A.k.a. Brands Holding Corp., the parent of Princess Polly, Culture Kings, Mnml, and Petal & Pup., reported sales decreased 18.3 percent in the fourth quarter to $149.1 million compared to $182.4 million in the fourth quarter of 2021. Currency-neutral sales were down 13 percent.
The net loss was $173.9 million or $1.35 per share in the fourth quarter of 2022, compared to the net income of break-even earnings a year ago. Included in this loss was a non-cash impairment charge of $173.8 million.
A.k.a. said the impairment charge recognized on the goodwill recorded from the acquisitions of the Culture Kings and Rebdolls reporting units 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.
The net loss, as adjusted, was $3.4 million, or 3 cents a share, compared to an adjusted net income of $4.3 million, or 3 cents per share, in the fourth quarter of 2021.
Adjusted EBITDA was $6.1 million, or 4.1 percent of net sales, compared to $16.1 million, or 8.8 percent of net sales in the fourth quarter of 2021.
For the year, sales increased 8.8 percent to $611.7 million, compared to $562.2 million in 2021 or decreased 0.3 percent pro forma, adjusting for the acquisition of Culture Kings.
Net loss was $176.7 million or $1.37 per share in 2022, compared to a net loss attributable to a.k.a. Brands Holding Corp. of $6.0 million or $0.06 per share in 2021 and 116.6 percent of net sales.
Net loss, as adjusted, was $5.7 million, or $0.04 per share in 2022, compared to net income, as adjusted2 of $14.2 million or $0.15 per share in 2021. Adjusted EBITDA was $31.9 million, or 5.2 percent of net sales, compared to $62.4 million, or 11.1 percent of net sales in 2021.
“I want to recognize our brands and teams for their unwavering dedication in 2022 in the face of external pressures and a dynamic environment,” said Jill Ramsey, CEO. “As we went through the quarter, we saw lower marketing effectiveness given the highly promotional environment, and we made the strategic decision to reduce our spend compared to last year in an effort to balance growth and profit. Additionally, as we aggressively tightened our inventory in the second half of the year, there were fewer new styles in our women’s brands during the peak holiday selling period. These decisions, combined with the macroeconomic pressures, impacted our performance in the quarter but enabled us to protect the integrity and durability of our brands and business model for the long term.”
“As we look ahead, we remain laser-focused on strengthening the foundation of our brands and business. The omnichannel initiatives we announced today, including the opening of our first Princess Polly store in Southern California in the back half of the year and testing wholesale, set the stage for continued growth and profitability. We remain firmly committed to building great next-generation brands for the long-term, and I am confident that we have tremendous runway ahead of us,” concluded Ramsey.
The company also announced that Ramsey would be taking time to work through unforeseen medical issues but remain as active in the business as her health allows and remain on the Board. During this time, Ciaran Long, chief financial officer, will serve as acting CEO on an interim basis.
For the full year fiscal 2023, the company expects:
- Net sales between $570 million and $600 million;
- Adjusted EBITDA3 between $35 million and $37 million.
The above outlook is based on several assumptions, including but not limited to foreign exchange rates remaining at the current levels and a continued promotional environment.
