Earnings call transcript Q3 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings. And welcome to the a.k.a. Brands Holding Corp.

Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. follow presentation. will session question-and-answer the formal A [Operator recorded. a reminder, is being this conference Instructions] As

now pleasure is Thank It my you. Emily host, Please Schwartz. Ms. go ahead. to introduce your

Emily Goldberg

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

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

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

of our related please note, discussion business, any to Please SEC. risks filings the assume forward-looking our see no we obligation such update to For a with statements. further

This measures on GAAP call adjusted release financial Reconciliations and non-GAAP the available in the margin. of furnished such the website. EBITDA adjusted earnings to to SEC measures as will are included contain and these our most non-GAAP EBITDA measures comparable

I'll over turn the Jill. that, to With call

Jill Ramsey

continues ongoing Kings' opening work, to this everyone, you, afternoon. on like Thank our be hard grit the and appreciating dynamic start to weekend what team past a teams of grand Culture their call agility by our thanks, joining the their for I'd first congratulating and store this challenging Emily, for and U.S. in of macroenvironment. all and

quarter that region, top landscape. of strong a the I'm growth for headwinds, term. largest, remains pressures shifts improving predictable we solid the quarter, in discussed inflationary XX% are very last in less of long on competitive focused had we on Demand and brands while great these Despite sales growth net last customer spending during profitability on demand, year. U.S. X% by our consumers, this of time impacted marketing pleased building As the

constant million $XXX shift is adjusted macro stores decreased impact. post-pandemic. U.S., to net X% foreign X% exchange declined However, or Like and to Australia effects inflationary for in when Australia were overall pressure back sales currency. X% the flat consumer negative from experiencing or

Additionally, we when and discuss were will takes which further financials he headwinds, our significant revised Ciaran you through by impacted FX outlook.

inventory agility on work bps and our quarter, of position. our We resource a number the to the swift to team rightsizing. XXX of actions XX reallocations, during margin we our on gross bps make while and increased basis Thanks improved a and teams, sequential optimization rate EBITDA and progress margin continuing spend took marketing inventory

we'll be growth. We balancing anticipate on long-term managing challenging another focus while and our in quarter, efficiencies and our prudent identifying inventory about operation

of us Brands enables A.k.a. to our next conditions. and is fashion, the adapt flexible, market dynamic model during quickly generation asset-light

short of buying combines and strong and mix high This Our with lead efficiently supply a gross to allows test-and-repeat navigating data while exclusives. approach in dynamics. and merchandizing chain consumer our us deliver shifts margins demand inventory to driven times manage

cost. combining We dynamic performance channels ensures And and attract across customers channels our our social-first to retain with a times. to low in-house to during and approach yield spend and marketing, at optimize modern have marketing shift ability quickly a we strategy geographies

of multiple unique a have talent veteran leaders who talent. with experienced mix innovative operators and with We cycles e-commerce have next-gen economic combined

evidenced growth as the by led awareness period last compared active our brands' to Importantly, same we and the by U.S. customers our in XX% build to growth expand continue customer in base, year,

pleased significant awareness We of days highlights. opportunity and We to quarter, of our us. on our ahead have some initiatives are made in this market progress still I'm U.S. great the growth early share and

brand, women's Kings' today excited grand opening. talk the Culture is start with I'm to usually most the I While what about

at hat Saturday, It's an LED Caesars, November Kings unlike space, square Our flagship an Culture selling retail any of Forum store unrivaled opened on XX,XXX there Shops Las out feet U.S. in with Vegas. iconic store first X, with on-site apparel, rare experience the for live bar, and exclusive spinning world, a largest a and merchandize in basketball Room staircase, and the customizer in-store wall the recording sneakers DJs daily, and Secret half studio more. a a court,

atmosphere best to some basketball Grail Sharp addition flagship including store includes Vegas the add that features, the arcade In in only to The in-store all games, the giveaways Culture legendary and Holy one-of-a-kind activities Kings' signature excitement and the Shooter of and unforgettable store. challenge,

