)
3,713
(1,921
)
3,917
Net loss
$
(13,883
)
$
(173,896
)
$
(98,886
)
$
(176,697
)
Net loss per share, basic and diluted*
$
(1.31
)
$
(16.26
)
$
(9.24
)
$
(16.47
)
Weighted average shares outstanding, basic
and diluted*
10,619,178
10,694,559
10,707,024
10,726,392
* Adjusted for the one-for-12 reverse stock split effected on
September 29, 2023 (the “Reverse Stock Split”).
a.k.a. BRANDS HOLDING
CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (in
thousands) (unaudited)
December 31,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
21,859
$
46,319
Restricted cash
2,170
2,054
Accounts receivable
4,796
3,231
Inventory, net
91,024
126,533
Prepaid income taxes
—
6,089
Prepaid expenses and other current
assets
15,846
13,378
Total current assets
135,695
197,604
Property and equipment, net
27,154
28,958
Operating lease right-of-use assets
37,465
37,317
Intangible assets, net
64,322
76,105
Goodwill
94,898
167,731
Deferred tax assets
1,569
1,070
Other assets
618
853
Total assets
$
361,721
$
509,638
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
28,279
$
20,903
Accrued liabilities
25,223
39,806
Sales returns reserve
9,610
3,968
Deferred revenue
11,782
11,421
Income taxes payable
257
—
Operating lease liabilities, current
7,510
6,643
Current portion of long-term debt
3,300
5,600
Total current liabilities
85,961
88,341
Long-term debt
90,094
138,049
Operating lease liabilities
35,344
34,404
Other long-term liabilities
1,704
1,483
Deferred income taxes
—
284
Total liabilities
213,103
262,561
Stockholders’ equity:
Preferred stock
—
—
Common stock
128
129
Additional paid-in capital
466,172
460,660
Accumulated other comprehensive loss
(50,269
)
(45,185
)
Accumulated deficit
(267,413
)
(168,527
)
Total stockholders’ equity
148,618
247,077
Total liabilities and stockholders’
equity
$
361,721
$
509,638
a.k.a. BRANDS HOLDING
CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
Year Ended December
31,
2023
2022
Cash flows from operating
activities:
Net loss
$
(98,886
)
$
(176,697
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation expense
7,605
6,156
Amortization expense
11,536
14,192
Amortization of inventory fair value
adjustment
—
707
Amortization of debt issuance costs
624
647
Lease incentives
1,596
1,722
Loss on disposal of businesses
1,533
—
Non-cash operating lease expense
7,766
9,779
Equity-based compensation
7,640
6,730
Deferred income taxes, net
(745
)
(4,064
)
Goodwill impairment
68,524
173,786
Changes in operating assets and
liabilities, net of effects of acquisitions:
Accounts receivable
(1,283
)
(602
)
Inventory
32,149
(16,257
)
Prepaid expenses and other current
assets
(2,789
)
6,134
Accounts payable
7,512
(1,888
)
Income taxes payable
6,214
(2,442
)
Accrued liabilities
(13,982
)
(7,419
)
Returns reserve
5,566
(2,678
)
Deferred revenue
522
267
Lease liabilities
(7,676
)
(8,392
)
Net cash provided by (used in) operating
activities
33,426
(319
)
Cash flows from investing
activities:
Acquisition of businesses, net of cash
acquired
—
(5,321
)
Purchases of intangible assets
(61
)
(247
)
Purchases of property and equipment
(5,970
)
(19,746
)
Net cash used in investing activities
(6,031
)
(25,314
)
Cash flows from financing
activities:
Payments of costs related to initial
public offering
—
(1,142
)
Proceeds from line of credit, net of
issuance costs
11,500
40,000
Repayment of line of credit
(51,500
)
—
Proceeds from issuance of debt, net of
issuance costs
—
(121
)
Repayment of debt
(10,700
)
(5,600
)
Taxes paid related to net share settlement
