A.k.a. Brands, the parent company of online fashion brands such as Princess Polly, Culture Kings, and Petal & Pup, has released its financial results for the fiscal year 2023, as well as the fourth quarter of the period. The company reported lower losses and sales for the year, as it faced challenges from the Covid-19 pandemic, inventory issues, and currency fluctuations. The company also announced its outlook and initiatives for the fiscal year 2024, which include expanding its omnichannel presence, launching new categories, and streamlining its operations.

The Highlights and Details of the Financial Results

The financial results of A.k.a. Brands for the fiscal year 2023, which ended on December 31, 2023, are as follows:

Net Sales: The company’s net sales decreased by 10.7 percent to $546.3 million, compared to $611.7 million in the fiscal year 2022. This represented an 8.7 percent decrease on a constant currency basis. The company attributed the decline to the impact of the Covid-19 pandemic on consumer demand and behavior, as well as inventory challenges and currency headwinds. The company’s net sales in the U.S., its largest market, increased by 11.6 percent to $148.9 million in the fourth quarter, marking the second consecutive quarter of growth in the region.
Net Loss: The company’s net loss narrowed to $98.9 million, or $9.24 per share, compared to $176.7 million, or $16.47 per share, in the fiscal year 2022. The company’s net loss as a percentage of net sales improved to 18.1 percent, compared to 28.9 percent in the previous year. The company said that the improvement was mainly due to lower impairment charges, lower interest expense, and lower income tax expense.
Adjusted EBITDA: The company’s adjusted EBITDA, which excludes certain items such as stock-based compensation, impairment charges, and IPO-related expenses, was $13.8 million, or 2.5 percent of net sales, compared to $31.9 million, or 5.2 percent of net sales, in the fiscal year 2022. The company said that the decrease was primarily due to lower gross margin and higher operating expenses.

The Outlook and Initiatives for the Fiscal Year 2024

The company also provided its guidance and plans for the fiscal year 2024, which are as follows:

Net Sales: The company expects its net sales to be between $540 million and $555 million, representing a flat to 3 percent decrease compared to the fiscal year 2023. The company said that the guidance reflects its expectations of continued growth in the U.S., partially offset by lower sales in Australia and New Zealand, as well as currency headwinds.
Adjusted EBITDA: The company expects its adjusted EBITDA to be between $16 million and $18 million, representing a 16 to 30 percent increase compared to the fiscal year 2023. The company said that the guidance reflects its efforts to improve its gross margin and operating efficiency, as well as lower interest expense and income tax expense.
Omnichannel Expansion: The company plans to expand its omnichannel presence, which includes physical stores, marketplaces, and wholesale channels, to attract new customers and increase its brand awareness. The company said that it will open three to four Princess Polly stores in the U.S. in 2024, following the success of its first store in Los Angeles, which opened in September 2023. The company also said that it will explore new marketplace and wholesale opportunities with partners such as Amazon, Nordstrom, and Revolve.
New Category Launches: The company plans to launch new categories, such as beauty, accessories, and home, to diversify its product offerings and increase its customer lifetime value. The company said that it will leverage its data and insights, as well as its existing supply chain and distribution network, to create and deliver new products that meet the needs and preferences of its customers.
Operational Streamlining: The company plans to streamline its operations, which include inventory management, logistics, and technology, to enhance its operational efficiency and profitability. The company said that it will optimize its inventory levels and mix, improve its logistics and fulfillment capabilities, and invest in its technology and innovation platforms.

The Reactions and Comments of the Interim CEO and CFO

Ciaran Long, the interim CEO and CFO of A.k.a. Brands, commented on the financial results and the outlook for the fiscal year 2024, saying:

“We are pleased with our performance in the fourth quarter, as we delivered net sales growth in the U.S. for the second consecutive quarter, reflecting the strength and resilience of our brands and our business model. We also improved our profitability and cash flow, as we reduced our debt and inventory levels, and generated positive operating cash flow of $11 million in the quarter. As we look ahead, we are excited about the opportunities to grow and scale our business, by expanding our omnichannel presence, launching new categories, and streamlining our operations. We are confident that we have the right strategy, team, and resources to deliver long-term value for our customers, shareholders, and partners.”