AKA - Earnings call transcript Q2 2022 | a.k.a. Brands Holding Corp.

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Operator

Hello, and welcome to the a.k.a. Brands Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded. to call pleasure Fontana. to my now turn over the Jean It’s go Please ahead.

Jean Fontana

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

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

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

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

Jill Ramsey

agility, environment. and their complex today. by and to in joining call like I’d to hard delivering appreciating everyone, macro what growth teams recognizing a for continues our Jean, you, profitable be for thanks, work and Thank begin our

was of on X% of on XX% largest our last the we acquisition forma of impressive global release, growth constant we top Kings. in on year’s grew growth recent last in currency quarter but Net top constant slower net top while recovery XX% And pressures through did we the decreased Sales top as on sales sales region behavior As deceleration the year. pro for U.S., growth inflationary quarter of last XX% the year’s our spending currency grew Culture forma growth. in in robust up a on quarter. were impacted Australia anticipated X%, XX% pro on second pro X%, XXX% and achieved increases, experience this stated press moved global Australia. double-digit in we quarter shifts of than forma consumers, by in second

a lower million. higher return promotional lower adjusted on EBITDA contributed and investments, competitive returns environment to $X marketing Additionally, than expected of

carefully we Ciaran As and business through focused we expenses, challenging efficiency period, protecting promotions, continue profitable margins driving by shortly. and will manage greater our growth marketing maintaining driving speak to discipline are this and inventory around to on which our controlling

demographic. we Importantly, million we percentage differentiated demonstrating grew and XX% just globally, the our Active yet, growing customers X.X remain serve active target is our in confident our of for We customers now long-term brands. believe small outlook. potential a demand this growth

rest We the in U.S. are the both of in days and of still early expansion our world.

model profit operating and volatility. during to growth times unique manage to Our between flexible enabling pull and resilient, levers is of us

of a times, competitive huge exclusive, a First, data-driven, powerful repeat a high all merchandising lead with next buying of and which generation fast hemisphere leverages mix a dual create our strategy combination of and test footprint advantage.

growth gets inventory faster, to model maintaining managing and proven margins. risk customers trends Our while strong

efficient combine which higher costs marketing that with efficient to approach in-house media an and and lower performance this and leads great followers channels, across our social content marketing brands highly have all network vast amplified We flexibility. a Second, starts of influencers. to with

across us drive our to unique and our both platform and and growth culture enables resources teams multi-brand ideas, to vendors, collaborative Third, share efficiencies. innovation,

are XX% new up our this. chain Princess to have make tremendous reach Polly’s and quarter establishing and as quickly with continues their further their remain sustainable styles brand women’s supply they rest by of our on year-end. and on what’s by to They’ve at of quarter mission world. Club, starting ahead a the their made in and to I’ll of sustainable this on-trend is largest share Princess with tremendous brands. leader brand materials line progress of accessible, Earth quarter-over-quarter. gain opportunity and their our rebuilding quarter traction the over on sales fashion, track and goal XX% Turning Polly, fashion to use the U.S. from highlights contributor some XX% updates. sustainable to growth to

growing to to addition their and soon their buy pre-owned proud buy secondhand Princess that in fast will to sustainable that site by and Standing range, be and partnership. is Polly customers quality Polly fashion. share sell Princess eCommerce a positions to of circularity the customers able their expanding strategic and In on incredible participate space sell allowing full a is them to an step through

competitive also growth these strengthening Princess to their position their extended which in target size launched continues with Polly is their bolstering see demographic. brand and With in differentiation initiatives, fall. collection their the curve, Princess Polly

with your quarter a pleased This returning dress are XX% for with we the friends. from styles strong I nearly always share up very as my enough from after same customer. wanted thank a response inclusive quarter XXX I’ll across sales sizing. prior to purchase. were the you have I XX% cannot quote customers initial a first of the and

reach audience. growth is mention spend influencers. there across Polly this ambassadors continued quarter, My social XX fast in-house. took another a to into audience believe Princess we with efficiently and generation received a next to heart. they that channels And is their applied. next marketing this media And you at Thank smaller applications. is the have customers. a Polly currently will Polly no now. college that over marketing to way so Last back small enthusiasts performance to of proportion Princess for and potential Innovators season are bottom rolling is today, program means sales swing idea a influencer with program channels. enable a the to X,XXX right and ambassador authentic effective high robust of level broader from students They optimizes ambassador campus XX,XXX the college the in of You full Converting activated leader much my quality. from not reach while it a curve new brand fall, a marketing And is how self-esteem in cost to fit across out Princess network micro incredible cool at to campaign

