AKA - Earnings call transcript Q1 2022 | a.k.a. Brands Holding Corp.

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Operator

Greetings and welcome to a.k.a. Brands Holding Corp.

First Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Ms. Goldberg. Emily ma’am. you, Thank

your begin presentation. may You

Emily Goldberg

found you Good and the quarter this call a.k.a. at Ciaran be first are Jill Executive Chief joining conference afternoon. afternoon, With call Officer on can released Long, Thank XXXX we to Brands’ results Financial website Chief for discuss me our on Ramsey, which ir.aka-brands.com. the Officer.

Management or refer started, like events, and the characterizations Harbor language. of to future to company’s which statements, projections, you Before may remind I’d including forward-looking we underlying other get of assumptions. expectations, make Safe guidance

Forward-looking cause those statements differ involve expressed. risks results than and uncertainties that materially actual could to

the release it For measures a to and any adjusted most contain are statements. such GAAP impact these This the business, with SEC. EBITDA to owned our pro will presented further Please call non-GAAP of website. non-GAAP certain as measures periods as comparable call available note forma comparable adjusted the will such to forward-looking contain no discussion financial update the related we measures, EBITDA numbers also see and includes to filings risks Kings please we Reconciliations our on assume if included earnings on the of which all described. the The a margin. had our furnished of SEC for basis, periods in Culture and obligation

turn call the over will I Jill. Now, to

Jill Ramsey

environment. and today. our proud the our continues quarter brands Emily of what and exceeded of would expectations, you, a execution business and impressive agility model. Thank extremely their of our results, call our to strength be I for agile start to am first thanks joining for brands reflecting recognizing which challenging teams the everyone like our by our and I for

$XXX forma an on forma top to growth Pro First sales impressive which XX%, on incredibly basis. XXX% year a million. net pro of is increased sales XX% grew quarter net last

of our expansion growth on in EBITDA over and expectations our customers. a Equally continued increase unique with ahead a continue base, of X.X%. deliver to combination at forma of margin adjusted customer million profitability customers pro X.X the basis to we Importantly, on active XX% with is exciting

with We that confident Gen brands continued is market to remain and growing customers and awareness for millennial tremendous on are Z there globally. share and the in our laser-focused potential drive U.S. gains

far incredible region. Our the net volume that basis. the our XX% with sales growing a of up by of makes U.S. U.S. on outperformed business fastest pro am growth expectations majority pleased the to now I forma is and share

region international basis. on a with quarter had growth robust Our also XX% a forma pro

Turning unprecedented to Australia, and decrease experienced demand. call, disruption our in an February, as in Omicron region surge and on shared this resulting in a earnings last consumer behavior in January a we

a net quarter forma the sales improved progressed, basis as While down X% the quarter. in trends pro on were

saw the a As Kings Australia it quarter penetration store current to highlights physical summer from shine. to some our strong brands first expected, Culture was Across footprint. truly is U.S., over in the our before brands, brands will Ciaran. and disproportionately share I due when we the to which turning and our briefly in impacted in spring start their

and parties high-quality, X Coachella Polly steadily has back on-trend to with customers quarter drove the festival momentum ranks recent particularly came time year’s Polly sets climbed Teens as wear we festivals top the for outsized share third-favorite with site matching and had where this e-commerce reach teens Dresses, years the Princess Piper the demonstrated in excite U.S., years. growth and and of continues the great Polly shopping our in online in now remained Princess the Sandler growth, survey. by the quarter U.S. continue to last XX market Stock among merchandise. teen in to and the Princess First, another female has in for X roaring in upper-income awareness destinations to first and survey. other as gain Taking

leader particularly channels. sustainable collection, we Curve, our We by with also are continues this Earth to paid new customers assortment. excited Princess of media, pleased of an and more many efficiency we we to Princess sustainable to about across remains track assortment social converting remain their our due performance, the of tracking on and expertise emerging assortment launched And recently Polly’s target with the perform of industry are marketing well their in and marketing to Club Polly expansion optimizing meet the end in-house the XX% fabrics are extended-size year.