of equity awards
(191
)
(104
)
Proceeds from issuances under equity-based
compensation plans
162
227
Repurchase of shares
(2,100
)
—
Net cash (used in) provided by financing
activities
(52,829
)
33,260
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
1,090
(272
)
Net change in cash, cash equivalents and
restricted cash
(24,344
)
7,355
Cash, cash equivalents and restricted cash
at beginning of period
48,373
41,018
Cash, cash equivalents and restricted cash
at end of period
$
24,029
$
48,373
Reconciliation of cash, cash
equivalents and restricted cash:
Cash and cash equivalents
$
21,859
$
46,319
Restricted cash
2,170
2,054
Total cash, cash equivalents and
restricted cash
$
24,029
$
48,373
a.k.a. BRANDS HOLDING
CORP. KEY OPERATING AND FINANCIAL METRICS
(unaudited)
Three Months Ended December
31,
Year Ended December
31,
(dollars in thousands)
2023
2022
2023
2022
Gross margin
51
%
53
%
55
%
55
%
Net loss
$
(13,883
)
$
(173,896
)
$
(98,886
)
$
(176,697
)
Net loss margin
(9
)%
(117
)%
(18
)%
(29
)%
Adjusted EBITDA2
$
1,339
$
6,093
$
13,790
$
31,872
Adjusted EBITDA2 margin
1
%
4
%
3
%
5
%
Key Operational Metrics and Regional Sales
Three Months Ended December
31,
Year Ended December
31,
(metrics in millions, except AOV; sales
in thousands)
2023
2022
% Change
2023
2022
% Change
Key Operational
Metrics
Active customers4
3.7
3.8
(2.6
)%
3.7
3.8
(2.6
)%
Average order value
$
76
$
77
(1.3
)%
$
80
$
82
(2.4
)%
Number of orders
1.97
1.93
2.1
%
6.85
7.42
(7.7
)%
Sales by
Region
U.S.
$
79,057
$
70,860
11.6
%
$
315,496
$
312,977
0.8
%
Australia/New Zealand
63,272
72,235
(12.4
)%
202,777
268,873
(24.6
)%
Rest of world
6,583
6,031
9.2
%
27,985
29,888
(6.4
)%
Total
$
148,912
$
149,126
(0.1
)%
$
546,258
$
611,738
(10.7
)%
Year-over-year growth on a constant
currency basis1
—
%
(8.7
) %
Sales by Region -
Two-Year Stack
Three Months Ended December
31,
Year Ended December
31,
2023
2021
% Change
2023
2021
% Change
U.S.
$
79,057
$
79,558
(0.6
)%
$
315,496
$
270,028
16.8
%
Australia/New Zealand
63,272
95,487
(33.7
)%
202,777
265,365
(23.6
)%
Rest of world
6,583
7,378
(10.8
)%
27,985
26,798
4.4
%
Total
$
148,912
$
182,423
(18.4
)%
$
546,258
$
562,191
(2.8
)%
Active Customers
We view the number of active customers as a key indicator of our
growth, our value proposition and consumer awareness of our brand,
and their desire to purchase our products. In any particular
period, we determine our number of active customers by counting the
total number of unique customer accounts who have made at least one
purchase in the preceding 12-month period, measured from the last
date of such period.
Average Order Value
We define average order value (“AOV”) as net sales in a given
period divided by the total orders placed in that period. AOV may
fluctuate as we expand into new categories or geographies or as our
assortment changes.
a.k.a. BRANDS HOLDING CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in
thousands, except per share data) (unaudited)
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP
financial measures that management uses to assess our operating
performance. Because Adjusted EBITDA and Adjusted EBITDA margin
facilitate internal comparisons of our historical operating
performance on a more consistent basis, we use these measures 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 expect Adjusted EBITDA margin
to increase over the long-term as we continue to scale our business
and achieve greater leverage in our operating expenses.