strengths to and marketing, on pivot customer learning their ability goes. Polly’s to Princess and They were incredible is content wherever increase of early with their strategies efficiency. One TikTok, testing

platform, subscribers drive the continue Princess X engagement continues is than Furthermore, ability and high channels. unparalleled. between powerful non-members. also Polly’s brand. as face a members and half we XXX% our one rate their customers, ability now to on to them also marketing, non-members. higher successes to Princess aspect they efficiency traffic ROI with highest for landscape, tier and a back and nearly who influencer are marketing Polly’s And top their combined is with marketing SMS million million Princess seeing impressive Even to lean X emerges even and new with strength the in-house Now, highest spend significant of enable has these Polly potential purchase channels drives the text become across while a shift it efficiency dynamic performing more loyalty growing members is in conversion nearly X.X with sales more times to programs their that beyond. fastest and expectations as to of channels TikTok into spend doubling their our personalization. will marketing one of is of model in-house dominant which of optimize program at leverage down exceed repeat, they is as

strategies their and our to demonstrates drive the Petal to From brand continues into leaning their and dresses they the to and same performance Polly Princess optimize perspective, U.S., to merchandising of growth. piece Pup. world. QX, Pup to on vendors the and successfully across of Turning sets test repeat advantage Petal driving be they’re and strength Pup’s shares In as fastest able the cutouts leverage our own Polly. uses and growing, read they and dual like Petal as two trends to react Princess to Polly, many rest shift and were platform quickly growth Australia Princess a and jumpsuits. hemisphere strategy like And This inventory.

Pup on like And targeting platforms, high in-house to into minute marketing. the on example, relevant data. delivery Petal SMS on on with orders lean In this quarter, shows. focused Princess learnings on Australia between up successfully based advertising before just reallocate took content they U.S. to performing Polly Polly, Princess marketing and text new growing ads sales customers they’re from and For streaming

quarter, they our channels. file This content of highest customers growing leverage and resources, of their Rebdolls and to size returning also their and group their fastest learnings, and practices SMS continues with became the incredible one doubled customer engage best from of brands.

growth Culture streetwear are stores for strong brands. our in highly Renowned QX has to a QX. that Vegas delivered to that into Moving Kings sustained closer nightclub, their stores experiential

high Culture return are number by engagement, With Kings traffic impact back featuring to of conference boxers we high Kambosos content marquee Haney media. and restrictions, events in-person and exclusive energy the in was a stores. visible the fight. following our events and the amplified on level press merchandise second quarter, up of social COVID thrilled in branding, their [indiscernible] event including to was with promoted a leading The that posted

LA moment Trophy. of Lombardi with he viral Vince the created Scott stores Nick arrived Additionally, the when ramps a in

incredible November The who This Sydney will and and track stores such brands host the and launch. with over of as buzzing an our Brisbane. of concept this stores flagship will had Auckland, retail highly celebrities quarter, in I with location are continued am month. the to will traffic later a on Recently, excited artists Melbourne is Hall class this we be to exciting so carry open Sydney I that confirmed Vegas world for Las The in a Famer recognizable launch They lineup U.S. in this to in and for excited lineup chance of Shack, energy, visit XX are athletes. and our store of

with nearly a Kings in after this a format resonate it brand. broad on online audience streetwear, a from We Culture incredible printed mix are in tees XXX doubled is championship one this global the famous exclusive and U.S. bullish as segment entertainment. popular the thought winners just highly for experiential jump range Since fastest we’ve that print-on-demand can their we than as production, and of acquisition brands, and over such with for in in label. has growing half remain exclusive team confident Culture on Australia private With and sports brands sales SMUs products, a New time of business. come potential More the which store or World third-party series hoodies. the offers Zealand of Kings quickly in the will facility of kind of fall, the trends,

key and brands. risk margins and realize XX [indiscernible] driven over to customers launched capability with sharing Culture our faster, trends this get are we With Stranger quarter, higher successful we gross This other we demand Avatar. license programs, Kings, inventory capability and Things, this including at reduce

