Luxury skiwear and lifestyle brand Perfect Moment, Ltd. reported net revenues dipped 1 percent to $974,000 for the fiscal first quarter ended June 30, historically representing less than 5 percent of its annual net revenues, the year’s smallest quarter. Wholesale revenue totaled $52,000 in the quarter, up 68 percent compared to $31,000 in the year-ago quarter.

E-commerce net revenue decreased 4 percent to $922,000 in Q1, compared to $957,000 in the year-ago quarter. The company said the decrease was driven by increased e-commerce customer returns due to end-of-season discounting and $143,000 of fiscal 2024 sales returned in the first quarter of fiscal 2025, which exceeded the company’s return reserve.

“We continually look for ways to reduce our return rate. To reduce size-related returns, for our new AW24 collection, we have focused on ensuring more consistent sizing across products and styles,” commented Perfect Moment CEO Mark Buckley. “We have also introduced new size specifications and guidelines that assist eCommerce customers in making more accurate physical measurements before purchase.”

Had customer product returns in the first quarter of fiscal 2025 been consistent with Perfect Moment’s historical return percentage, the company said its adjusted net revenue would have increased 12 percent to $1.1 million.

“In fiscal Q1, traditionally our lowest quarter of the year, our gross revenue growth of 43 percent was driven by continued e-commerce expansion,” added Buckley. “The end-of-season sale for autumn/winter 2023 (AW23) included an unusually high percentage of products sold at a discount. This was to make way for a significantly new collection replacing many of our product lines for autumn/winter 2024 (AW24), partly due to an upcoming change in legislation in some of our markets for Durable Water Repellency (DWR) treatments.

Buckley said the discounting drove the higher returns, and when combined with the fiscal 2024 product returned in the first quarter of fiscal 2025, net revenue was nearly flat for the quarter.

First-quarter gross profit decreased 26 percent to $356,000 from $482,000 in the year-ago quarter, and gross margins were 36.6 percent of net sales, down 12.2 full percentage points compared to 48.8 percent in the year-ago Q1 period. The company attributed the decrease primarily to fiscal 2024 returns processed in the first quarter of fiscal 2024 sold at a higher margin than the average margin of the company’s sales in the fiscal first quarter of 2025 and the increased mix of products sold at an end-of-season discount compared to the fiscal first quarter of 2024.

“We have made progress on our margin expansion strategy with a strong cross-functional effort to improve how we serve U.S. customers with a local distribution center, said Buckley. “We recently partnered with Quiet Platforms to establish a third-party operated distribution center in the U.S. Partnering with a cutting-edge supply chain management leader like Quiet Platforms helps to accelerate our ambitious plans for the U.S., a market that currently represents about 38 percent of our revenue.”

In July, Perfect Moment partnered with Quiet Platforms, a wholly-owned subsidiary of American Eagle Outfitters, to establish distribution and order fulfillment centers in the U.S. (For additional SGB Media coverage, please scroll to the bottom of post).

“We believe the new distribution center will help improve the customer experience and lower our duty costs, as well as reduce outbound and return shipping costs for the U.S. market,” Buckley continued. “We expect the lower duty costs to greatly improve our e-commerce margin in the second half of the fiscal year that will lead to an increase in total margin over fiscal 2024.”

Total operating expenses increased 18 percent to $3.8 million in fiscal Q1 from $3.2 million in the year-ago first quarter. The increase was primarily due to increased SG&A expenses, partially offset by decreased marketing and advertising expenses.

“To be consistent with our peers, for the first quarter of fiscal 2024, we reclassified $377,000 of costs previously categorized as cost of sales to SG&A, Buckley noted. “For the fiscal years ended March 31, 2024, and March 31, 2023, had we reclassified $3.2 million and $2.7 million, respectively, of costs of revenue to SG&A, our adjusted gross margin would have been 50.9 percent and 48.7 percent.”

The fiscal first-quarter net loss was $3.4 million, or 22 cents per basic and diluted share, compared to a net loss of $2.7 million, or 55 cents per basic and diluted share, in the year-ago Q1 period.

Adjusted EBITDA was negative $2.9 million, compared to negative $2.0 million in the year-ago quarter. The increase in adjusted EBITDA loss was primarily driven by costs to support growth and an increase in warehousing and merchant services due to increased returns.

Cash, cash equivalents and restricted cash totaled $4.0 million at June 30, 2024, compared to $7.9 million at March 31, 2024. The decrease was primarily due to increased cash used in operating activities.

“As our product range expands over time and includes more year-round apparel and accessories, we see the potential to further grow our community and elevate our brand by opening our own physical store locations, both permanent and pop-up,” Buckley announced. “These stores would be strategically located in major cities and ski resorts and high-traffic city locations. They would provide a luxury in-store experience that reflects the premium character of our brand.”

In August, Perfect Moment secured space to open its first pop-up shop in the Soho neighborhood of New York City. The shop, which will feature the brand’s AW24 collection, is planned to open in October.

Buckley said the company is interested in opening other pop-up shops and eventually open year-round store locations.

“We anticipate these efforts, along with the enhancements to our customer’s e-commerce shopping experience, will further strengthen brand awareness and customer loyalty as we expand beyond our core skiwear and into the global luxury outerwear market. We see the successful execution of these initiatives positioning us well for growth and expanding market share in the second half of the fiscal year, with the aim to enhance shareholder value,” the CEO concluded.

Image courtesy Perfect Moment, Ltd.

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For additional SGB Media coverage on Perfect Moment, please read below.

Perfect Moment Taps America Eagle Subsidiary as U.S. Distribution Partner