Reports Full Year Fiscal 2024 Net Sales of $24.5 million, Net Loss of $399,000 and Adjusted EBITDA of $612,000
ATLANTA, GA / ACCESSWIRE / October 1, 2024 / Luvu Brands, Inc. (OTCQB:LUVU), a designer, manufacturer, and marketer of a portfolio of consumer lifestyle brands, announced today its financial and operational results for the full year ending June 30, 2024.
For the 12 months ended June 30, 2024 overview:
Full year net revenue decreased 16% to $24.5 million versus a year ago.
Full year gross margin improved to 27% from 25% a year ago.
Full year net loss of $399,000, or $0.01 per basic and diluted share.
Full year adjusted EBITDA of $612,000 was down 69% from a year ago.
Inventory at June 30, 2024 of $3.3 million, representing a decrease of 22% versus a year ago.
As of June 30, 2024, the Company had $1.03 million of cash and cash equivalents, which was flat compared to a year ago.
Louis Friedman, Chairman and Chief Executive Officer, acknowledged the challenges faced during FY2024. He cited declining consumer sentiment due to macroeconomic, extreme weather impacts, and geopolitical instability as a headwind affecting sales. Additionally, the absence of the significant marketing event of the Netflix show, "How to Build a Sex Room," in FY2024 impacted Liberator product sales. To counter this decline, the company increased digital advertising spending and successfully engaged online influencers.
Twelve Month Operating Results
Net revenue in FY 2024 decreased 16% to $24.6 million compared to $29.2 million in FY 2023. The year-over-year decrease is primarily attributable to lower unit sales in our Liberator product line.
Gross profit in FY 2024 totaled $6.5 million compared to $7.2 million in FY 2023, while gross margin improved to 27% in FY 2024 versus 25% a year ago. The decrease in gross profit is primarily due to the decrease in units sold, and the improvement in gross margin is mainly due to lower freight and raw material costs versus a year ago.
Operating Costs excluding Sales and Marketing in FY 2024 were $3.2 million, or 13% of net revenue, compared to $3.1 million, or 11% of net revenue in FY 2023. The increase was primarily attributable to increases in personnel expenses and professional fees.
Sales and Marketing expenses in FY 2024 totaled $2.75 million, or 11% of net revenue, compared to $2.2 million, or 8% of net revenue, in FY 2023, driven by increased digital advertising spend.
Net loss in FY 2024 was $399,000 compared to net income of $1.2 million in FY 2023, and the net loss margin in FY 2024 was 1.6% compared to net income margin of 4.1% in FY 2023.
Adjusted EBITDA in FY 2024 was $612,000 compared to $1.95 million in FY 2023.
Friedman added, "As we focus on reinvigorating our products and brands, we are encouraged by the strong consumer response to our recent influencer success. This makes us confident that our fresh, updated product collections coming to market over the next year will build on that success. We believe the combination of elevated product, good storytelling, and superior customer experience in the coming year will position the business to return to top-line growth in 2025 and enable us to build long-term shareholder value."
Friedman emphasized Luvu Brands' commitment to cost control and maximizing sales growth. The company aims to return to growth in the coming year by exploring the following strategies:
Diversification of Product Lines: Luvu Brands recognizes the need to diversify its product offerings beyond the Liberator brand. While Liberator has been a cornerstone of our success, we aim to explore new lifestyle categories and create innovative products that resonate with a broader customer base. Our research and development team is actively working on identifying trends and consumer preferences to guide our expansion.
International Expansion: The global market presents significant growth opportunities. We plan to expand our presence beyond the United States by strategically entering new markets. This involves understanding cultural nuances, adapting our marketing approach, and establishing strong distribution networks. Our goal is to become a recognized brand worldwide.
Digital Transformation: In an increasingly digital world, we're committed to enhancing our online presence. This includes optimizing our e-commerce platform, improving user experience, and leveraging data analytics to personalize customer interactions. We'll also explore partnerships with online marketplaces and influencers to amplify our reach.
Strategic Marketing Collaborations: Building on our successful influencer campaigns, we'll continue to collaborate with key influencers and thought leaders. These partnerships allow us to tap into their engaged audiences and create authentic connections. Additionally, we'll explore co-branding opportunities and strategic alliances with complementary brands.
