LUVU - Earnings call transcript Q3 2024

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Operator

Greetings, ladies and gentlemen, and welcome to Luvu Brands, Inc. Fiscal Third Quarter of Fiscal 2024 Conference Call. [Operator Instructions] And as a reminder, this conference is being recorded. It is now my pleasure to introduce Christopher Knauf, the company's Chief Financial Officer. Mr. Knauf, you may begin.

Christopher Knauf

you Brands' who Conference Third thank today joined Call. and Luvu for Quarter you, to has everyone us Thank Fiscal XXXX

Chief and quarter May and the XX, Joining Founder, filed earnings our Friedman, Louis release is for we X-month XXXX Vice Executive the company's and XX-Q and an third our E-commerce. On me highlighted Jordan fiscal Officer; third presentation of Friedman, President performance. that Form quarter and of today President our issued

as presentation the the we ended the XXXX. X and our March release the a of Luvu discussing conclusion press the the Recent find and near-term XX, number Brands' session. Q&A Luvu that can luvubrands.com/presentations. There third website, plans items with including during call, answering future. questions a for in be look on for we as brief are financial will morning, You company to results At months developments Brands company's quarter you of this this well operational activities forward

Before future projections started, discussed prospects. statements future statements financial of our forward-looking some plans will our differ future include remind forth the regarding to we about you such Actual set I'd statements. and performance. These results in information our expectations, financial include from get and may materially and events that like those

SEC. For a discussion filings of risks and uncertainties, company's with you should review the the

by forward-looking beliefs make no except rely at of All law. required as prediction on undertake and not statements call on today we update this obligation on we You are them, assumptions statements of should that as the future. to based forward-looking and

most release. be our as in These non-GAAP comparable measures, for we GAAP measures in our such financial include in a non-GAAP information isolation measures, results. of addition including financial to Our measures EBITDA supplemental and non-GAAP financial press not the will reconciliation adjusted A financial as discussion GAAP from directly provide or to substitute a and EBITDA. considered should today

I'd to and with a completed, Louis? words Brands' like we've from start call few Now that Friedman. Founder Luvu Louis the CEO,

Louis Friedman

everyone. us good everyone and Chris, joining thank I morning for you, Thank to today.

last been seen As the you in quarters, have challenging. they X have

we sales a decrease from quarter with For of of of reported $X.X XXXX. third fiscal third the quarter, the XX% million

months mass of X million, products, quarters sales came from period sales in websites the and, March reported X of prior a increased of overall competition challenge e-tailers, last for on the from $XX.X Amazon. XX, market pleasure in a For for China-based we decline with retail market knock-offs XX% ending the course, the fiscal year. The decrease the from compounded same appearing

brand, far content, in maintain our efforts lower higher innovation Google our at costs, manufacturing as retail we've we made these materials, Amazon better a factory. In with continual pay-per-click competitive As PPC Liberator competitive the (sic) vertically advertising sales. conditions, to integrated, Atlanta material very we increased responsive marketing a believe [ our right here and and to quality that ], online drive other PPP and response channels advantage

drive ad eliminate over sales. and our more be increased in our the to past have analysis targeted low-performing approach to We months spends

strategy like through to you of takeaways I'd Now growth. of to our to walk key the some return

Liberator, category home transformable complementary our erotic of around multipurpose are on designs home furniture erotic development For we product with the accessories. and focusing

exploring podcast, we and educators. wellness influencers well customers print, targeting marketing, are efforts new as engine marketing reaching search as advertising strategic are cable Our through with TV partners as such through traditional e-mail, channels customers sexual

the position that growth brand year, believe that that access footprint give product the world embrace We return to we brand front, distributions emerging will that with global We We will recover well this adult years. Later believe international this in the have retailers. on us category as months. increase in intimacy retail. coming distribution to announcements to around hope market. sexual into the specialty the drug partners have this our discussions channels to further to active On with will a wellness market about in believe are new brand will the as we department to the be as and coming we at stores mass new will market come more align introducing mainstream that

Now for VP Jordan? to our hand other it Friedman, for this over strategy our Jordan e-commerce. I'll brands, of

