Luvu Brands Announces Second Quarter Fiscal 2025 Financial Results

Rhea-AI Summary

Luvu Brands (OTCQB:LUVU) reported Q2 FY2025 financial results with notable improvements. Net revenue increased 6% to $7.2 million, while gross margin improved to 28% from 27% year-over-year. The company achieved a significant 566% increase in net income to $193,000, compared to $29,000 in the prior year.

For the six months ended December 31, 2024, net revenue slightly increased to $12.94 million, with gross margin improving to 27%. The net loss decreased by 82% to $17,000, compared to a $97,000 loss in the prior year. Adjusted EBITDA rose 33% to $399,000.

The improvement in performance was primarily driven by stronger e-commerce sales and dropship network, partially offset by declining wholesale accounts. The company successfully reduced operating expenses through targeted marketing channels, lower production costs, and tighter headcount management.

Positive

• Net revenue increased 6% to $7.2 million in Q2 FY2025
• Net income surged 566% to $193,000 in Q2
• Gross margin improved to 28% from 27%
• Adjusted EBITDA increased 47% to $402,000
• Sales and marketing expenses reduced to 9.5% of revenue from 10.5%

Negative

• Wholesale accounts showed decline
• Operating costs increased due to higher personnel expenses
• Six-month period still showed net loss of $17,000
• Minimal revenue growth (0.2%) over six-month period

Reports Second Quarter Fiscal 2025 Net Sales of $7.2 million, Net Profit increased 566% from the prior year.

ATLANTA, GA / ACCESS Newswire / February 10, 2025 / Luvu Brands, Inc. (OTCQB:LUVU), a designer, manufacturer, and marketer of a portfolio of consumer lifestyle brands, announced today its financial and operational results for the second quarter of fiscal 2025 ending December 31, 2024.

For the three months ended December 31, 2024, highlights include:

• Net revenue increased 6% to $7.2 million versus the prior year.

• Gross margin increased to 28% from 27% a year ago.

• Net income of $193,000 was in increase of 566% compared to the prior year.

• Adjusted EBITDA of $402,000 was an increase of 47% versus the prior year.

For the six months ended December 31, 2024, highlights include:

• Net revenue was $12.94 million versus $12.91 million in the prior year.

• Gross margin increased to 27% compared to 26% from a year ago.

• Net loss was $17,000, down 82%, compared a net loss of $97,000 in the prior year.

• Adjusted EBITDA of $399,000 was in increase of 33% versus the prior year.

Three Month Operating Results:

• Net revenue in Q2 FY2025 increased 6% to $7.2 million compared to $6.8 million in the prior year. The year-over-year increase is primarily attributable to stronger sales from e-commerce sites and dropship network. This increase was slightly offset by a decline in our wholesale accounts.

• Gross profit in Q2 FY2025 totaled $1.98 million compared to $1.82 million in the prior year, while the gross margin improved to 28% in Q2 FY2025 versus 27% a year ago. The increase in gross profit is primarily due to the increase in sales, lower freight, and reduced raw material costs compared to a year ago.

• Operating costs, excluding sales and marketing in Q2 FY2025, were $899,000, or 12.5% of net revenue, compared to $849,000, or 12.5% of net revenue in the prior year. The increase was primarily attributable to increases in personnel expenses and professional fees.

• Sales and marketing expenses in Q2 FY2025 totaled $684,000, or 9.5% of net revenue, compared to $711,000, or 10.5% of net revenue, in the prior year. This decrease resulted from eliminating unprofitable pay-per-click spending and reduced graphic design needs due to fewer new product launches compared to the prior year.

• Net income in Q2 FY2025 was $193,000 compared to net income of $29,000 in the prior year. Increased sales and cost control measures returned a significant improvement compared to the prior year.

• Adjusted EBITDA of $402,000 is a 47% increase from a profit of $273,000 a year ago.

Six Month Operating Results:

• Net revenue in six months ending December 31, 2024 increased 0.2% to $12.94 million compared to $12.91 million in the prior year. The company continues to focus on returning to growth through the development of new and innovated products at good margin.

• Gross profit during the six months totaled $3.5 million compared to $3.4 million in the prior year. Improved sourcing of raw material vendors and tighter control on production costs continues to improve the overall gross margin.

• Operating costs, excluding sales and marketing during the six months were $1,780,000, or 13.8% of net revenue, compared to $1,668,000, or 12.9% of net revenue in the prior year. The increase was primarily attributable to increases in personnel expenses and equipment repairs.

• Sales and marketing expenses in the six months ending December 31, 2024 totaled $1,330,000, or 10.3% of net revenue, compared to $1,407,000, or 10.9% of net revenue, in the prior year. This decrease was the result from focusing on marketing channels that provide a higher return on spend. The company continues to seek out new marketing channels to reach more customers.

• Net loss for the six months was $17,000 compared to net loss of $96,000 in the prior year. Our strategy of continued improvement in our production and fulfilment processes coupled with innovative product launches significantly improved the bottom line compared to the prior year.

