Lulus Reports Third Quarter 2024 Results

CHICO, Calif., Nov. 13, 2024 (GLOBE NEWSWIRE) Lulu’s Fashion Lounge Holdings, Inc. (“Lulus” or the “Company”) (Nasdaq: LVLU) today reported financial results for the third quarter ended September 29, 2024.

Crystal Landsem, CEO of Lulus, said:

“Third quarter net revenue came in ahead of our outlook, driven by record growth in special occasion and bridesmaid dress categories, boosting overall dress sales and reinforcing our strength in event apparel. This gain was offset by continued softness in our casual wear business, which we are strategically reevaluating to better align with our core focus on event attire. As a result, we took a proactive approach to inventory management, leveraging markdowns and promotions to end the quarter with a 7% decline in inventory, outpacing our 3% decline in net revenue. While these actions weighed on gross margins, they support our efforts to sustain demand and drive top line growth.

To that end, our ongoing strategic initiatives and cost reduction efforts are firmly in place and we are working towards securing more flexible, longer term options in place of our existing revolving credit facility to support the near term financial flexibility and long-term growth of Lulus. We remain confident in our brand, the opportunities ahead, and the value we deliver to our customers, and are committed to building a strong foundation for sustainable growth.”

Third Quarter 2024 Highlights:

• Net revenue of $80.5 million, a decrease of 3% compared to $83.1 million in the same period last year, driven by a 3% decrease in Total Orders Placed and a 2% decrease in Average Order Value (“AOV”) from $133 to $131, offset by reduced return rates.
• Active Customers of 2.7 million, a decrease of 10% compared to 3.0 million in the same period last year and flat compared to the second quarter of 2024.
• Gross profit decreased 9% to $30.6 million and Gross Margin decreased 220 basis points to 38.1%, in each case compared to the same period last year.
• Net loss of $6.9 million, compared to $3.9 million in the same period last year.  
• Adjusted EBITDA* of ($3.6) million, compared to $1.0 million in the same period last year. 
• Net cash used in operating activities of $5.5 million, compared to net cash provided by operating activities of $12.7 million in the same period last year.
• Free Cash Flow* of ($6.3) million, compared to $11.6 million in the same period last year.
• Total debt increased by $11.5 million and $3.5 million during the thirteen and thirty-nine weeks ended September 29, 2024, respectively.
• Net Debt* increased by $7.0 million and decreased by $0.3 million during the thirteen and thirty-nine weeks ended September 29, 2024, respectively.

Tiffany Smith, CFO of Lulus, said:

“Our focus through Q4 is on generating additional liquidity, maintaining healthy inventory turns, and accelerating a reset of our shoes and separates assortments. Amid ongoing macro uncertainties and consumer pressures, we are taking a disciplined approach to cost management to ensure we maintain a healthy financial position. Our fourth quarter and full-year net revenue outlook contemplates continued momentum in our special occasion and event wear categories, balanced by a targeted product assortment reset in underperforming casual categories, the latter of which tempers our Q4 sales expectations. Continued macroeconomic pressures and our product assortment reset introduce some uncertainty in Q4 margin and profitability expectations; therefore, we are not issuing a fourth quarter Adjusted EBITDA outlook at this time. Our confidence remains high in achieving our long-term sales and profitability targets.”

Updated Financial Outlook:

• Fourth quarter 2024 net revenue is expected to be between approximately $67.5 million and $70.0 million, compared to $75 million in the same period last year. Full year 2024 net revenue is expected to be between approximately $317.5 million and $320 million, compared to $355.2 million in fiscal year 2023.
• The full-year 2024 capital expenditure plan has been reduced to approximately $3.2 million, a reduction of $0.3 million relative to our previous estimate.

Forecasting future results or trends is inherently difficult for any business, and actual results or trends may differ materially from those forecasted. Lulus’ outlook is based on current indications for its business. Lulus’ outlook factors in our current best estimates for anticipated headwinds, including those related to the level of demand, spending and returns by our customers, macroeconomic uncertainties, inflation, supply chain pressures, and shipping costs and the intended impact of cost-reduction measures. Given the volatile nature of current consumer demand and potential for further impacts to consumer behavior due to macroeconomic factors, including continued inflation, higher interest rates, the presidential election, as well as other world events, wars, and domestic and international conflicts that affect overall consumer confidence and the predictability of consumer purchasing behavior, Lulus’ financial outlook is subject to change.