Kaspien Holdings Inc. Reports Fiscal Fourth Quarter And Full Year 2022 Results
Management Commentary
"I'm proud of the progress our organization made this last year as we rebuilt our foundation and improved our core offerings. We made challenging decisions to reduce operational expenses and rationalize unprofitable partners. We also saw many of our partners reach new highs on the platforms we serve through our proactive approach to marketing and account management.
We have seen the positive impacts of these decisions already in 2023, with improved margin and reduced operating expenses leading to our best monthly results in two years. Our focus over the 2023 fiscal year is to continue improving our contribution margin, increasing inventory turns, and targeting positive EBITDA by the end of the year," said Kaspien CEO Brock Kowalchuk.
Fiscal Fourth Quarter 2022 Financial Results
Results compare 2022 fiscal fourth quarter ended January 28, 2023 to 2021 fiscal fourth quarter ended January 29, 2022 unless otherwise indicated.
- Net revenue decreased
7.3% to$33.4 million $36.0 million - Gross profit decreased
31.0% to$4.2 million 12.7% of net revenue, from$6.1 million 17.0% of net revenue, in the comparable year-ago period. The decrease in gross profit was primarily attributable to the write-down of obsolete inventory and lower merchandise margin. - Selling, General & Administrative ("SG&A") expenses decreased
14.5% to$9.8 million 29.5% of net revenue from$10.7 million 31.9% of net revenue in the comparable year-ago period. The increase in SG&A expenses was primarily attributable to decreased selling expenses. - Loss from operations was
$5.6 million - Net loss was
$6.6 million $1.34 $5.8 million $2.33 - Adjusted EBITDA loss (a non-GAAP metric reconciled below) was
$5.3 million $5.1 million - As of January 28, 2023, the Company had
$1.1 million $1.2 million - Inventory at quarter end was
$26.9 million $29.3 million - As of January 28, 2023, the Company had
$8.8 million $3.6 million
Fiscal Year 2022 Financial Results
Results compare the fiscal year ended January 28, 2023 to the fiscal year ended January 29, 2022 unless otherwise indicated.
- Net revenue decreased
10.8% to$128.2 million $143.7 million - Gross profit decreased
25.6% to$24.4 million 19.0% of net revenue, compared to$32.8 million 22.8% of net revenue, over the comparable year-ago period. The decrease in gross profit was driven by a decrease in merchandise margin and an increase in warehousing and freight expenses. The table below summarizes the year-over-year comparison of gross margin:
Change | ||||||||||||||||
(amounts in thousands) | January 28, | January 29, | $ | % | ||||||||||||
Merchandise margin | $ | 52,893 | $ | 64,410 | (17.9) | % | ||||||||||
% of net revenue | 41.2 % | 44.8 % | (3.6) % | |||||||||||||
Fulfillment fees | (17,940) | (21,655) | 3,715 | 17.2 | % | |||||||||||
Warehousing and freight | (10,563) | (9,982) | (581) | (5.8) | % | |||||||||||
Gross profit | $ | 24,390 | $ | 32,773 | (25.6) | % | ||||||||||
% of net revenue | 19.0 % | 22.8 % | ||||||||||||||
- SG&A expenses decreased
8% to$39.8 million 31.0% of net revenue from$42.4 million 29.5% of net revenue in the comparable year-ago period. The decrease in SG&A expenses was due to a$2.4 million $0.9 million - Loss from operations totaled
$15.4 million $9.6 million - Net loss was
$19.0 million $5.47 $8.0 million $3.28 - Adjusted EBITDA loss (a non-GAAP metric reconciled below) was
$14.2 million $7.2 million - Cash used in operations was
$11.3 million $14.5 million
About Kaspien
Kaspien Holdings Inc. (f/k/a Trans World Entertainment Corporation) (NASDAQ: KSPN) is a leading e-commerce marketplace growth platform, offering an expanding suite of software and services to help brands grow on Amazon, Walmart, Target, eBay, and other online marketplaces. Founded in 1972 as a brick-and-mortar retailer and rebranded as Kaspien in 2020, the Company has spent the last decade building and utilizing proprietary technologies for brand protection, marketing optimization, and fulfillment efficiency to generate rapid revenue growth for its partners. Through innovative strategies and best-in-class technologies, Kaspien has earned the trust of many leading brands, including 3M, Owlet and ZippyPaws. For more information, visit kaspien.com.
Non-GAAP Financial Measures
Adjusted EBITDA is defined as net loss, adjusted to exclude: (i) income tax expense; (ii) Other (income) loss; (iii) interest expense; and (iv) depreciation expense. Our method of calculating adjusted EBITDA may differ from other issuers and accordingly, this measure may not be comparable to measures used by other issuers. We use adjusted EBITDA to evaluate our own operating performance and as an integral part of our planning process. We present adjusted EBITDA as a supplemental measure because we believe such a measure is useful to investors as a reasonable indicator of operating performance. We believe this measure is a financial metric used by many investors to compare companies. This measure is not a recognized measure of financial performance under GAAP in
Thirteen Weeks Ended | Fifty-two Weeks Ended | ||||
January 28, | January 29, | January 28, | January 29, | ||
(amounts in thousands) | 2023 | 2022 | 2023 | 2022 | |
Net loss | $ (6,639) | $ (5,811) | $ (19,001) | $ (8,031) | |
Income tax expense | - | (18) | 43 | 27 | |
Other income (loss) | - | 49 | - | (3,481) | |
Interest expense | 1,033 | 412 | 3,577 | 1,867 | |
Loss from operations | (5,604) | (5,368) | (15,424) | (9,618) | |
Depreciation expense | 272 | 299 | 1,233 | 2,468 | |
EBITDA | $ (5,332) | $ (5,069) | $ (14,191) | $ (7,150) | |
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements in this communication are forward-looking statements. The statements contained herein that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties.