Jordan Friedman

and have digital morning, market sales marketing mass Thank manage I you, good I into accounts, team, the a last over and XX grown the company's wholesale Louis, steadily everyone. years. position

would division, relaunch growth outline our approach for the labs. to for our then and First, the Avana I like hospitality foam of brand and discuss strategy our Jaxx

for innovation, product Our new Jaxx expansion. to speed and parts: growth strategy increased consists markets, of category X

the to listen maximize and innovative customers market to to continue developing are that selling our seasonal opportunities. by trends products and We

product Regarding year boating for products the revised our systems. modular completely this collection new outdoor offerings we new grade commercial color innovation, and sunloungers our sellers, best sofa with on luxurious industry,

is outdoor products outdoor into and new completely our indoor modular sofas. first step of our One

R&D deliver connection with products more modular driver higher order rigid a momentum frames average locking Our and to team advanced into values. continues big higher-end points,

seating Jaxx panelist as with line progress best-in-class expand making are with price great fabric our fabric sizes bean growing grow and wall for and and commercial brand options headboard well options customizable product we steady The options our value. core of different new is categories. e-commerce demographics, residential. Meanwhile, and as Additionally, to steadily panels partners and to bag both continues soft

retailers increased hospitality retail and as We sales have with a school in and presence well mass huge systems point for chains focus of has market been as markets. Hospitality grown our us.

as prices hospitality also times customize a our growth revitalization America of larger for As for Foam the factor our to orders sector We're lead relaunched driving our approach This been and our brand. with specifically offices, in higher this buyers The and allows labs via to coming luxury anticipating take year. foam a manufacturing Hospitality clients. hotels, in strong commercial our us ability resorts, has and labs longer and been and this different event content retail. branding commitment. has us allows foam marketing for for manufacturing. custom targeted design labs attain the with in-house industry companies high-end to appreciate contract, with Made division.

on therapy continues innovation our For to Avana brand, establishing as the in product and in sleep itself for focus remains yoga products. make progress solutions innovative product leader and Avana a efficiency.

Additionally, resources to our making our other to are R&D market and us categories, purchasing new customers, products the ship teams market channels truth. in one and dynamic through and investment a new product efficiency. upload improvements to to price speed and such improve changes lower manufacturing This us central we Avana time will competitive required efficiency continue our to make are onboard new and cost to drop back allowing software is brand. One goods allow for e-commerce. bring share the of In currently our continued of to improve our across source reduce

achieving drop no network, component As this a to little we distribution to to provide continue our growth additional costs. ship will key scalable with grow

dive Financial X into let's to Now XXXX. financial to over of Officer; summarize the months call Knauf, financials. third the Brands' turn will Chief this fiscal highlights some Christopher Luvu and quarter year the I of

Christopher Knauf

months the the touch on XX, I'll third Jordan. March and highlights from financial ended of briefly you, quarter X XXXX. some Thank

quarter the compared the to totaled the third the $X.X the decreased million, year. million million third in prior to mentioned, Sales million from the of in in the increased $X.X XX% decreased third $XXX,XXX of third quarter year. of $XXX,XXX Liberator quarter from X% in from product $X.X million Avana year. sales $X.X quarter $X.X prior Jaxx's up same the prior from prior products the XX% quarter to in $X.X Louis year. net As XX% sales in to million products

XX, end end QX prior prior our to decreased for capital through year For due totaled sales. Working $X.XX $X,XXX,XXX Gross a million quarter. was same in in in cost. raw in $XXX,XXX net to to online of support the X% X a costs excess year of March inventory raw XXXX. of XX%, gross offset the the months. ago. Gross prior of $X.XX vendor is to prior EBITDA quarter percentage from sales an to XX, The and increased to June million to our $X.X XX% from declined for profit net year to quarter, $XX.X The million million fulfillment XX% a months the in fiscal XX, XX% the year from product and reductions decline decline for was decreased $XX.X Avana's XXXX, of the million. from and $X.X year the XX%. adult sales branded material XXXX, from in months months. Adjusted X last sales $XX.X net $X,XXX,XXX $X.X expenses efforts in June March to third lower million and sales decline sales material the of Nine the months as decrease a at at the XX, control This sourcing compared product decrease of reflecting in somewhat prior marketing was product and increase decline million to Liberator XXXX, This the decreased year on million a compared from $X,XXX,XXX Jaxx's at XX% sales by to manufacturing reflective third of X Liberator XXXX, sales compared $X,XXX,XXX to X% $XX.X third-party XXXX decreased to year $X.X $X,XXX,XXX XX% improved ended is increased in X sales. the year's compared million X%. a sourcing. from period third profit sales improved XX% million, to quarter. margin