Our to We critical execute continues a more dynamic across our part a network micro-influencer influencers. growth. and a collaborations X,XXX a vast of be of than and strategy month differentiator

committed brands go, we and of ahead by platforms whether for Z the wherever or priority to top of streaming ones with Today’s saw quarter, and Polly events constantly apps, to year. large a first platforms of and growth across ambassador elsewhere. first TikTok new excited is are the our We on dating efficiency the they X,XXX is campus top shifting balancing and start to Polly’s Ambassador XX% services, and Gen Princess the new held drew the front We growth sign-ups. on also TikTok our testing by tactics and level quarter, always ensure staying in since migrating bolsters Princess audience which optimizing Program this followers we gaming is the and to engagement confidence strategy. content between crowds and successful exceed we in at or we continue them. XX,XXX in new platform followers millennial are and platforms College on continues expectations customers constantly our to several further weekly are in will universities of new paid. over new in improve organic with

spend gain delivers our text key be in-house This and allows last reaching optimize XX% subscribers to to us channel approximately media, manage quarter’s channels, marketing our As we paid by discussed platforms, important on marketing XX on a performance grew call, Across priority. be last marketing message in-house social via we and efficiency. customers, since return and new which XXx message marketing text we flexible, continues actively over customers also a quarter.

loyalty this customers rewards will to developing Princess later Polly to continues higher customer even further. Princess experience to the expectations customers. opt loyalty the to outperform XX% in And the average front, non-loyalty to program tier relevance further capabilities customer Polly’s excited than being base with in also this drive On this and enhance engagement year all spend new we anticipate is for are add segment. a customers program personalization

triple in a who prospective which were Curve content. quarter, engage pilot-tested Polly For rates first the home the Princess conversion extended-size to example, redirected page, Curve customers more page. than with dedicated saw Curve landing targets when We shoppers

to in We are the coming this are just capability personalization with quarters. scratching excited expand and the surface

to continue our primarily execute also UK. We on in the plans, international

are the worldwide. We continued Polly for excited very by potential momentum and Princess

thrilled the many to X model, because throughout has during live engagement, properties stores, were Kings brand pause as from live hype out down Aoki are These to Culture the that in-store drive Unique in after content with events, stores, and of DJ our coming quarter. Kings, we key chain energy, digital given in we months. improve in events events first celebrities expected Moving to events, cases Shaq live amongst that And starting to to and in iconic stores stores COVID Kings they celebrity in nearly our Kings welcoming with peak And business supply amplify very appearance have stores on X-year put great that Steve appearances. traffic quarter, cancellations levels. social on the forward brands, other the our celebrities to Omicron and impact an back the look sequentially come we incredible Culture Culture see generate on and our Australia pleased the and quarter. we performed media. especially by our last We as were and discussed a Culture welcome

a believe opening. approximately actively additional store as have slated this to incredible get building forward track Kings’ flagship Vegas block in-store excited U.S. by social be events Culture to drive closer drive store. traffic will Culture format, in opening assortment which unique particularly world-exclusive be end. U.S. up I and lining look of open brands on we location highly Vegas, key to in details year to store To-date, global and We leverage sharing an are streetwear growth recognized to our the concept is to store are experiential highly first Las for in to the and celebrity will live on Vegas a media the We brands and generate premier and excited buzz their to are XX flagship the events. we Kings brands in-store confirmed

awareness confident accelerator be We that in U.S. store will the for Kings key Culture the are opening a

the merchandise the growing Our Culture assortment streetwear our segments fashion. exclusive Kings represents merchandise and and growth are majority These exceed on-demand and key continues in-house our expectations. to differentiators fastest in of brands and competitive print our

customers us enables trends printing on reminder, within to allows to needed, and efficient for production This jump to culture capability print print produce license the scale margins As our as keeping our days. merchandise top and on-demand a quickly inventory and test high. to us trends gross new quickly designs tees on hoodies only and

seen doubling great down L.A., on our results. new of the already this we capability acquisition With of have facility and are outside

successful TV Bel-Air. and recent Attack print Titan, Turtles latest Teenage on-demand trends Games, as and on such return collaborations Dennis of Some the hits like and throwbacks Rodman, popular Ninja Mutant include Naruto, Squid XXs

third-party While category. the Culture brands, strategically brands build Kings’ exclusive to strategy within focused in-house helped on is credibility streetwear

over broad third-party less we have chain of volume, while up the and supply discussed And seen half brands, cancellations We order as which quarter, on brands Kings’ last third-party Culture brands. a XXX disproportionately the impact business. Australian have some impact of than make range

half. especially these Culture this $XX expect our drive be the a majority we impact a million We to reminder, as and in-house to $XX a in our growth. impact first our back exclusive navigate Kings in confident in As sales of ability half to challenges, brands the the to remain million continue