• Adjusted EBITDA of $399,000 is a 33% increase from a profit of $299,000 a year ago.

Louis Friedman, CEO of Luvu Brands, commented, "Our second quarter results underscore the strength of our business model and the effectiveness of our strategic initiatives. We have successfully driven sales growth through our diverse product assortment, while reducing operating expenses through targeted marketing channels, reduced production costs, and tighter headcount management."

The company's strong performance in the second quarter reflects its commitment to delivering value to its customers and shareholders. By leveraging its robust e-commerce platforms and implementing cost-effective measures, LUVU Brands continues to enhance its profitability and maintain a competitive edge in the market. Friedman also said "We continue to look at investments that will improve our e-commerce platforms performance, reduce the time it takes to bring products to market, and expand our distribution network. These core strategic objectives are essential to our growth plan and increasing shareholder value."

Additional Information:

Please see www.luvubrands.com for updated events, press, and new product releases. If you wish to speak to us directly, please email chris.knauf@luvubrands.com with your preferred day and time.

Forward-Looking Statements

Certain matters discussed in this press release may be forward-looking statements. Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; acceptance of the Company's products in the market; the Company's success in obtaining new customers; the Company's success in product development; the Company's ability to execute its business model and strategic plans; the Company's success in integrating acquired entities and assets, and all the risks and related information described from time to time in the Company's filings with the Securities and Exchange Commission ("SEC"), including the financial statements and related information contained in the Company's Annual Report on Form 10-K and interim Quarterly Reports on Form 10-Q. Examples of forward-looking statements in this release include statements related to new products, anticipated revenue, and profitability. The Company assumes no obligation to update the cautionary information in this release.

*Use of Non-GAAP Measures - Adjusted EBITDA

Luvu Brands management evaluates and makes operating decisions using various financial metrics. In addition to the Company's GAAP results, management also considers the non-GAAP measure of Adjusted EBITDA. While Adjusted EBITDA is not a measure of performance in accordance with GAAP, management believes that this non-GAAP measure provides useful information about the Company's operating results. The table below provides a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure.

As used herein, Adjusted EBITDA income represents net income (loss) before interest income, interest expense, income taxes, depreciation, amortization, and stock-based compensation expense.

About Luvu Brands

Luvu Brands, Inc. designs, manufactures and markets a portfolio of consumer lifestyle brands through the Company's websites, online mass/drug merchants, and specialty retail stores worldwide. Brands include Liberator®, a brand category of iconic products for enhancing sensuality and intimacy; Avana®, yoga, inclined sleep therapy, and orthopedic pillow products; and Jaxx®, a diverse range of casual fashion daybeds, sofas, and beanbags made from virgin and re-purposed polyurethane foam. Many of our products are offered flat-packed and vacuum-compressed to save on shipping and reduce our carbon footprint. The Company is headquartered in Atlanta, Georgia, in a 140,000-square-foot vertically integrated manufacturing facility that employs over 190 people. Bringing sewn products manufacturing back to the USA and creating innovative consumer brands are core to the Company's operating principles. The Company's brand sites include www.liberator.com, www.jaxxbeanbags.com, www.avanacomfort.com, plus other global e-commerce sites. For more information about Luvu Brands, please visit www.luvubrands.com.

Company Contact:

Luvu Brands, Inc.
Chris Knauf
Chief Financial Officer
770-246-6426
Chris.knauf@LuvuBrands.com

Consolidated Statements of Operations

		Three Months Ended								Six Months Ended
		December 31,								December 31,
		2024				2023				2024				2023
		(in thousands, except share data)								(in thousands, except share data)
Net Sales		$	7,186			$	6,786			$	12,941			$	12,912
Cost of goods sold (excluding depreciation expense presented below)			5,204				4,968				9,444				9,512
Gross profit			1,982				1,818				3,497				3,400
Operating expenses:
Advertising and promotion			247				273				478				541
Other selling and marketing			437				439				851				866
General and administrative			899				849				1,783				1,668
Depreciation			108				103				217				203
Total operating expenses			1,691				1,664				3,329				3,278
Operating income			291				154				168				122
Other income (expense):
Interest expense and financing costs			(98	)			(94	)			(185	)			(188	)
Total other income (expense)			(98	)			(94	)			(185	)			(188	)
Income from operations before income taxes			193				60				(17	)			(66	)
Provision for income taxes			-				(31	)			-				(31	)
Net Income/(loss)		$	193			$	29			$	(17	)		$	(97	)
Net loss per share:
Basic		$	(0.00	)		$	(0.00	)		$	(0.00	)		$	(0.00	)
Diluted		$	(0.00	)		$	(0.00	)		$	(0.00	)		$	(0.00	)
Shares used in calculation of net income per share:
Basic			76,834,057				76,547,672				76,834,057				76,547,672
Diluted			76,834,057				76,547,672				76,834,057				76,547,672