Customer-Centric Approach: Our customers are at the heart of everything we do. We'll invest in understanding their needs, preferences, and pain points. Regular feedback loops, surveys, and social listening will guide our product development and marketing efforts. By staying attuned to our audience, we can adapt swiftly to changing market dynamics.
Agile Supply Chain Management: To maintain cost efficiency and flexibility, we'll optimize our supply chain. This involves streamlining sourcing, improving inventory management, and minimizing lead times. Our operations team will focus on agility, ensuring we can respond swiftly to market demands and minimize disruptions.
Investment in Talent and Culture: Our employees drive our success. We'll invest in talent development, fostering a culture of innovation, collaboration, and continuous learning. By attracting top talent and nurturing their growth, we'll position ourselves for long-term success.
Louis Friedman, CEO, emphasizes that these strategies are essential for Luvu Brands' resilience and growth. As we navigate challenges, we remain committed to delivering quality products while adapting to an ever-evolving market landscape.
Additional Information:
Please see www.luvubrands.com for updated events, press and new product releases. Should you wish to speak to us directly please email [email protected] with your preferred day and time.
Forward-Looking Statements
Certain matters discussed in this press release may be forward-looking statements. Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; acceptance of the Company's products in the market; the Company's success in obtaining new customers; the Company's success in product development; the Company's ability to execute its business model and strategic plans; the Company's success in integrating acquired entities and assets, and all the risks and related information described from time to time in the Company's filings with the Securities and Exchange Commission ("SEC"), including the financial statements and related information contained in the Company's Annual Report on Form 10-K and interim Quarterly Reports on Form 10-Q. Examples of forward-looking statements in this release include statements related to new products, anticipated revenue and profitability. The Company assumes no obligation to update the cautionary information in this release.
*Use of Non-GAAP Measure - Adjusted EBITDA
Luvu Brands management evaluates and makes operating decisions using various financial metrics. In addition to the Company's GAAP results, management also considers the non-GAAP measure of Adjusted EBITDA. While Adjusted EBITDA is not a measure of performance in accordance with GAAP, management believes that this non-GAAP measure provides useful information about the Company's operating results. The table below provides a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure.
As used herein, Adjusted EBITDA income represents net income (loss) before interest income, interest expense, income taxes, depreciation, amortization, and stock-based compensation expense.
About Luvu Brands
Luvu Brands, Inc. designs, manufactures, and markets a portfolio of consumer lifestyle brands through the Company's websites, online mass/drug merchants, and specialty retail stores worldwide. Brands include Liberator®, a brand category of iconic products for enhancing sensuality and intimacy; Avana®, yoga, inclined sleep therapy, and orthopedic pillow products; and Jaxx®, a diverse range of casual fashion daybeds, sofas, and beanbags made from virgin and re-purposed polyurethane foam. Many of our products are offered flat-packed and vacuum-compressed to save on shipping and reduce our carbon footprint. The Company is headquartered in Atlanta, Georgia, in a 140,000-square-foot vertically integrated manufacturing facility that employs over 190 people. Bringing sewn products manufacturing back to the USA and creating innovative consumer brands are core to the Company's operating principles. The Company's brand sites include www.liberator.com, www.jaxxbeanbags.com, www.avanacomfort.com, plus other global e-commerce sites. For more information about Luvu Brands, please visit www.luvubrands.com.
Company Contact:
Luvu Brands, Inc.