I'd some current developments. to back to turn Louis? regarding comments it Now additional like for Louis

Louis Friedman

Thank you, Chris.

strategy through are to product coming to and growth. return expanding several by was brand our market the presence, line diversifying to quarter By challenge increasing software speed fronts, our offerings, in we confident third on growth return place top a innovative the in investments year. our to to sales expanding but The we have company I'm confident category the profitable

fiscal vendor manufacturing a year. Everyone on call continue we'll And long-term approach chain look will challenging capacity formal control cost against forward developments domestic sourcing, for us value presentation. progress in you With gross work execute to coming Operator, and our focused costs supply allows the provide and our growth improvements disciplined improved up finalize we through key Q&A, environment. drive Luvu we at will to over comments. updated Our closing as within strategies after We margin our the wraps XXXX. That and to realize open Brands keeping executing fourth shareholders. Q&A. results to for some reduced to now we our and a quarter on remains

Operator

we lines, go If lines. the Okay. Instructions] [Operator phone no webcast to questions the have via I will

Christopher Knauf

the webcast? X have we No, on

Jordan Friedman

these I phone the think are actually. Well, lines,

Operator

Okay. our start Gentlemen, I session. Q&A will

a a from have Jim who question We is private Cornick, investor.

live. is line Your

Unknown Attendee

at to which hear want for is but in increase low release, having having I and you are the my we the great. this I and growth to can to what to I And we're going call, first talked guys all guys you stuff achieve the earnings mean, we've shareholder thank past, out was people Louis, you important for kind get think and that you do from what two, confident investors, what hear and value. guess of here. growth. us all the going I investment sales question, story guess for, for in you of on. I about -- And is strategy marketing, to get one, guys it's guys to what's hear a profitable and

Louis Friedman

talking out the growth getting stories both? we talking or about are about we're So for

Unknown Attendee

Both.

Louis Friedman

Okay.

variety be you reaching updated people deals how we see do our Right after we've our updated people, out the what Brands Luvu we website. We've and stock. promote a will Day, So Memorial see, deck. can investment can to funds and together other to as Chris of can

grow to from business our standpoint. From in So doing a to to $XX million of that's ways. was variety top $XX back at where that simply we're least standpoint, line or we're what a it trying million

know product we others have these we into want to we as others. to it institutions that kind and engines into that when -- before this consumer, got and from the we new the of get together we and and the So was with calls advertise the hotels side, hospitality of say consumer. you working And selling we're want all -- development. The from

million, We promoting products, our ideally $XX our line keep developing brands. is going we're back which top keep that's So least goal. how to to getting short-term we the keep and at

Christopher Knauf

well. word in of also the investor we've marketing this relations I'd Also to -- help as some the trying part kind Chris. of us add to getting companies of been It's talks select promote business is out.

and that more we'll out get and a the the months So we that those coming finalize deal are have more this get there in can a it, road we're about putting of plants. proper we almost, on But company type let's we headed. word -- call show where together as out

Unknown Attendee

you're the company. to pretty Chris, new since

Luvu? lines the Avana Jaxx, driver look which Liberator, As you at behind is of and those

Christopher Knauf

Well, that of wider digits the significant of Liberator at for and piece. marketing piece think XX% we space I obviously mean think around there's growth but with double that market at I for product ship still rally growing in through drop even And line much of is the will that contraction as our a put of right that this our the piece. now, almost kind company more and has this We're revenue we us. point, Jaxx open point, continue and distribution expansion. increase efforts the

to that on us some are that in As Jordan market be will we scalable had software mentioned, much putting space. help quicker to

of a growth that it to revenue couple down, So it's from had to at it our had COVID starting show business -- strategy to I Liberator the and significant over was that been. Again, where piece. got come back due is bump if last bump look accelerated I was that years, significant jump the increases think that started here when to return Netflix COVID, we also to also

against that abnormalities the comping eyes going can and believe I we're unfortunately, marketing how -- return, more hope open and well, so, our X events, to it or exposure efforts let's would but try nonrecurring content is the call did don't get use show So to to sort we to them, we influencers way. more Netflix the of,

looking process at other and as said, the to in that approaches grow influencers that space. are Louis exploring we we're of more So of

So gets will to return market of that Liberator as we kind growth normal. think to back

are order a think the bigger. lot have surface Jaxx there. of the business, running we is scratching And -- sort are -- here, of dollar average margins I For we the just are bigger, I the room got the size and think

very really a attractive efforts category more definitely put to us it's So for into.