Consolidated Balance Sheets

		December 31,
		2024				June 30,
		(unaudited)				2024
Assets:		(in thousands, except share data)
Current assets:
Cash and cash equivalents		$	1,349			$	1,028
Accounts receivable, net of allowance for doubtful accounts and allowance for discounts and returns of $10 on December 31, 2024 and $11 on June 30, 2024			1,611				1,061
Inventories, net of allowance for inventory reserve of $165 on December 31, 2024 and $214 on June 30, 2024			3,242				3,287
Other current assets			139				141
Total current assets			6,341				5,517
Equipment, property and leasehold improvements, net			1,648				1,870
Finance lease assets			104				103
Operating lease assets			1,297				1,545
Other assets			96				96
Total assets		$	9,486			$	9,131
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable		$	2,040			$	1,502
Current debt			2,117				1,639
Other accrued liabilities			621				508
Operating lease liability			584				528
Total current liabilities			5,362				4,177
Noncurrent liabilities:
Deferred Tax Liability			119				119
Long-term debt			340				854
Long-term operating lease liability			836				1,151
Total noncurrent liabilities			1,295				2,124
Total liabilities			6,657				6,301
Commitments and contingencies (See Note 13)			-				-
Stockholders' equity (deficit):
Preferred stock, 5,700,000 shares authorized, $0.0001 par value none issued and outstanding			-				-
Series A Convertible Preferred stock, 4,300,000 shares authorized $0.0001 par value, 4,300,000 shares issued and outstanding with a liquidation preference of $1,000 as of December 31, 2024 and June 30, 2024			-				-
Common stock, $0.01 par value, 175,000,000 shares authorized, 76,834,057 and 76,547,672 shares issued and outstanding as of December 31, 2024 and June 30, 2024, respectively			766				765
Additional paid-in capital			6,270				6,253
Accumulated deficit			(4,206	)			(4,188	)
Total stockholders' equity			2,830				2,830
Total liabilities and stockholders' equity		$	9,486			$	9,131

Consolidated Statement of Cash Flow

		Six Months Ended
		December 31,
		2024				2023
		(in thousands)
OPERATING ACTIVITIES:
Net income		$	(18	)		$	(97	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			217				203
Stock-based compensation expense			18				5
Provision for bad debt			-				1
Inventory reserves			49				-
Loss on sale of fixed asset			7				-
Change in operating assets and liabilities:
Accounts receivable			(550	)			(227	)
Inventory			(4	)			709
Prepaid expenses and other assets			2				(27	)
Accounts payable			541				(258	)
Accrued expenses and interest			112				63
Operating lease liability			(260	)			(192	)
Amortization of operating lease asset			248				190
Net cash provided by operating activities			363				370
INVESTING ACTIVITIES:
Investment in equipment, software and leasehold improvements			(3	)			(39	)
Net cash used in investing activities			(3	)			(39	)
FINANCING ACTIVITIES:
Borrowing (repayment) under revolving line of credit			160				52
Repayment of unsecured line of credit			(0	)			(6	)
Proceeds from unsecured notes payable			-				200
Repayment of unsecured notes payable			-				(200	)
Payments on equipment notes			(187	)			(197	)
Principal payments on capital leases			(12	)			(8	)
Net cash used in financing activities			(39	)			(159	)
Net increase (decrease) in cash and cash equivalents			321				172
Cash and cash equivalents at beginning of year			1,028				1,041
Cash and cash equivalents at end of year		$	1,349			$	1,213
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest		$	176			$	191

SUPPLEMENTAL FINANCIAL INFORMATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Reconciliation of Net Income/(Loss) to Adjusted EBITDA income for the three and six months ended December 31, 2024 and 2023:

		Three Months Ended								Six Months Ended
		December 31,								December 31,
		2024				2023				2024				2023
		(in thousands)								(in thousands)
Net income (loss)		$	193			$	29			$	(17	)		$	(97	)
Plus interest expense, financing costs and income tax			92				126				181				188
Plus depreciation and amortization expense			108				104				217				203
Plus stock-based compensation expense			9				14				18				5
Adjusted EBITDA		$	402			$	273			$	399			$	299

SOURCE: Luvu Brands, Inc.

View the original press release on ACCESS Newswire

FAQ

What was Luvu Brands (LUVU) revenue growth in Q2 FY2025?

Luvu Brands reported a 6% increase in revenue to $7.2 million in Q2 FY2025 compared to $6.8 million in the prior year.

How much did LUVU's net income increase in Q2 FY2025?

LUVU's net income increased by 566% to $193,000 in Q2 FY2025, compared to $29,000 in the prior year.

What was LUVU's Adjusted EBITDA for Q2 FY2025?

LUVU's Adjusted EBITDA for Q2 FY2025 was $402,000, representing a 47% increase from $273,000 in the prior year.

How did LUVU's gross margin change in Q2 FY2025?

LUVU's gross margin improved to 28% in Q2 FY2025 from 27% in the prior year, primarily due to increased sales, lower freight, and reduced raw material costs.

What was LUVU's performance for the six months ended December 31, 2024?

For the six months ended December 31, 2024, LUVU reported revenue of $12.94 million (0.2% increase), reduced net loss of $17,000 (82% improvement), and Adjusted EBITDA of $399,000 (33% increase).