particularly online unlocking mnml very Mnml we and the capabilities at Kings quarter, also we leveraging the incredible vintage with the print-on-demand continue in these to brands. ever strong tee seeing. launched This launched are early we’re between excited results and assortment are the its Kings response, two U.S. program, first And with synergies Culture stores in pleased Culture streetwear

operations. to Turning

our plans. a shipping quarter, to But to and fulfillment expenses shipping and we moved an Kings’ distribution based Culture schedule have on from shared U.S. with rollout in DC, part delivery successfully of important times on we half budget. mnml a center cut U.S. customers This U.S.

sports streetwear a as over Culture scale the And turning Fila. call relevant bringing to growth U.S. welcome and to a VP, growing like to we we him mid-June brings two Mitchell the of including Ciaran, new an proven He also of brands, to Legal President the In in possesses and of to native globally. our track skill Resources, in U.S. Also record of June, and with and years XX leading of Human Ness, forward experience. Reebok scaling organization. broader Jon White set global I’d Kings making as to asset Kenneth greater XX a Head years we his over uniquely at even & contributions adidas, operational talented of team. leaders divisions experience appointment Before digitally high announced our look joined Yuska us brand, Jonathan

margin leveraging macro model and term are focus the on to Looking of the of ahead, growth. will year balancing through the deliver focused challenges improved we anticipate flexibility continue longer our remainder on while

expansion a our season Despite We the for we leverage of well with our successful are the in Kings playbook confident is we to potential differentiated U.S. Polly store into brand. excited see Princess to and Culture new the brands. growth Vegas. will positioned flagship remain back-to-college across headwinds, current in our continue

our our model become global teams once over to unique is every it achieve On With Ciaran. incredible with our to why anything, Australia, fashion. confidence vision than again truly is had my to day to in forward next positions that ahead. all us spend recent to Our look that talent leader generation of a it’s the the a.k.a. trip I I’ll the future that, inspires was More and and turn reminded with on time me fashion. team to I chance

Ciaran Long

Thank good everyone. and Jill, you, afternoon,

As business we Jill would performance. to improved manage the remainder the our through priorities mentioned, EBITDA our year be drive of margin

review We our have number outlook discuss a I the second which for results. of quarter remainder opportunities following speak will my and of of our reduce the drive I then costs, year. efficiencies to will to financial identified

and to net of active quarter, a The second We million across compared primarily due to net and last compared X% orders customer higher since currency $X.X year. of on million increased quarter. XX% to $XX the of the currency growth growing On constant XX,XXX $XXX the acquisition our constant Polly value for X% For In growth to sales number the active growth Princess the of order rates. and million was saw total healthy of reflects first of compared down sales an represents – basis, macro quarter. return the year to customers spite last with to the prior of Average $X.X orders activity basis, and acquisition grew X% year-over-year a a mnml. XX%. increased of This year. promotional would’ve million are to active customers brand in U.S. presence headwinds, Culture The XX% the both increase higher $XXX

the a highlights U.S., net will quarter from our $XX to few Now second year. provide we up In second last million sales from XX% three regions. the increased quarter

Encouragingly, dollar our brand the to driver Princess we growth X% to be Polly on up reflecting basis, continue and to their currency the continues sales as Kings’ brand during were the Our largest primary $XX in net events impacts million consumers decreased build macro Australia shift in shopping as constant X% of awareness. brand the U.S. holding we to a talked store in-store quarter earlier. stores. resumed Culture about strong comps the

second world, rest the net X% sales of million in year. prior quarter Turning of $XX.X the from to increased the

are New We in the and encouraged demand by UK. Zealand

profitability. Moving to

Culture versus on the of profit in year. XXXX XX.X% quarter period $XX Adjusting million a a gross to the QX Kings by quarter a to XX.X% Our costs reported promotions for the well points. balance. in approximately X% for was related Gross declined same increased gross acquired of increased making with margins gross the last basis. XXXX this inventory second accounted margin rate margins charge half basis second as the up as decline for returns, acquisition, freight Higher XXX heightened about in

last to year. XX.X% basis Our and XXX quarterly of points was rate increase return