fashion, our store with We and unlike in it grow to and this for of in U.S. introduce the format. to long-term streetwear anyone and Kings’ experiential brings else this lifestyle presence and and more are to a and the customers store together incredible are wait and see launch potential come. brand powerful We years brand expand culture, combines music, global to can’t Culture confident Culture and this internationally. excited unique Kings U.S. about

model the the to & proof fastest Petal of Pup us further quarter, in in growing curve as scaling acceleration that is returned the gives well-positioned next trends the was with in brand replicate events. success U.S. Polly. to our Turning growth to customers Princess we this U.S. the as & changing same meet complete social brand can Pup, the and at our Pup & Petal did Petal confidence we fashion

by year be the at penetration and and evidenced & XX% second the to quarter As as growth all the quarter. last quarter is set are a guest capsules years last to rate the mix wedding Pup on repeat Xx we growing rate first focus, for Pup’s buying repeat & dresses, just collections, in noted grew in & Petal X to the strategy the getting increasing overall of launch of quarter, Petal XX and new in nearly exclusives compared we test and in exclusive is year. vacations, quarter. exclusive Pup well-positioned XXXX increase customer excited is strong and with is wedding first working, product which their largest Petal date-night first of seasonal started an

terms to in strategy success We our new see with of acquisition micro-influencer continue conversion. and customer great

number and & top Petal believe focus a for more marketing the Petal doubled drive quarter, Pup also are collab heavier engagement we TikTok and meaningfully excited Australian Pup influencer, Stevenson, & collaborations will upcoming which expanding new is During of with on efforts the to Georgie than with and influencer channels an we excitement. Pinterest.

particularly followers nearly over last We growing have year. Xx strong growth with TikTok in seen

develop costs, talent, and lead fulfillment acquisition. onboard Mnml competency a.k.a. core other Mnml and first Mnml solid quarter, platform We the improved is had the April, as denim Mnml. team to efficiencies, importantly, brand. helped strategies, to an brands by knowledge recruit to post from the has as bottoms, both and in a.k.a. to a in already transition And lower new Turning time a.k.a. the driven X brief from operational shared from which benefited leveraging launch preferred the of learning already provider experience in strong a customer the merchandising customers. well the sales months platform channels. acquisition new our increased and and

As mentioned we this on Kings Mnml the as forward and to launching second on Australia great brand, stores. as and site our well the website last look call, on Culture both scaling King’s is Culture quarter, Mnml site the in

the benefit first great growth. with dropping brand June pleased also collaboration be a performance quarter with content, triple-digit TikTok both are Rebdolls as in Denise an the has a first which and platform influencer We other from notable awareness TikTok brands, will from to continues the our sales in and synergies exciting such organic Rebdolls boost builder. quarter. focusing strong engagement Mercedes, on to learnings in Rebdolls led which a.k.a.

business relationships model. global been briefly pressures. elevated able diversified mitigate Turning to operations a chain airfreight and our environment challenges costs, remains the supply We’ve across inflationary continued to base with disruption, challenging vendor with flexible these strong our our and

is to power merchandising strategy. of our remain and in in raise full first we been able Ciaran discuss more performance year quarter which and a will Additionally, detail our exclusive we of prices the brands testament outlook. demand, importance without pricing confident impacting but the shortly, our have guidance to our

While year, are believe we well we as the lap positioned fundamentals growth strong, second we a monumental quarter and business our back period for in anticipate remain the same we the half. last of softer

is the next-gen the opening will season to positioned excited with continues Polly half our second Culture We the of opening center, and at recently our execute and of for are I model, all quarter advantage, our we competitive or brands. ambassador level have spent in build the and store in distribution expectations our of Kings very next our talent And engaged, business are time for the brands. team. on offices, our first confidence Princess ever that In and the to the scaling in are with of and quarter, than our ever growth fourth awareness which accelerate the summary, the performance brands playbook our reaffirms our brand the best the other our our the and U.S., powerful than the we quarter. back-to-college take continue program. time, several energized, truly for Vegas back I’m in strong more our at They track of confident growth. to on the will we same exceeded to better U.S.

a and growth and to is add markets, expansion opportunity the our to for turn direct-to-consumer quarters Ciaran. call in the portfolio see robust the over fashion and forward the continue to of pipeline to executing U.S., Beyond to that, I’ll our brands massive international our right. for we strategy. when years organic in look we have ahead time I’m excited With