We calculate Adjusted EBITDA as net income (loss) adjusted to
exclude: interest and other expense; provision for (benefit from)
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 any recoveries; and
one-time or non-recurring items. We calculate Adjusted EBITDA
margin as Adjusted EBITDA as a percentage of net sales. Adjusted
EBITDA and Adjusted EBITDA margin are considered non-GAAP financial
measures under the SEC’s rules because they exclude certain amounts
included in net income (loss) and net income (loss) margin, the
most directly comparable financial measures calculated in
accordance with GAAP.
A reconciliation of non-GAAP Adjusted EBITDA to net loss for the
three months and year ended December 31, 2023 and 2022 is as
follows:
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Net loss
$
(13,883
)
$
(173,896
)
$
(98,886
)
$
(176,697
)
Add (deduct):
Total other expense, net
2,741
2,053
13,556
8,575
Provision for (benefit from) income
tax
5,754
(3,713
)
1,921
(3,917
)
Depreciation and amortization expense
4,446
4,975
19,141
20,348
Equity-based compensation expense
2,162
2,282
7,640
6,730
Inventory step-up amortization expense
—
—
—
707
Transaction costs
—
—
—
140
Goodwill impairment
—
173,786
68,524
173,786
Non-routine items5
119
606
1,894
2,200
Adjusted EBITDA
$
1,339
$
6,093
$
13,790
$
31,872
Net loss margin
(9.3
)%
(116.6
)%
(18.1
)%
(28.9
)%
Adjusted EBITDA margin
0.9
%
4.1
%
2.5
%
5.2
%
Net Income (Loss), As Adjusted and Net Income (Loss) Per
Share, As Adjusted
Net income (loss), as adjusted and net income (loss) per share,
as adjusted are considered non-GAAP financial measures under the
SEC’s rules because they exclude certain amounts included in net
income (loss) and net income (loss) per share calculated in
accordance with GAAP, the most directly comparable financial
measures calculated in accordance with GAAP. Management believes
that net income (loss), as adjusted, and net income (loss) per
share, as adjusted, are meaningful measures to provide investors
because they better enable comparison of the performance with that
of the comparable period. In addition, net income (loss), as
adjusted and net income (loss) per share, as adjusted, afford
investors a view of what management considers to be a.k.a.’s core
earnings performance, thereby providing investors the ability to
make a more informed assessment of such core earnings performance
with that of the prior year.
We have calculated net loss, as adjusted and net loss per share,
as adjusted, for the year ended December 31, 2023, by adjusting net
loss and net loss per share for the following:
- Loss on disposal of the Rebdolls reporting unit; and
- Impairment recognized on the goodwill recorded from the
acquisitions of the Culture Kings and Petal & Pup reporting
units, which is a result of the continued worsening global economic
trends, elevated interest rates and unfavorable demand in
Australia.
A reconciliation of non-GAAP net loss, as adjusted to net loss,
as well as the resulting calculation of net loss per share, as
adjusted, for the year ended December 31, 2023, are as follows:
Year Ended December 31,
2023
Net loss
$
(98,886
)
Adjustments:
Loss on disposal of the Rebdolls reporting
unit
951
Goodwill impairment
68,524
Tax effects of adjustments
—
Net loss, as adjusted
$
(29,411
)
Net loss per share, as adjusted
$
(2.75
)
Weighted-average shares, diluted
10,707,024
We have calculated net loss, as adjusted and net loss per share,
as adjusted for the three months and year ended December 31, 2022,
by adjusting net loss and net loss per share for the following:
- Inventory step-up amortization expense resulting from the
acquisition of mnml;
- Impairment recognized on the goodwill recorded from the
acquisitions of the Culture Kings and Rebdolls reporting units,
which is a result of the worsening economic trends, including
continued inflation and rising interest rates, as well as
unfavorable demand due to a gradual customer shift from primarily
online shopping to a mix of online and physical store shopping;
and
- The tax benefit related to the finalization of Australia tax
basis allocation pertaining to the inventory and intangibles
included in the purchase of the Culture Kings non-controlling
interest, as well as an intra-entity transfer of intellectual
property rights.
