Perfect Moment Ltd. reported total revenue for the fiscal third quarter ended December 31 decreased 21 percent to $12.7 million, compared to $16.1 million in the prior-year comp quarter. The decrease was said to be primarily due to the occurrence of some nontraditional seasonality that affected revenue recognition for the quarter; a substantial amount of wholesale revenue that historically was recorded in the third quarter was instead accelerated into the second quarter due to certain earlier-than-planned customer shipments.

Wholesale revenue totaled $9.0 million in the quarter, down 32 percent compared to $13.1 million in the prior-year comp quarter. In addition to the timing of the Q3 to Q2 revenue recognition, the company’s wholesale accounts also had significantly higher purchases in fiscal year 2022 due to the post-Covid rebound. E-commerce revenue increased 23 percent to $3.8 million in the quarter compared to $3.0 million in the prior-year comp quarter. The increase was attributed to greater brand awareness and a stronger focus on e-commerce.

“Our fiscal third quarter represented a special transitional period for Perfect Moment, as we prepared for our NYSE American IPO, onboarded new talent and senior team leaders, and increased our focus on e-commerce sales,” commented Perfect Moment CEO, Mark Buckley.

The luxury lifestyle brand combining fashion with technical performance for skiwear, outerwear, swimwear and activewear executed an initial public offering in February.

“Our results for the quarter reflect this transitional period, particularly with the strong growth in e-commerce, Buckley continued. “Improved production timelines resulted in substantial amount of wholesale shipments typically occurring in the third quarter being accelerated into the second. While it made for a strong second quarter, as a result third quarter revenues were lower compared to the year ago.”

Gross profit decreased 22 percent to $4.9 million in fiscal Q3 from $6.2 million in the prior-year quarter, and was said to be primarily attributed to the early shipment of wholesale orders.

Gross margin was 38.2 percent of net sales in the period. compared to the 38.4 percent in the prior-year period. The change in gross margin remained virtually flat in light of a decrease in higher margin wholesale revenue that is attributed to a strategic shift in e-commerce sales and where the company lowered the number of products discounted while maintaining full prices on core products that increased margins.

Total operating expenses increased 7 percent to $4.1 million in the third quarter, compared to $3.9 million in the prior-year comp quarter. The increase was said to be primarily due to increased SG&A expenses as well as increased marketing and advertising expenses to support growth, drive brand awareness, and prepare Perfect Moment for becoming a public company.

Net income totaled $1.2 million, or 8 cents per diluted share, in fiscal Q3, compared to $3.3 million, or 24 cents per diluted share, in the prior-year comp quarter.

Adjusted EBITDA was $1.7 million in Q3, compared to $4.1 million in the prior-year Q3 period, with the decline attributed to the occurrence of some non-traditional seasonality that affected revenue recognition for the quarter. A substantial amount of wholesale revenue that historically was recorded in the third quarter was instead accelerated into the second quarter.

Cash, cash equivalents and restricted cash totaled $3.5 million at quarter-end, compared to $4.7 million at the end of the prior fiscal year. Pro forma cash position including the company’s IPO on February 8, 2023 totaled $9.8 million with no long-term debt.

“Looking to the new fiscal year that begins in April, we are broadening our lifestyle offerings with the launch of a summer product line that we did not have last year,” added Buckley. “We are also adding a new direct-to-consumer ‘capsule’ collection for the autumn season. With these new lines, combined with our increasing focus on lifestyle offerings, e-commerce and other planned direct-to-consumer and retail initiatives, we look to lessen the predominate effect of our sales for the winter season and see smoother quarterly results over the long term.

He said the company’s positive outlook for the new fiscal year is underpinned by a much stronger financial resources, including strong cash position and a debt-free balance sheet — “all thanks to the generous participation of our valued new shareholders in our IPO.”

Buckley said Perfect Moment is also exploring a channel expansion into retail, so more customers can experience its products “in real life.”

“We anticipate this will help us gain greater market share, particularly in the U.S. and Europe,” he said. “This necessitates building our teams in the U.S. and opening a U.S. fulfillment center, which we also expect to improve our customer experience and margins.”

Marketing Initiatives

  • Perfect Moment total followers across social media platforms, including Instagram, Facebook and TikTok, exceeded 343,000 by quarter-end up nearly 20 percent since the end of the prior-year comp quarter and currently totals more than 379,000 making Perfect Moment one of the world’s most followed luxury ski brands.
  • The total social audience reached by content posted by U.S. and U.K. key opinion leaders (KOLs) about Perfect Moment was more than 166.8 million during the period. This represents the total combined followers of the celebrities, influencers, models, media publications, and fashion industry notables who organically posted about the brand during the quarter in the U.S. and U.K. (see company’s full definition of KOLs and data sources, below.)
  • The total number of global unique visitors per month (UVPM) reached more than 4 billion during the quarter. This is the combined sum of UVPM reached by all global digital media coverage achieved during the quarter.
  • Hosted several brand events across the U.S. and Europe that included top fashion models and social media influencers with collective reach of more than 66.8 million followers.
  • To support greater brand engagement, partnered with Soho House & Co., a global hotel chain and group of private clubs with over 1.4 million Instagram followers and have more than 237,000 members represented by the media, arts and fashion industries.

Business Initiatives

  • Appointed as CFO Jeff Clayborne, a highly experienced finance professional with a record of driving growth and profitability for start-ups to Fortune 100 companies, including Walt Disney and Universal Music Group. He brings more than 25 years of experience in finance, business development, M&A and accounting after beginning his career at McGladrey & Pullen and KPMG.
  • Significantly strengthened corporate governance with the appointment to the board of directors Berndt Hauptkorn, president of Chanel Europe; and Andre Keijsers, who brings more than 25 years of capital markets, M&A and finance experience, including at a multi-billion-dollar Nasdaq-traded company.
  • Engaged logistics partner Global-E to support better DTC customer experience, sales growth and gross margin improvement.

Subsequent Event
On February 8, 2024, the company completed an IPO of common stock that generated net proceeds of $6.4 million and began trading on the NYSE American stock exchange. The company’s pro forma cash position following the IPO was $9.8 million, with pro forma working capital of $11.3 million and no long-term debt.

Image courtesy Perfect Moment