Ciaran Long

Thank good everyone. you, and Jill, afternoon,

the sales in We to pleased ongoing EBITDA our delivered first adjusted have despite quarter expectations and are macro challenges. above the

to business attributed strength of our be can performance strong the the Our our model of brands. flexibility and

the to sales forma of Adjusting to $XX of for inclusion compared value sales prior net basis, rates. compared year, sales to increased quarter, prior the XXX%. as first year. X% constant-currency $XX Kings increased order million compared XX% in forma net XX%. The a FX the average orders to year total On year, on million net pro pro the to lower For prior to million decreased due the a our to grew rose basis. mostly XXX% $XXX forma last number $X.X Pro Culture

million well our XX in the trailing $XXX,XXX The customers months customers to the success brands, basis. active active a growth our business and to year grew quarter, pro model. during on the and the compared across on forma as of continued basis orders a For as momentum grew both $X.X reflects strong sequential XX% last

a regions, within year’s including assuming on Kings highlights I provide few last again, from Now forma basis, Culture results. our three a pro key will

forma in U.S. sales increased year on net increased XX% quarter last basis. up the First $XX the pro XX% million, from and quarter first a

Our in awareness. be we to our Princess continue growth driver continues largest U.S. the of brand, brand Polly, the primary build to as

of our from are million in pleased $XX we our we XXX% Princess of across mentioned, growth grew sales remain million net through the brands. performance $XX continued Australian benefits all with prior the year. and to the the Polly, seeing Jill As of platform five

on net The X% the decreased changes of X% to inclusion by forma primarily Culture pro driven a With Kings, sales was the FX basis. decline rate.

slowdown we quarter, as the call, driven terms $XX the our impacting And of Australia. cancellations, by overall, sales Vietnam in of Kings in in the anticipated the chain variant, saw in to first of as half. COVID-related million previously cancellations primarily discussed. supply coming out in of surge last the discussed saw Omicron a Culture In with impact effects sales million $X first we impact We this

net world, Omicron first the a the where XX% of prior year forma basis, increased of pro New million consumer similar the in by of was rest impacted in to on there Zealand, sales quarter was a Australia. Turning reaction $XX from surge which

our first to profitability, million. $XX the quarter to Moving gross profit for increased XXX%

the in Culture the the the orders were as $XX Mnml. million prior offset to in selling increases maintain to expenses of as strong of the in $XX quarter well committed we year. was as price by higher expenses gross the point partially remain number compared due of gross XX% in our basis basis the Our than air as due lower-margin, had to rate compared rate a and point margin result The in margin inclusion impact. Kings of which XXX the was a basis expected. same impact; year XXX decline period gross had increase in better targeted during million, freight, and largely was quarter The These third-party was product margins. point factors were inclusion increase Selling to Culture to which shipped, XXX the last and assortment, XX.X% Kings

expense of million. $X to XX.X% the in from deleveraged to $XX sales, points quarter million Marketing compared XX expense XX.X%, As basis by of first XXXX. a increased selling percentage to

of percentage a a spend of an was increase marketing due sales, and to increase Culture primarily higher the of Kings’ level compared first increase marketing Polly’s spend. This quarter As was advertising XX.X%, XXX-basis-point Princess XXXX. expense to in

As way. to in Jill performance marketing mentioned, continue customers our reach we to our and influencer efficient investments in the most balance

Kings of $XX of G&A million primarily increased the in million expense G&A the The due $XX Mnml. Our increase in expense Culture was inclusion to from year. prior and

insurance fees. compensation was as costs. transaction related headcount increases a and and in in offset support in equity-based professional by there business to as service across to relates benefits growth, and an partially Additionally, increase additional salaries expense decrease functions This was well

a – last XX.X% result same G&A period in as of to percentage a was As compared XX.X% sales, as the year.

For million the was quarter, prior the million versus adjusted $X $XX in EBITDA year.

As a year X.X%, prior of compared our our XX.X% EBITDA percentage of first exceeded the to sales, quarter, which adjusted in margin expectations.

was income $X.X the net a.k.a. per year. $X.XX income to quarter million net was attributable a.k.a. $X.XX million On to prior or share adjusted million or attributable per to Our or per share. our compared $X for in $X.X $X.XX the share, basis, an

Our million weighted were first $XXX.X for shares quarter approximately outstanding average the of XXXX.