inclusion and Kings $XX selling across increase we million While expenses for to related return the and Marketing compared the to the increase was in in were was The continue best year. an million expenses Culture mnml. during a to Selling increased the $XX due in million in $XX million increased to new from $X.X versus $X.X to $XX to rates, expense center moving last quarter prior in the brands of saw and mnml. class in fulfillment rates volume year we increase have prior Of million expenses year. order the million quarter with due regions. to

a expense to This as traffic basis driving effectiveness increase to XX%, compared the to the second quarter channels website increase As of at a our sales, was percentage marketing moved quarter. of through our XXX we of XXXX. is due point marketing reduced

expense due headcount to equity year. benefits G&A prior increases related growth, expense related of million $XX was additional million compensation salaries and $XX inclusion and mnml in across G&A to functions primarily and costs. increased in Our of in increase an the based to increase in to business support The the insurance

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

in a of year gross This and margin expenses. to marketing returns, promotions is EBITDA compared second margin pressures quarter. the X.X% XX% decrease prior of increased primarily adjusted from margin in result adjusted EBITDA increased Our

$X.X Our or a.k.a. share was compared net $X.XX net of cents million $X.X quarter to loss per income to for in year. share per the attributable or $X.XX the prior million

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

the at was balance our million Kings ended with and $XXX the $XX brands. facility. $XXX The debt. of equivalents associated across fulfillment end credit sheet, of to quarter including the available was growth quarter in mnml $XX the center, of total approximately our quarter, and million to cash Turning million quarter second the the of anticipated new million, in the the liquidity we we the increase $XX At with had $XXX of addition million end end in compared cash Inventory on Culture inventory million of at XXXX. and

incremental expected, increase quarter. largely the did softness increase see to Although, due the sales in was of an the we in inventory late

We and we can across including back active inventories order year line size by cancellations, hemispheres believe measures our are in end. bring inventory, postponements, for right we reallocating taking to dual

outlook. our to Turning

tempered million of $XX saw quarter as second macro EBITDA million adjusted For to in be to now of results, continue which are million expect for July. $XXX we year, results. we revenue reflects the year $XX continue and to well $XXX growth the our pressures as guidance full remainder rates year our impact with as million. This the reflect between full We June, to outlook in our the lowering

We and year, elevated pressure, returns. are through the July to FX expecting including back the continued the of environment, trend half the promotional continue

such, QX. be As to margin rate we similar to the believe in gross back half

As margin improved navigate intended we taking to performance earlier, deliver as actions are sequential we we economic to headwinds. continue discussed

would optimizing tightening maintaining non-customer around marketing Our controls, investments, be expenses and focus discipline facing initiatives. on inventory

and such create platforms to approach. efficiency, opportunity are channels, leaning reallocating ROIs the internal We email, We flexibility marketing highest greater have the believe loyalty. SMS, of marketing that an we and into to our deliver given our and agility as

We continue million to $XX the for full expect capital between to $XX expenditure of year. million

For the to million by third in quarter quarter, continue in we margin impacted range profit to be to $XXX promotional the $XXX net be environment. million. expect of third the Gross sales will the

EBITDA We range million. million to be expect of in adjusted to the $X $X.X

of want operator echo we our we QX, of flexibility and XXX executing expect and call For share diluted have a the With and highly $X.X We will differentiated turn efficient while believe growth we of Jill’s the year for or to long-term also expectations the half profitability. Q&A. be for on that, million. weighted I interest to will that count our expense enable support growth us to believe brands comments will EBITDA over approximately strategies. model business to million achieve I the business average back organic the adjusted that

Operator

Yruma from first Instructions] Sandler. from Our coming [Operator today you. Ed is Thank question Piper

now live. is line Your

Ed Yruma

me. Hey, good taking I two for Thanks afternoon. guess, for questions. the

going guys model, to if adjustments inventory I a data in sales and a inventory think question, that you should growth balances I model in from what line was appreciate up as But of just the kind of guess from you. wondering make about the guess, operating can what I perspective bigger What you about quality inventory we picture puts and terms timing with the to takes. forward? growth. kind And use, guys Thank the could you indicated to happening talk hindsight in happened then you the that flexibility some in more quarter. getting of obviously level you First, the of prevent I

Ciaran Long

inventory. the take I’ll Ed. Thanks, Hey,

of we good the it late think feel was A of about QX. the in quality lot obviously in coming I inventory.