Chris Knauf
Chief Financial Officer
770-246-6426
[email protected]
Fiscal 2024 Results
Consolidated Statements of Operations
| 2024 |
|
| 2023 |
| |||
| (in thousands, except share data) |
| ||||||
|
|
|
|
|
| |||
Net Sales |
| $ | 24,574 |
|
| $ | 29,219 |
|
Cost of goods sold (excl. depreciation expense presented below) |
|
| 18,048 |
|
|
| 22,027 |
|
Gross profit |
|
| 6,526 |
|
|
| 7,192 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Advertising and promotion |
|
| 1,028 |
|
|
| 791 |
|
Other selling and marketing |
|
| 1,725 |
|
|
| 1,422 |
|
General and administrative |
|
| 3,187 |
|
|
| 3,081 |
|
Depreciation |
|
| 412 |
|
|
| 354 |
|
Total operating expenses |
|
| 6,352 |
|
|
| 5,648 |
|
Operating income |
|
| 174 |
|
|
| 1,544 |
|
|
|
|
|
|
|
|
| |
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense and financing costs |
|
| (411 | ) |
|
| -355 |
|
Total other income (expense) |
|
| (411 | ) |
|
| -355 |
|
Income from operations before income taxes |
|
| (237 | ) |
|
| 1,189 |
|
Provision for income taxes |
|
| (162 | ) |
|
| 10 |
|
Net income |
| $ | (399 | ) |
| $ | 1,199 |
|
|
|
|
|
|
|
|
| |
Net income per share: |
|
|
|
|
|
|
|
|
Basic |
| $ | (0.01 | ) |
| $ | 0.02 |
|
Diluted |
| $ | (0.01 | ) |
| $ | 0.02 |
|
Shares used in calculation of net income per share: |
|
|
|
|
|
|
|
|
Basic |
|
| 76,547,672 |
|
|
| 76,333,485 |
|
Diluted |
|
| 76,547,672 |
|
|
| 76,494,717 |
|
Consolidated Balance Sheets
| 2024 |
|
| 2023 |
| |||
Assets: |
| (in thousands, except share data) |
| |||||
Current assets: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 1,028 |
|
| $ | 1,041 |
|
Accounts receivable, net of allowance for doubtful accounts and allowance for discounts and returns of $11 in 2024 and $55 in 2023 |
|
| 1,061 |
|
|
| 1,051 |
|
Inventories, net of allowance for inventory reserve of $188 in 2024 and $252 in 2023 |
|
| 3,287 |
|
|
| 4,202 |
|
Other current assets |
|
| 141 |
|
|
| 83 |
|
Total current assets |
|
| 5,517 |
|
|
| 6,377 |
|
|
|
|
|
|
|
|
| |
Equipment, property and leasehold improvements, net |
|
| 1,870 |
|
|
| 2,187 |
|
Finance lease assets |
|
| 103 |
|
|
| 24 |
|
Operating lease assets |
|
| 1,545 |
|
|
| 1,913 |
|
Deferred tax asset, net |
|
| - |
|
|
| 10 |
|
Other assets |
|
| 96 |
|
|
| 100 |
|
Total assets |
| $ | 9,131 |
|
| $ | 10,611 |
|
|
|
|
|
|
|
|
| |
Liabilities and stockholders' equity: |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 1,502 |
|
| $ | 2,114 |
|
Current debt |
|
| 1,639 |
|
|
| 1,659 |
|
Other accrued liabilities |
|
| 508 |
|
|
| 416 |
|
Operating lease liability |
|
| 528 |
|
|
| 396 |
|
Total current liabilities |
|
| 4,177 |
|
|
| 4,585 |
|
|
|
|
|
|
|
|
| |
Noncurrent liabilities: |
|
|
|
|
|
|
|
|
Deferred Tax Liability |
|
| 119 |
|
|
| - |
|
Long-term debt |
|
| 854 |
|
|
| 1,148 |
|
Long-term operating lease liability |
|
| 1,151 |
|
|
| 1,667 |
|
Total noncurrent liabilities |
|
| 2,124 |
|
|
| 2,815 |
|
Total liabilities |
|
| 6,301 |
|
|
| 7,400 |
|
Commitments and contingencies (See Note 13) |
|
| - |
|
|
| - |
|
Stockholders' equity (deficit): |
|
|
|
|
|
|
|
|
Preferred stock, 5,700,000 shares authorized, $0.0001 par value none issued and outstanding |
|
| - |
|
|
| - |
|
Series A Convertible Preferred stock, 4,300,000 shares authorized $0.0001 par value, 4,300,000 shares issued and outstanding with a liquidation preference of $1,000 as of June 30, 2024 and 2023 |
|
| - |
|
|
| - |
|
Common stock, $0.01 par value, 175,000,000 shares authorized, 76,547,672 and 76,547,672 shares issued and outstanding as of June 30, 2024 and 2023, respectively |