sheet, balance we quarter million, including million, $XX $XX the $XXX the compared debt. and cash quarter first the ended cash was million at end equivalents at of in $XX our the of end Inventory the liquidity quarter, the At the million million had $XXX of of to million available XXXX. we total facility. the and quarter of $XX on Turning credit with to end in

to with pleased in market, guidance growth. of full $XXX sales with strong as the strong net the reaffirming our million We Turning expected we the U.S. remain to for are sales by range our demand brands for million. to be our our year, $XXX outlook, evidenced in the

on against in last quarter exceptional in the forma Pro net Australia. throughout basis, of are On the year. net year. first of top XXXX, grew our up growth less sales line, half last as forma XX% was half XX% we both and the the second second year In move sales we the of so a growth lapping robust U.S. growth in are coming pro the we

of the in back be half much the will anticipate continue year we year. half of the growth stronger the result, a As than to front that

Australia. addition improvements to half, we the also back sales In trends easing in in in compares anticipate

$XX million adjusted to is to $XXX year, the the EBITDA in expected million. be range For of

share $XXX.X full year million between expect second $XXX.X diluted We count $XX to average for full million the $XX the of for expected are weighted year. to the million million be for expenditures quarter. and Capital

sales million $XXX For be the quarter, the to second net expect million. of to in range we $XXX

growth U.S. an the we in headwind FX up the last against what In to which were equates quarter. addition second to million lapping impact unfavorable year of of to with the quarter saw extremely reopening, first an X%, we $X compared in strong additional

third-party quarter $X this sales $XX and In in second to we to the impact of $XX terms in first in impact million anticipate cancellations continue million impact the anticipate saw brands, half. from million the the of supply chain the of in front back quarter. million We half balance $X and

partially margin We and the quarter price continued freight expect by be higher to gross the by continued impacted slightly profit elevated costs offset in activity, second promotional increases.

brands For of the second share manage $XX expect drive the to adjusted our momentum on macro the $XX current we gains and quarter, to challenges. million remain to of as be market the EBITDA in opportunities the through range million. we continued bullish We

slower expect much of stronger year of half growth half as We a lapping the comparable result the a in second of back XXXX.

long-term progress growth to we of to position, on strategy, margins EBITDA in two XX% operator as in remain our for and acquisitions; net Princess we adjusted the mid-teens. inventory the Polly’s per the excluding Kings’ one call sales which acquisitions the With approximately our on team’s momentum U.S., the will and ability that, include to Culture year; long-term turn confident strong beyond our executing over annually, XXXX, deliver growth Our in targets, continued I Q&A. of addition look

Operator

of Randy with line first from [Operator Konik comes instructions] Our question the Jefferies.

with proceed question. your may You

Randy Konik

you what pretty and I just you of supply demand the guys, brands clarify of that Is around the expectations. in a pricing you’re the will? – because talked across it the the because good the chain rise if power there feels you part is afternoon. commentary think I about or in just to about So saying slight all the wanted other firm, of to function I more still of sentence, Thanks, talked side get increases, of kind promotional and consumers like kind [indiscernible]. want price Yes.

I that wanted Thanks. first. to just So double-check on

Jill Ramsey

question. Yes. your Hey, Randy, thanks for

in just front in incredible growth as across have up well. momentum year’s bit stimulus and the little are is rollouts marketing of we XX So promotional very we and activity with and very the Look, seen efficient half as marketing last channels different a against to increase everyone vaccine committed being spend our comping reopening.

Our brands are selling But at to of increase of any continue a really being strong full have as price to sell-through to strategy of marketing a pressure. quite inflationary with really are prices, over our power efficient needed, really XX%, and our bit we committed offset we spend. to pricing

Ciaran Long

And Yes. XX% a We would be pretty close – did of to QX. – we for kind it margins, expect to QX. gross Randy, that on for maybe, just we to

we the really rate expect get will number overall slightly to last think continued to I gross from did that at we kind year, margins in XX% that price improve come that back to of half and increases. the

We in do already across have in done targeted QX. more the and will we QX to some continue brands, some

Randy Konik

the are at And last quarter talked then just kind us and on Thanks changing XXXX. stuff think talk am that that today, half kind COVID back of where guys. kind happened you of only point I in is in you today in in ago bit and maybe you Australia Thank that the there? time. think sure see you that a you. And world back just of of I how question playing I out, of my beyond? I improvements of months and year just we can on we about perspective and rehash what to little time how just X us from region go are the about things said give you to expect from last things kind want

Jill Ramsey

Yes.

have of front in of had we bit noise the half a So, little the year. Australia in

that Let me break bit. you a for down

year. in some with from on hit Omicron Australia we disruption the last call, the market As as earlier got see They talked did about that. the consumer