just I would kind fulfillment think ended some would’ve kind at if dollars $XX of said where with Kings kind I and probably kind QX, that of cancellations opening increase of between in the you there’s they about model fall up of of flexibility to we on about and certainly say, little to or that move repeat with center change sales to levers Culture women’s million. have they U.S., that do of half the be the bit to Culture but have. through was I will And expected versus kind brands, by with expect softness. the take orders then of in we look we that was brands XX the of were with on the party that we order due the that have and year have the that would that the XX mnml of test inventory just brands, and through longer it’ll cancel model, of the the men’s third less and Kings probably just end a ability that be quantities. they

beat So it’ll through probably then.

Jill Ramsey

lion’s Ed, it’s We your I’ll certainly of really Hey, see the second share impacts. macro that take is this question. Jill.

across and macro certainly into carried where whole five having shift and all also of as saw July, there’s across a group you it pretty can them group stores stores. June consumer of of a a effect One see have And seen in we that the into of the And we’ve rapid deceleration if we brands, advantages happening. regions.

Ciaran term, we’re those make as our We higher and reallocate So channels. lot macro about spoke advantage. We the and nearer see a of long close marketing, adjustments the do in obviously inventory real returning hemispheres. data we and just to both making expense the some reading certainly in adjustments very haul where making we’re can is because that also adjustments able remain minute can back allocation that marketing up things the we a in business sales between orders half. in very, to That’s confident to on really I’ll those temporary. we’re of through or by But talk where unique reallocate to impacted orders.

immediately begun out we’ve started now actually also We as efficient than leaned have saw us more Facebook, channels, shifted into we’ve like higher that change, is we that. start doing actually for business the And returning already TikTok to Instagram. We and channels harder reallocate marketing shift went the into to unproductive saw motion already those just see in We’ve and able marketing of where getting in-house as through also we improvement and return. regionally highest July. we put spend and

So modeled have hit rate confidence the can back that we that that’s half. in for

Ed Yruma

much, so Thanks guys.

Operator

you. Thank

is Fargo. next question Our from from Ike coming Wells Boruchow

Your live. line is now

Ike Boruchow

Hey kind it’s guys. It’s know look year. to of when post implied and as you of from guys highlight currency sales looking what’s assumptions currency and and the in of what guidance headwind get M&A. of that I wanted clarification just net the down please? looking rest expecting for maybe just the I is kind some growth from I mid-single-digits, you XQ then like are in expected there Can a M&A it what well, at were and year remainder the

Ciaran Long

Hi, Ike. Yes.

We’re FX the on in drivers. back not what M&A. pretty and the X% nothing and the seen half, big in modeled we guidance an perspective in there’s for anything expecting into modeled they’re we’ve period, the M&A From perspective, have June close from July an

Ike Boruchow

Okay.

the M&A on of kind to clarify here. question Just

Is year. at $XX being so second contributed of I think this that you’re the from historically, correct? million mnml looking or half in maybe

Ciaran Long

Yes.

quarter. about week. a second contributed million in mnml the We mnml $XX bought So

lower October. week of second it’s think to I

mnml there’ll benefit a be be two full in obviously only So for QX – for QX, benefit week benefit mnml. there’ll in

Ike Boruchow

Okay, great. a Cool. lot, Thanks guys.

Operator

you. Thank

from coming Lorraine is from America. question Hutchinson of Next Bank

line Your is live. now

Lorraine Hutchinson

callouts Thanks. by wondering and any category. be it strength of areas your were Good particular region afternoon. there if just I consumer was on income weakness

Jill Ramsey

Lorraine. Hey,

did impact. we do we regions. mentioned, of change of the see I customer a did actually little would more Rebdolls. broad lower a and have bit group income We growth across at see sales a said, an As I in That say,

phase this pretty really what broadly, as would shifted line were Petal they & and with we’ve And stores. this expect have seen into on they’ve disproportionately across was stores the the But cycle. throughout but really, well their strong impacted. an that you we’re the held growth Pup, board, period growth been So has and have in certainly really there earlier more with than little more here seen consumer or seeing pockets still in our And macro momentum back definitely environment. we –