A reconciliation of non-GAAP net loss, as adjusted, to net loss,
as well as the resulting calculation of net loss per share, as
adjusted for the three months and year ended December 31, 2022, are
as follows:
Three Months Ended December
31, 2022
Year Ended December 31,
2022
Net loss
$
(173,896
)
$
(176,697
)
Adjustments:
Inventory step-up amortization expense
—
707
Goodwill impairment
173,786
173,786
Tax benefit - Culture Kings change in tax
basis of inventory and intangibles; intra-entity transfer of
intellectual property rights
(3,263
)
(3,263
)
Tax effects of adjustments
—
(212
)
Net loss, as adjusted
$
(3,373
)
$
(5,679
)
Net loss per share, as adjusted*
$
(0.31
)
$
(0.53
)
Weighted-average shares, diluted*
10,739,439
10,726,392
*Adjusted for the one-for-12 Reverse Stock Split.
Pro Forma Net Sales
Pro forma net sales is considered a non-GAAP financial measure
under the SEC’s rules. We believe that pro forma net sales is
useful information for investors as it provides a better
understanding of sales performance, and relative changes therein,
on a comparable basis. We calculate pro forma net sales as net
sales including the historical net sales relating to the
pre-acquisition periods of Culture Kings, assuming that the Company
acquired Culture Kings at the beginning of the period presented.
Pro forma net sales is not necessarily indicative of what the
actual results would have been if the acquisition had in fact
occurred on the date or for the periods indicated nor does it
purport to project net sales for any future periods or as of any
date. A reconciliation of non-GAAP pro forma net sales to net
sales, which is the most directly comparable financial measure
calculated in accordance with GAAP, in each case disaggregated by
geography, for the year ended December 31, 2023 and 2021 is as
follows:
Year Ended December 31,
2023
Year Ended December 31,
2021
Growth Rate
Actual
Actual
Culture Kings
Pro Forma
Actual
Pro Forma
U.S.
$
315,496
$
270,028
$
7,669
$
277,697
16.8
%
13.6
%
Australia/New Zealand
202,777
265,365
43,314
308,679
(23.6
)%
(34.3
)%
Rest of world
27,985
26,798
280
27,078
4.4
%
3.3
%
Total
$
546,258
$
562,191
$
51,263
$
613,454
(2.8
)%
(11.0
)%
1 In order to provide a framework for assessing the performance
of our underlying business, excluding the effects of foreign
currency rate fluctuations, we compare the percent change in the
results from one period to another period using a constant currency
methodology wherein current and comparative prior period results
for our operations reporting in currencies other than U.S. dollars
are converted into U.S. dollars at constant exchange rates (i.e.,
the rates in effect on December 31, 2022, which was the last day of
our prior fiscal year) rather than the actual exchange rates in
effect during the respective periods. 2 See additional information
at the end of this release regarding non-GAAP financial measures. 3
The Company has not provided a quantitative reconciliation of its
Adjusted EBITDA outlook to a GAAP net income (loss) outlook because
it is unable, without making unreasonable efforts, to project
certain reconciling items. These items include, but are not limited
to, future equity-based compensation expense, income taxes,
interest expense and transaction costs. These items are inherently
variable and uncertain and depend on various factors, some of which
are outside of the Company’s control or ability to predict. See
additional information at the end of this release regarding
non-GAAP financial measures. 4 Trailing twelve months. 5
Non-routine items include costs to establish or relocate
distribution centers; severance from headcount reductions; sales
tax penalties; insured losses, net of recoveries; and non-routine
legal matters.
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Grafico Azioni aka Brands (NYSE:AKA)
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Grafico Azioni aka Brands (NYSE:AKA)
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Da Gen 2024 a Gen 2025