Even We to move with have really back really market U.S. bit rebound market, seen that still has. stores living Australia the are into we though to same behaviors. levels way back and consumer in a remain the case the high much Omicron seeing regular

past though, So, well. FX we market, is an a noisy moved seven there as The of bit. headwind perspective, still that headwind from have a points about bit

saw the a adjust cancellations, We fallen last in you we cancellations FX XX% more bit that call that HX it the the from today, QX Australian have comps in and have across noise on and QX. this really talked and little for about digits, QX and When QX. XX% of in growing year, against is last mid-single in the up is high and the market anticipated

in will digits. market accelerating is a our is reminder look to important QX, out the Australia comps and ease bit that Australian It to of we to by is really at we back long-term coming majority U.S. of As really we the back the really Australia in see out in a half, moderate to the those ‘XXs, U.S., focus. and it’s really of growth the high-single are X% U.S. growth. where now. our coming QX the look the single-digit – anticipate led be XX% volume in and algorithm going we as growth all focused. We And we of our more That really our with that’s

Randy Konik

guys. Super helpful. Thanks,

Operator

Bank America. Our Lorraine comes of Hutchinson question of from line next with the

You with your question. may proceed

Lorraine Hutchinson

back full when what you. point you outlook? Good wanted the guidance And your half? versus briefly the gave any then initially Thank aside can change there year on second there any in in to the you from guidance. just up afternoon. quarter the XQ Are comparisons signs follow the confidence Is gives in you easier to I acceleration? back-half

Ciaran Long

Sure. Thanks, Lorraine.

$X about we about talked that million for million QX us, that really XXX First, basis QX, XXX We I compared we to had the to in QX, guidance $X in being headwinds $X would was from basis the moved we have it’s few would now just QX. FX. points. where now then about increased say, talked the is about a cancellations changes, thought And be months going ago, thought in we one be really, as million It’s to points. the second

so QX, that the cancellations, And would have we of need When sequential the QX big kind we to we from really – those I at changes. and build are effects they to changes of say, be. we the would kind we right impact and are where the of are normally look excluding

we where And from so kind of that’s there QX. are

to much As of the X% we growth of the been as that, They we are have go same kind pretty versus we the XX% in and year. X% the back half Related away in FX that are right a were of from modeling the in that back us – QX the seeing half back perspective. important, think the obviously, big rates in are rate the we XX%. changes the half front for we QX of about actualizing at half, now kind are the the headwinds in

I going think will give some Jill maybe on the of in that confidence well. the things are that cover as business us

Jill Ramsey

brands. in are all the real across Yes. of about Look, the Culture building as acceleration U.S. the up half our Kings, we group really are of back With for we look we excited setting blocks

us center launched distribution up back really We in for of half. which QX, get sets our the the will end

of to on in got biggest And Polly, great wedding the to but international Culture as progress that further through launching are continue accelerate back more wedding and great making season also & with half. to we the to for is ever own the their new marketing really well, QX season And really the well-positioned be along really big that plan anticipating also accelerator positioned incredible Princess on looking there. and growth And with than really excited Pup will excited in store As Culture we anticipated a and in a awareness U.S. so Program, so really on excited marketing Kings, Ambassador site, on College lean growth that scaling record. a great have have well, into is Petal be we capitalize its that and to opening And about that to season go well-positioned are activation back-to-college Kings. with activation the Mnml better Polly brand really that, Princess

we as the start see So, back to half well. goodness will that in

Lorraine Hutchinson

then would further supply Understanding for Kings challenges And product? disruption of there COVID the any anything your coming the about or availability million that turn $XX China of else out supply the talked the chain is you built lockdowns into you. is chain in guidance. there Thank global Culture

Ciaran Long

Lorraine, other certainly been I haven’t products. we have that Yes. have, the say any seen get it. getting able inventory we challenges to we in would

are and a on well From it have planning to we I kind at over we months, XXX are say continues this been when see little of chain that supply six get years bit done, able we where but We to. X stage, over of rates basis used points would elevated ahead COVID. normally perspective, to into we have wanted we the gross a last to that are that margin. seen have a to of the continuing airfreight headwind be we

– see or model Although outbound increases, the higher for say the able of fuel is the from I built we air pricing brands. into outbound guidance freight surcharges, costs across that freight year. of the obviously the all for We U.S. sorry, our would just rest But in higher the with that are particularly offset did to

Operator

Our Group. the Telsey next Advisory Dana comes of with line question Telsey from

You with question. may proceed your

Dana Telsey

Good afternoon, everyone.

first that to planning then you impact $XXX Where year? be you quarter, in Is the you freight the taken? also. inflation, second the about think back being increases do are increases what you that brands? And will And the how you assume price are thinking half I about As follow-up. by each for a think price quarter that’s How And million been? the just have that for brand? more of

Ciaran Long

QX $XXX Maybe there we that Sure. this got At of have rest planning year for for any Dana. as pretty we moderation that me in impact significantly the year, QX, of point, in that. freight through And the not go overall last decreases first. go year-on-year the up see QX million take did are as and airfreights let we The we in year.