Lorraine Hutchinson

the then same And toward gross some I the of in gross think seemed the did the you’re occurred half, guiding just for follow-up of that struggles one Thanks. the margin, like on margin back XQ end this these quarter. you in

you blocks building to to can guidance? or the you about using rationale talk just get the So were that

Ciaran Long

Sure. Yes, gross a Lorraine. from pressure returns and from We that certainly period. saw sales margins a the and in the perspective June

than half, that we in June we’re we think as that of we promotional I the back be – period. about kind think less feel we can a were bit little

kind help some were we where overall think [indiscernible] so in to promotional, margins there. over And bit be that of little QX. of we closer to a probably kind We’re gross

we’re mix men’s better that some of expecting back us, expecting we’ve a in continue that of continue half. brands that For doing the little but that bit brands, to return was seen, by will the than rate driven women’s

some can, price we but back the environment promotional taking do are we in that increases We brands also of the where to surgical it half. understand some be is look in going a

want And gross that build margin to into expectations. our so

Lorraine Hutchinson

you. Thank

Operator

Thank you.

Oliver Chen coming Cowen. is from from Next question

now Your line live. is

Oliver Chen

sounded you’re Hi, you that color ensure had – or And you it’s to been going would it follow promotions digital track of Jill kinds and environment you. seeing to just maintain marketing seeking be now? what the health? that think efficiency. also like see Are I brand than you stable And Ciaran. like you closer take forward, that love some What’s elevated on then a Do you’ll band. Thank think for do more you you still just sounds to the of relatively had seeing and expected nature return factors? they’re going why think rates risk it on you’re do a you

Jill Ramsey

expecting the to With regards Oliver. we half. are in certainly, back back Hey, half, a promotions promotional

and inventory, just the we we of at that in mentioned are on not very a our wise. lot targeted composition But happy and surgical being – site more much doing be that. will the with teams but have good of will Ciaran I think we We precise and are targeted it, broad more it.

On are well, on to they balance opposite increases that targeted help very out. the as also side pricing

have power We amount significant exclusive merchandise. of lot a with of our pricing

really between modeled as back marketing we’ve that margin so I our as and can we channels, able saw of and reallocate – mentioned, testing We already highest early And out high to the shift With balance the the might have teams further returning. performing, where I already been of out have been the marketing the just on digital channels and for improvement agility gross that. confidence shifting tuning to out efficiencies, team, have we levers spend, marketing really those stage regard still targets into half. more less

stability the dynamic. the also the of landscape. I’d our just say teams is about But asking sort marketing marketing incredibly landscape of You’re agile. are incredibly

house our We highly into also are these leaning programs, efficient. email, loyalty SMS, all are hard in

the other consumer also we their impacted uptick have of agility A behaviors whatever brands, the that have have are do way, to good those our in then that women’s navigate an the at we across and in best mind rate. brands well. it’s keep and bit can at dresses shopping women’s, faster returns and return a class and and comes saw that. of rate. categories, of as And even board as regard outpacing across a our see, is team changed, reminder, We as higher our within a is that’s return men’s confident has did regions. as sort the changes of It than the growing I’m So returns outpaced a also little behavioral higher a returns, sort bit in lot returns. of mix, is With to brands

the we we said We operating else slightly there well on That teams are out still rate. half how that which that, modeled are XX%, elevated the take anyone and have is return can under unlike lower. into even back that focused constantly

Oliver Chen

and on which there’s sounds the product characterize which within isn’t side dress it. has helpful. has very well, if better, working way out it been to Jill, That’s less been product like product working a going Okay. product,

Jill Ramsey

Yes.

just well So my as anything consumer work exactly to is mentioned the printed business Also, back performing well for be reflecting really continues getting us. strong to comments the as and out. macro to dress is earlier tee out our I as back denim, going bottoms, isn’t in going trends

and We’re printed up for us very tee within capability. just new as as and allows and agile We higher at a an a doubled trend well production incredibly this fall. hoodie excited about since this their the Kings fall to business, in jump capability us, purchased Culture the ramp days margin. is which on has

and about excited it well, bringing some rolled that super as capability tees and that in-house. to we’re new margin So will to Polly we and realizing rolling be on already graphic it we’ve mnml their improvement

of the are really areas those on are So stand us that kind out product. for

Oliver Chen

Last question, some few out a context and called times. you the us consumer gave

you of thinks consumer. of the different control see out with might deteriorating And if from consumer What the and here? the do that now? quite environment consumer consumer health your the of risk happening you how factors with with Some that’s the interplay fluid is environment