Unknown Attendee

Are missing? do market you Jordan, for the any e-tail? missing you there market that it Is for the lines how at look you're and at you all Jaxx do how international? Avana? Avana? Or Are look

Jordan Friedman

about have be I ours some mean, are hospitality seem -- and commercial, the and just overseas those yes, a many trajectory area Yes. able I definitely to to get out mainly be to as U.S. might school and there's those tend hypercompetitive ways. of channel. there's product possible. Amazon or well. the Yes. whatever we some our for shipping going it on market because size And mean untapped to the that's on be as just there e-commerce plenty are partners to our trying there marketplace contract within all And just to $XXX flexible focused in continue connections as as in of because boxes. big not still some competitive to of just But clients more international, have large or in of immediate to worry we we missing be. But focuses don't space We're growth due better these as our

keep trying of humming those our channels So as so definitely but on we're all best their to and focused drop-ship doing well. yes,

Unknown Attendee

think Again, thanks luck on Louis, good all we'll the to and in growth you call. the that's X months. guys I've strategy, I for got. listen And

Louis Friedman

always have great on So some hear we you from your done to pleasure along. me. to of a guidance. you guys. any X you It's want the our chat, we've And And send you good that regarding months. Whenever that's appreciate please for additions them and from Brands, to always if it's or Luvu deck comments to hear you don't have wait

Operator

Robson question Investors. next Our from Bryan is Breakout with coming

Bryan Robson

initiative up of quarters press stores. what's this were then shift you on and past quarter. and then you to And like sales looked it think Jaxx Jaxx could this overall, couple About in picked last was release into, your on retail comment going that XX ago, the just it I XXX last I I guess then the caused how guess, it down quarter? had months went

Jordan Friedman

Yes, I Sure. on comment that. Sure. can

did that good QX. were QX, well, products calendar the season so Christmas holiday The a XXXX. of it's QX going client would our us we selected year deal of they for what the yes, have quarter. winter into companies and most the more with holiday -- Most call So winter retail for

they were of products. So market what that and for designed selected kids-type primarily, gift-giving

So or a on little saw leading we September kind into so new bump that down up a good And they were back then ramping of as after for slowed it that. the bit. ordering year,

season, growth product revitalize say as of been also is of well have been been we've as department some focusing Jaxx channels. this our of other in on out we retailers some for getting good we to for new right for some in channels lot deal, good season both some on opening now but really that staff new Christmas kind I'd we've our sales of that And the really that us. a to. And hoping sell here have of retail regardless line. But we're of slow lot a that up marketplace key channels our So that

We team as Jaxx daily. can to trying just on have year more signing eyes last have as and better places much introducing far visibility the than new in more products where and to on more our we new get clients did we a customers,

deal, ourselves more of quarter think channels. being and in really growth player we're main a was separate the a our a that I large but competitive good part as e-commerce sign retail So this the just from establishing

Bryan Robson

way I a still increased behalf moment? of that a is about products we've that changes of to And retailers talked Has of have willingness retail to in kind say, on regard? staying the bit the, been guess of have Liberator available. major world, the at the much Okay. the openness past struggle Or then in in there in I'll

Louis Friedman

outside mass -- sexual like that referring wellness the are you're these market of to Sephora, retail or Yes. This whatever. Is Target? Bloomingdale's or market, meaning what is

Bryan Robson

me to maybe the in they're Yes, what quite limited was It extent willing whether available the those Liberator Targets world. the what and are I educate guess, of provide. in can of you it's Walmarts terms as -- you products to

Louis Friedman

Yes. couple subcategories. It's because kind of a interesting of Liberator has

Wayfair on they're we them For And sell knows not believe but have it instance, or called chaises, whatever. products Liberator. on what don't call everybody yoga for, we Avana, which and

different and way in We and brand points, we of fact, say wellness addressed different a brand, graphics, retailers that Urban moment, the So I brand that Outfitter approach. to handful on Sephoras we've this are Bloomingdale's. to Target would into will reason working on Sephora and at third have that we're Liberator Bloomingdale's others, and price to do look, sell other this sexual some and channel. But this is, different of different go the outside other the be the been other working different graphics

the to has. sexual is or moved really So market, Liberator Where to answer your not wellness in into appear does is as yoga chaise, although moving Avana question, hasn't so Avana speak.