Jill Ramsey

we able standpoint, that our to offset inflation an have from brands. across through increases been And pricing

incredible brands high mix power of Our exclusives. to have pricing due the

able been and test to really learn way offset prices that have we our surgically that. So, can into

have year. group Kings executed this our those brands, We earlier Culture of across

those. we is tail done are adept That offset at our very mid-XX into price gross really already. our Polly, last agile of at making now As Petal our and these as need They committed an and some changes and & wave to being at year. all end to had saying Pup well another from But very – standpoint. are agile to looking the to committed margins whatever of we inflation Princess now factored and Mnml, outlook

Dana Telsey

million China How Any inventory than and what active there million. saw there, then number forward? levels of you $XXX And you. the developed Got terms it? Thank how update of lockdown was going better you about nearly it. that Vietnam, X.X think in then customer expected. of with And do the

Ciaran Long

Sure.

Let inventory first. me cover

versus – about of it’s for the up growth inventory think sales year-over-year is XX%. XX% I us

So, little see volatility ahead that’s supply as really the from I we kind perspective, of kind say of in an chain. bit would and a inventory just

to of just for inventory and place make we right in the have the continuing kind are We have sure it customer.

continuing from So, bit a perspective. an pull there I ahead inventory think we are to little

U.S. building also year, are fulfillment also in brings inventory open this Kings a Culture We center for in will and bit. that the now that little of QX up the

out we in back we moderate inventory, I see that growth growth of about the should kind think as sales fulfillment of kind building rate we rate versus half balance think center. from out a as

Jill Ramsey

impacts any your a to Dana, significant And lockdown up seeing couple that. impact, regard me pick China let other not with aspects question on of any of from

caused where footwear our spoke sort that Those we for is into of about of impact you have navigate Vietnam, really Ciaran delay. or last about couple the cancellations We the the here active some on to ongoing, net have actually that are any about customers. off-going to have Also weak that have able or that a had weeks though, model asked us. asked there. been model, of factored And you so earlier. now delay years. been that But business hasn’t we had

share have really Polly. were gaining continue Princess really in Princess We by and largely U.S. on and U.S. we incredible market teen be awareness them Polly its and young awareness that really and have Sandler to continues with to just continuing awareness results and and We customers as the that brands expansion scale to great growth gain just seen audience led momentum ground proud of and Piper the love

U.S. in further then anticipate grow as active along push we customers on So, continuing that also and the to internationally as well.

Dana Telsey

Thank you.

Operator

with Our next Company. Oliver of comes from Chen question the Cowen & line

question. You with may your proceed

Oliver Chen

what seeing marketing Hi, Ciaran. there are acquisition and you with what they and new IDFA Can costs ahead navigation. Jill expenses, testing you Marketing on did you Good and to increased so due elaborate opportunities. also the afternoon.

strategies what and question, business your Second Would a the hemisphere how that seeing. with Thank you. given model. of employed volatility that’s we synergizing unique is and dual love that to are your proposition of being kind thoughts all respect on are

Jill Ramsey

Oliver, question. marketing is and obviously platforms. across is optimizing the Hey, social the for are to we a number those. very it landscape all The across thanks and We dynamic, a performance, Yes. playing efficient And strategy landscape. that of across continues of have influencer very evolve media, marketing

shift. of bit little a seen have We

really bit micro influencer influencer on some very and really are we a from that prices a continuing increases very further we the reminder. QX in just On of actually our we find strategy come are little saw actually a we for have QX. that focused Overall, or side, a And the pricing just on college the good acquisition and space, ambassador channel influencers efficiency our really then committed great performance program, And but continue seen to side, pressure it’s down inflationary efficient there. add us. as we still sources out to see to delve new overall into opposite as and into rolling to

to marketing critical out platform. of ahead and the others get out across platforms. before mass ahead brands Our the there all are just of hits constantly innovating We like really

been testing TikTok that for organic of some and getting our and just have on and now, right. tuning paid balance really time learning We content