Jill Ramsey

and we I were macroeconomic June saw and think a correlated a lot indicators change was in look, coming the headlines out. trends Well, really that of July when in

for it’s a back graph I is a of home it. long the that say, think other yes, fun media is a big to do And customers shift I time all headlines our I are We as the get trajectory. out happening, of stores. our outside to and that back get mall. could getting enjoying sales probably to do were lot control. nice the with and you think you correlated

traffic just actually just So brand in healthy and Australia the Kings was in nice over at there Culture our certainly stores in the back own that Auckland stores. incredible traffic seeing really and portfolio in energy back

fun So see. to

That great is that going So growth back is to in really we’re the be excited. to much that longer-term, us launching look that online. a for potential. us trend a half. tailwind long-term our I shifting am is confident and store macro is Timing to nice there be for just But bigger

unbelievably trip out allow going us the fired be pretty actually model the to hanging so, up my over bit every with come differentiated yeah. have the always more really Australia, after honest, back stores brands storm unique have than this that’s confidence short-term. But a and to ever hanging – and in We team, to and I in I to weather out

Oliver Chen

you Thank Best much. very regards.

Jill Ramsey

Thanks.

Operator

Thank you.

Telsey Next Dana from from coming is Group. Advisory question Telsey

now is line Your live.

Dana Telsey

afternoon. Good

those – think balance the in and pace As about are adjustments how metrics? about and of how of of metrics think U.S. what the in provided, the you Thank the active AOV, Australia number you’re you. for as orders, you year? guidance the also that you of And for looking about the thinking were are some of customers, you growth operational

Ciaran Long

seen really sequential bright business. maybe customer Thanks, I to sequential active kind continued we’ve growth in real Yes. strong. to And the was spot year-over-year nice think I a – to be growth them, each Dana. And the good through even go think as the of has see quarter-over-quarter of

I active at of that as kind think From than in into QX QX. continue AOV see think little a saw I into bit basis, decline from about QX. a growth sequential we’ll and expecting about think customer see we AOVs it we an we and – will level saw into to we percentage perspective, the same on QX the lower QX

about from rates fairly the run to that that obviously a flat then saw relative we the June back we an think – we’ve driver of kind that in perspective, order of continue half then think And from I that guidance in will year. – as change that’s fair AOV, into Just shared we’re I the with orders, think get the you you perspective see shared. volume would that

think a FX kind growth moderate geographies, the relates of on just some different as of although just And that a of natural allocate half. see little or little rate as have because to world nice channels, will decline growth we perspective, bit, we marketing and much ROI of the dollars rest through I those think do decline seen I some I I constant there regions. bit we some might same Australia a think to growth rate it currency, the back higher from in demand think we’ve coming from the

balance fall obviously revenue will I think just into the the the of the then – U.S.

in that the through in rest of are U.S. decline We the of the modeling year. kind

of opening little the QX U.S. helpful Culture I stronger, be the gets for in bit will think which growth obviously Kings a store, we’re as kind

Dana Telsey

just in Got XX.X%, a bit clarify, should it. QX which before rate, of think little and poor on there around what expecting I QX return And be in QX? or is to just settling that want sure to QX uptick make in also you’re was the

Ciaran Long

it’ll think through around be comes more down QX seasonally and for rates a bit I QX. that, Dana that little QX usually us.

saw moderates So rate will in what even to of kind we July that QX. the

Dana Telsey

Thank you.