We have used the words "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", and similar terms and phrases, including references to assumptions, in this document to identify forward-looking statements. These forward-looking statements are made based on management's expectations and beliefs concerning future events and are subject to uncertainties and factors that could cause actual results to differ materially from the results expressed in the statements. The following factors are among those that may cause actual results to differ materially from the Company's forward-looking statements: risk of disruption of current plans and operations of Kaspien and the potential difficulties in customer, supplier and employee retention; the outcome of any legal proceedings that may be instituted against the Company; the Company's level of debt and related restrictions and limitations, unexpected costs, charges, expenses, or liabilities; the Company's ability to operate as a going-concern; deteriorating economic conditions and macroeconomic factors; the impact of the COVID-19 pandemic; and other risks described in the Company's filings with the SEC, such as its Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.
The reader should keep in mind that any forward-looking statement made by us in this document, or elsewhere, pertains only as of the date on which we make it. New risks and uncertainties come up from time-to-time and it's impossible for us to predict these events or how they may affect us. In light of these risks and uncertainties, you should keep in mind that any forward-looking statements made in this document or elsewhere might not occur.
Company Contact
Ed Sapienza
Chief Financial Officer
509-202-4261
esapienza@kaspien.com
-Financial Tables to Follow-
KASPIEN HOLDINGS INC. AND SUBSIDIARIES | ||||||
Thirteen Weeks Ended | Fifty-two Weeks Ended | |||||
January 28, | January 29, | January 28, | January 29, | |||
2023 | 2022 | 2023 | 2022 | |||
Net revenue | $ 33,385 | $ 36,033 | $ 128,228 | $ 143,713 | ||
Cost of sales | 29,150 | 29,896 | 103,838 | 110,940 | ||
Gross profit | 4,235 | 6,137 | 24,390 | 32,773 | ||
Selling, general and administrative expenses | 9,839 | 11,505 | 39,814 | 42,391 | ||
Loss from operations | (5,604) | (5,368) | (15,424) | (9,618) | ||
Interest expense | 1,035 | 412 | 3,577 | 1,867 | ||
Other (income) loss | - | 49 | - | (3,481) | ||
Loss before income tax expense | (6,639) | (5,829) | (19,001) | (8,004) | ||
Income tax expense (benefit) | - | (18) | 43 | 27 | ||
Net loss | (6,639) | $ (5,811) | $ (19,044) | $ (8,031) | ||
BASIC AND DILUTED INCOME PER SHARE: | ||||||
Basic and diluted loss per common share | $ (1.34) | $ (2.33) | $ (5.47) | $ (3.28) | ||
Weighted average number of common shares outstanding – | 4,959 | 2,493 | 3,482 | 2,448 | ||
KASPIEN HOLDINGS INC. AND SUBSIDIARIES | ||||||||
January 28, 2023 | January 29, 2022 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 1,130 | $ | 1,218 | ||||
Restricted cash | 1,158 | 1,158 | ||||||
Accounts receivable | 1,169 | 2,335 | ||||||
Merchandise inventory | 26,704 | 29,277 | ||||||
Prepaid expenses and other current assets | 1,799 | 649 | ||||||
Total current assets | 31,960 | 34,637 | ||||||
Restricted cash | 1,338 | 2,447 | ||||||
Fixed assets, net | 1,999 | 2,335 | ||||||
Operating lease right-of-use assets | 1,505 | 2,144 | ||||||
Cash surrender value | 3,371 | 4,154 | ||||||
Other assets | 566 | 965 | ||||||
TOTAL ASSETS | $ | 40,739 | $ | 46,682 | ||||
LIABILITIES | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 7,044 | $ | 6,271 | ||||
Short-term borrowings | 8,812 | 9,966 | ||||||
Accrued expenses and other current liabilities | 2,876 | 2,362 | ||||||
Current portion of operating lease liabilities | 695 | 649 | ||||||
Total current liabilities | 19,427 | 19,248 | ||||||
Operating lease liabilities | 1,019 | 1,608 | ||||||
Long-term debt | 9,790 | 4,356 | ||||||
Other long-term liabilities | 11,604 | 14,185 | ||||||
TOTAL LIABILITIES | 41,840 | 39,397 | ||||||
SHAREHOLDERS' EQUITY | ||||||||
Preferred stock ( | - | - | ||||||
Common stock ( | 54 | 39 | ||||||
Additional paid-in capital | 214,029 | 359,220 | ||||||
Treasury stock at cost (467,069 shares and 1,410,417 shares, respectively) | (76,132) | (230,170) | ||||||
Accumulated other comprehensive gain (loss) | 886 | (910) | ||||||
Accumulated deficit | (139,938) | (120,894) | ||||||
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) | (1,101) | 7,285 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) | $ | 40,739 | $ | 46,682 | ||||
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SOURCE Kaspien Holdings Inc.