because a diversified So, has changes. the innovative us we spend advantage through of being out that gives of impact We saw marketing our a our this it of of really really less of saw iOS dual ahead impacts as from little is than hemisphere, others of On were but marketing marketing lot bit impact a insulated moving that of and strategy. efficient a from and strategy others our we the really lot COVID. bit

we We able marketing than another, stronger during have market Omicron. spend to say, one been hemispheres let’s the saw between shift as

to of ahead six inventory have the being advantage leverage ahead been trends well, We hemispheres. shipping and dual-hemisphere on And also and months with able our between able curve. to are monitor seasonal as optimization, use the out we seasonal

really continues business So, a model, every we that be we our are unique that using day just in those advantage and competitive to have.

Oliver Chen

banners your manifests contingent rates and/or of product Thank mix seeing? you. guidance what you what’s return overall? Has incorporated and/or which in terms and as with Thank quite we Last question, are that know that stabilized in about upon that how the is you.

Ciaran Long

Yes.

women’s did particular. in Kings, of in we brands at that’s bit faster So, in just guidance our Culture perspective, the QX, Oliver, we rest year. the rate little see from our have than a through return a there XX% mid-teens growing and a bit

at rest to as we in kind we kind of below back of go or expect of that and So, XX% stabilize year. the through would QX the

keep changes. aspect down the and of being level. rate. return that go best-in-class seen rate our we we have And rates we of improvements brands. at to all across are seen kind to brands have kind product, customer changes that make The of from the as return have committed we the But return still the think mid-teens continue that mix the brands to it overall, just lower through some to with seasonal I we experience at across to

Oliver Chen

Best Thank regards. you.

Operator

with Our next question of from Boruchow Fargo. line comes Wells Ike the

question. may proceed your with You

Unidentified Analyst

Ike. is Sobelson This everyone. Hi Thanks. on for Jesse

we including – we versus Kings forma pro math First, on organic. did just growth, some Culture

should then expect year? of We And we rest that in this going are the Mnml the estimating quarter. to forward the million adding Is correct? the $XX.X what brand contributed in from about revenue for that, on

Ciaran Long

that We quarter, the XX-Q of Mnml and disclosing $XX disclosed million – the was that Culture for through so and Jesse. the our Hey, rest in the for the we Kings revenue. actually year be of Mnml the about will revenue

the they expect it continue and volume would accurately. the We year, through year. bit be QX to kind in that a of to build we to at that little go or will strong more able through seasonally as QX, will are be and So, higher you that and model

Unidentified Analyst

Thank you.

Operator

comes from Youssef Squali the with next Our line of question Truist.

You your question. may proceed with

Unidentified Analyst

Hey, this for is Daniel Youssef. on

and on allocation last if Thanks. it’s comment wondering pipeline, at just M&A if all strategy the in market the changed the environment. you could capital given Just months few

Ciaran Long

Yes. Jill. ahead, Go

Jill Ramsey

Yes.

say, add an from great are a game. an perspective, speaking, shopping M&A great the game So, just broadly to to and would brands long constantly potential portfolio. – with I are we is we for M&A opportunistic

to kind have you can relationships. You something and stop. build start of not got It’s

about excited the pipeline. and committed of on right. brand private is excited we markets, down a been brands the Ciaran are let really are high The bit have to to That are bit And when timing and will comment adding our capital a said, the public valuations allocation. I in that, coming are moderating. talking We potential the we some following a markets and

Ciaran Long

Yes.

about of is leverage So, at the the moment, our end March. at X.X

as to as opportunity to talked we have think about. be the see that we be right about, talked Jill I for we would the acquisition, if get it than higher happy

Kings. enough to more existing more debt acquisitions obviously is EBITDA using we are key the year will there potential Vegas Obviously, there and on we after are in and that brands leverage have, that first spending our growth a we But part the strategy. of go than Culture capital the to continued take up have. So, some on store the for that this of that,

Unidentified Analyst

Thanks.

Operator

Ladies Jill we today’s end to over Ms. for of have like to this call remarks. gentlemen, back and turn I session. the would reached closing Ramsey question-and-answer

Jill Ramsey

call for Yes. great our much evening. rest of a your everyone have joining so and Hey, thanks today

Operator

conference. today’s concludes This

at Enjoy You lines you for day. rest of may your participation. time. your this Thank disconnect your

a.k.a. Brands Holding (AKA) 15 May 222022 Q1 Earnings call transcript