Operator

you. Thank

Next question is from Binetti coming from today Suisse. Credit Michael

live. now is line Your

Michael Binetti

in above margins and the you you’re Hey and operating as XX% first I out with XX% of gross for – questions. margin revenues. quarter in I fourth the some it help look you’ve guys, margin in us, here thanks the all the negative suppose as is fourth XX% quarter, EBITDA had revenues the at quarter first the details And operating to quarter. Ciaran, the laid calling organic quarter the it I fourth guess in or guidance when growth lower call the or for

speaks to lines cost below up the sneaking the tell I’m lines. understand you you us margin. the to that think other cost bit cost I biggest question goods where Thanks. the of a savings a year-over-year flexibility maybe little on sequential the the So or it in us see Could of help improvement

Ciaran Long

Yes.

get one think to really at I of obviously that we driver. are kind back pushing XX% of one, rate historic around that marketing that’s that Michael kind the we’ve big So usually is to that, run

we and XX.X% we the do in year. that to the in XX% of for the QX, I seeing what remember July, that can from at plan QX, You we’re in were rest think execute against

of selling moment see a is and up, other line there leverage we we’ll well. the the in think QX. higher see in And revenue at usually having we leverage QX the the the There got are than for a I see rent moment, is – little at bit we’ve as – expenses will little property expenses the bit in on some Vegas there that. and obviously of in bit a from that Vegas not little opens that

saw across increase and like I QX G&A selling QX we I QX a QX. think expenses. will be modeling in QX a have into QX look, then it’ll into think pretty from a we’re in, little And we from into dollars from stable from QX, perspective, small bit

just think but of and build quite a but that still bit initiatives, basis, all line. will of where bit little area a rate We on are taking there come I actions across that’s the on lines cost a will from of kind leverage be –

Michael Binetti

Okay. That’s a lot of flexibility.

some around can have help you’re – out as picture past IPO thinking about Okay. the and think And point think assume you point a full this where growth that? thoughts growth this year getting – we Maybe think you in about to guess ordered think about you we on I’m do the positive want early units levels recapturing are spring. how model for there’s target like to to look bit look I you in to probably but selling ahead a you how price business. inventory the at from and probably it’s think ordering the then I and up? your time wondering, some going or the about the current to for up via some here, the safe units bigger guess you should little Do inventory be of us conversations for plan spring you us how back

Ciaran Long

Yes.

orders, safe think to the I of as assume, think areas that’s different you go on inventory change really ability compositions. to what’s the Michael, I interesting through

repeat, the quickly on inventory, they a they of – also strength chase perspective. little from and really it’s the react have much sales think that can brands are bit too can when but I a they fully test fast

growth next I the positive big awareness the we think year, then with that’s into we in point building And to that’s on we just think Culture U.S. of kind Kings certainly the U.S. us expect in see So QX, opening I there. in inflection an a QX for store for – think about as the think brand would as

that well. feeling about think pretty I as good So we’re

Michael Binetti

lot, guys. a Okay. Thanks helpful. Very

Operator

you. Thank

Jefferies. from Greenblatt Garrett from coming is question Next

is now line live. Your

Garrett Greenblatt

any thinking Thank plans hold to months, on on on months for of environment overall. pause of XX give you. acquisitions just my you’re the how expansion U.S. Thank current you current national put out of thoughts I’m push your taking kind Just Right. maybe about curious and a outside environment. Australia? question. Does you maybe acquisitions to and kind X the

Jill Ramsey

on take largest Certainly, today, have is Hey the five our priority that. Culture and our I’ll the focus of U.S. great the our focus we Garrett, brands Yes. Kings in in more and scaling with on our group always a portfolio to focus brands right even now and

part that. conversations start M&A is is are something leads Not we you game. So and really long-term strategy the relationships. stop take M&A said, And and that sometimes everything a multiple develop really and to a got our of can towards we putting those years

a also sheet. that, So scaling there making right we balance in very the that open. just That keeping absolutely really still on pipeline are out said, brands and have, discussion sure and and warm we focus healthy now active have our is we

Garrett Greenblatt

you. Got it. Thank

Operator

closing reach or the for you. the I’d any to Thank floor of end We to question-and-answer session. further management comments. turn over back like

Jill Ramsey

storm confident agility do anticipate weather am the near-term. with half but back our model our Obviously, we I to guess confident continued ability and uncertainty, here team’s that. I I Yes. our in very just add to

Culture very incredibly in back near-term all and good up of We in progress and in differentiated get invite that come. longer-term are tracking wait brand half already confident really the to this can’t feeling that about seeing just and and Kings you opened margins the some our store to

So thanks, everyone.

Operator

this does disconnect thank at time and for you wonderful have We your your teleconference That line webcast. today’s participation today. you. And conclude and Thank day. a we

a.k.a. Brands Holding (AKA) 11 Aug 222022 Q2 Earnings call transcript