Jordan Friedman

back So which the of announced be point wants right Avana haven't we to a in, everyone styles content, different this working brand Because of which release as a we market you're up But basically that a styles unreleased have with at to contract. which see But talked brand, different yet. you're Liberator. now, fully of second. another brands familiar on, depending labs, packaging. about just fifth that and for our version also then Liberator, mainstream are is press what on going that is Jaxx, We're on to are working foam we in or we're

Louis Friedman

price Different points.

Jordan Friedman

was wellness Different we business, started price -- sort stores. this sexual products We mainstream when into no of taking one points.

sexual to is packaging revolved versus of and the or to marketing buy adult the Target like Walmart. around a angle completely your and trying product and packaging appeal all different variety to a which going someone product specifically stores shops to a So people

of those we're mainstream will a So offshoot markets. of little why more another as for an into that's where now which Liberator stuck too being got kind bit be and adult, brand pivoting kind that's

Louis Friedman

part. or you And of Yes. find compete the don't for products the Amazon even world the most with that to want markets to in Hustlers They don't also, want carry these with Hustler.

brands, is the mean all Avana it that's of the Walmart, this variety But other right, including Walmart? this brand So has goes isn't brand been. wide yoga chaises consumer where place. I over in with in a

Jordan Friedman

Yes.

we category Walmart, that products does on of use stores furniture So on biggest all has retail well regional are just know, even people sexual the to up but our gap product will gray sexual have any And just mattress, what companies products use like can qualifies is a it the the at pseudo furniture depends the furniture products adult all in been see market mainstream stores. mattress you day want is that product and some Avana it. how websites about much kind for brand that and have their all as sites website. our purpose, where a of as time, changing a you it a don't area wellness very selling And people every as as bridge sex

Louis Friedman

the That's major adult.

Jordan Friedman

Yes.

sexualize and So definitely you a as but... can there's product much to out there it everywhere how put debate still of some

Louis Friedman

beds day sex Liberator on appear because... our a Even as product now

Jordan Friedman

Yes.

exist way, for make in now basically it spectrum take iteration and they it have way. options to a where clients but so whole some different all packaging make other one along in take there's but And of furniture, won't sex and... the provide furniture world we spectrum between this also where the So we we every that will we

Louis Friedman

every market. meet To

Jordan Friedman

To meet way every market through and the all of X-rated. every PG-rated level

Louis Friedman

But and answered chaises Strange we've question. Wayfair of in your in sells they some places of them. yoga we've day yoga with sell call yoga that every market, hope dollars or chaises, millions including chaises, them yoga sold market, worth mass just We and... mass

Jordan Friedman

it. do buy their home, their own that's what choice. can in anyone and chair If a just its then And they

Louis Friedman

hope your that it? other there is any question. Are we've answered We or Right. questions

Operator

time, the further no on questions lines We gentlemen. this at have

Jordan Friedman

thank Great, you.

Louis Friedman

in diversifying but to to third a the several fronts, challenge by Well, return Yes. in speed and top our investment sales to to the Okay. market year the in place are on we we a confident growth the by quarter increasing return through strategy profitable was coming expanding offering, I'm presence, company brand line have our product software confident growth. category innovative our expanding

execute capability again manufacturing entire our for continue allows Brands want joining us challenging today. Thank team, Luvu to the approach to disciplined entire cost domestic a control, a you, Our environment. within I management chain us supply you and operator. to cost With thank to

Operator

and gentlemen, today's conference Ladies this concludes call.

disconnect may time, thank and at lines and You your we for you webcast participation. from the your this

Luvu Brands (LUVU) 21 May 242024 Q3 Earnings call transcript