|
| 765 |
|
|
| 765 |
|
Additional paid-in capital |
|
| 6,253 |
|
|
| 6,234 |
|
Accumulated deficit |
|
| (4,188 | ) |
|
| (3,790 | ) |
Total stockholders' equity |
|
| 2,830 |
|
|
| 3,211 |
|
Total liabilities and stockholders' equity |
| $ | 9,131 |
|
| $ | 10,611 |
|
Consolidated Statement of Cash Flow
| 2024 |
|
| 2023 |
| |||
| (in thousands) |
| ||||||
OPERATING ACTIVITIES: |
|
|
|
|
|
| ||
Net income |
| $ | (399 | ) |
| $ | 1,199 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Deferred Income Taxes |
|
| 129 |
|
|
| (10 | ) |
Depreciation and amortization |
|
| 412 |
|
|
| 354 |
|
Stock-based compensation expense |
|
| 19 |
|
|
| 46 |
|
Provision for bad debt |
|
| 10 |
|
|
| 1 |
|
Provision for inventory reserve |
|
| (38 | ) |
|
| 76 |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
| (20 | ) |
|
| 54 |
|
Inventory |
|
| 953 |
|
|
| (460 | ) |
Prepaid expenses and other assets |
|
| (54 | ) |
|
| 81 |
|
Accounts payable |
|
| (615 | ) |
|
| (566 | ) |
Accrued expenses and interest |
|
| 52 |
|
|
| (77 | ) |
Accrued payroll and related |
|
| 40 |
|
|
| (42 | ) |
Operating lease liability |
|
| (383 | ) |
|
| (337 | ) |
Amortization of operating lease asset |
|
| 369 |
|
|
| 342 |
|
Net cash provided by operating activities |
|
| 475 |
|
|
| 661 |
|
|
|
|
|
|
|
|
| |
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Investment in equipment, software and leasehold improvements |
|
| (71 | ) |
|
| (115 | ) |
Net cash used in investing activities |
|
| (71 | ) |
|
| (115 | ) |
|
|
|
|
|
|
|
| |
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Borrowing (repayment) under revolving line of credit |
|
| 5 |
|
|
| (31 | ) |
Repayment of unsecured line of credit |
|
| (13 | ) |
|
| (12 | ) |
Proceeds from unsecured notes payable |
|
| - |
|
|
| 200 |
|
Repayment of unsecured notes payable |
|
| - |
|
|
| (200 | ) |
Payments on equipment notes |
|
| (392 | ) |
|
| (308 | ) |
Proceeds from exercise of stock options |
|
| - |
|
|
| 2 |
|
Principal payments on capital leases |
|
| (17 | ) |
|
| (15 | ) |
Net cash used in financing activities |
|
| (417 | ) |
|
| (364 | ) |
Net increase (decrease) in cash and cash equivalents |
|
| (13 | ) |
|
| 182 |
|
Cash and cash equivalents at beginning of year |
|
| 1,041 |
|
|
| 859 |
|
Cash and cash equivalents at end of year |
| $ | 1,028 |
|
| $ | 1,041 |
|
|
|
|
|
|
|
|
| |
Supplemental Disclosure of Cash Flow Information: |
|
|
|
|
|
|
|
|
Non cash items: |
|
|
|
|
|
|
|
|
Purchases of equipment with equipment notes |
| $ | - |
|
| $ | 414 |
|
Finance lease asset obligation in exchange for lease payable |
| $ | 104 |
|
| $ | - |
|
Finance lease asset obligation in exchange for lease payable |
| $ | - |
|
| $ | - |
|
Cash paid during the year for: |
|
|
|
|
|
|
|
|
Interest |
| $ | 363 |
|
| $ | 350 |
|
Income taxes |
| $ | - |
|
| $ | - |
|
SUPPLEMENTAL FINANCIAL INFORMATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Reconciliation of Net Income (Loss) to Adjusted EBITDA income for the 12 months ended June 30, 2024 and 2023:
| 12 months ended June 30, |
| ||||||
| 2024 |
|
| 2023 |
| |||
| (in thousands) |
| ||||||
Net income (loss) |
| $ | (399 | ) |
| $ | 1,199 |
|
Plus interest expense, financing costs and income tax |
|
|
|
|
|
| 348 |
|
Plus depreciation and amortization expense |
|
| 412 |
|
|
| 354 |
|
Plus stock-based compensation expense |
|
| 20 |
|
|
| 46 |
|
Adjusted EBITDA |
| $ | 612 |
|
| $ | 1,947 |
|
SOURCE: Luvu Brands, Inc.