the experiential King's athletes, marketing retailtainment and appearance. their Culture artists DJs Culture to serves flagship key music unique stores, brand model, the is U.S. engine Kings U.S. in other powerful as and stores for Similar for and a Known host of awareness in-store a accelerator frequently

and Drama was the spinning influencers of number top a opening. X, attended streetwear Ferg's other DJ

half Morta, creates of Kings. buzz, U.S. the King. including awareness designed approximately flagship consumer the today streetwear and All this lifestyle These to for and up experience, top focus association of the a great No expansion. elements like of Culture business brings in-house for Loiter. one brand Goat Kings' XX quite of Culture make Crew together Saint officially and On U.S. the the are introduces in-house brands, brands exclusive fashion area key Culture Carre, immersive the Kings' Culture

including store find brands, addition customer leading And hats. XX fashion styles gear, thousands selection. In third-party can and popular of great sells the the more to fan in-house the footwear even online, brands, from

the that and Kings confident streetwear significant will in space We capture become the new are U.S. in white market. Culture authority

segment. their U.S., they products -- an printed exclusive to Kings fast-growing continue in brand expands Culture As emphasis and build the on their with penetration of the tees hoodies

to capability allows licensed reminder, at trends print margins. a gross quickly jump As on-demand Culture attractive properties on and Kings print our

a deliver Kings to property, Playboy, world-exclusive They Things quarter. ramp business Dreamville with exceeded in successful a print series Culture Cole's and their of and had which talent Stranger UFC Netflix, expectation. J. continue licensing fourth quarter, XX collaboration including licensing collaborations, This and new the and events label the will

that live and return activation. in-store Australia pleased expansion, is While stores we're rebounded quarter the third U.S. the the Culture events Kings' of in current with priority

of to are Mnml fruition. Mnml, of were of that range Culture denim with there our and at is brand assortment Kings' category. during fastest website, top specializing in performing streetwear section now the opening We synergies overall a the Mnml in the I'm one the performance to the the on the Culture the Mnml Culture excited It pleased both and coming Kings' and between growing in to Vegas. store Mnml is and and brand brand Las wide bottoms. weekend. Turning bottoms share brands best selling was dedicated Kings

with model, enabling drop strategy resources shared production We're line. styles time more also pleased on them proven leverage quickly from a a.k.a. shifting to platform. our to new test-and-repeat to align Mnml's and with They're learnings the their ability faster merchandising

fashion a be once our Turning to women's our Princess as ranked largest website Piper brand, teens, continues by female for Polly, again survey. the most brands. to top Sander's recent

on line brand I have with market, the the demand and that seen incredibly impacts potential growth and U.S. early on this broader we its then the globally. macro fall we're confident expanding remain in of bullish this in still in While innings

which media back-to-school micro-influencers. Polly Given season. expectations ambassadors casual them who that dresses, homecoming favorites, of are expand wear customers with by focused and formal roughly this was homecoming confidence Polly's on XX% as of exceeded assortment expanded powerful focus offering. their Princess back-to-school primary expanded college along existing new, collection, was community more which Princess featured Princess quarter students, formal serve and gives Their Polly's also the on apparel, further to their growing social amplified a

new XX% gross made to styles range accessible. great impact They've margins to lower with the continues progress sustainable and their and customers. surpass their of by Polly and for on-trend fabric materials made low Princess fashion transform make headway year. the committed this expanding to to their are will their to supply accessible of mission make converting on chain price same They end of to sustainable the goal and continue maintaining their points support impact

continues Polly's Gen grew competitive to extended Curve, also audience continuing to create These Z fashion and traction players. other customers. size and with initiatives Princess position their quarter-over-quarter while their differentiation gain attract XX% strengthen new a nearly from collection,

rapidly well rise to test social As the marketing new to customer react. the Princess and wherever with goes. to formats agile updates, landscape channels, platforms, positioned privacy They of the constantly reallocate the marketing and new Polly spend is of content popularity shift and digital evolve new quickly continues

has imagery to been still priority engaging for content. and grew on are video partnerships on a TikTok platform. huge Polly Growing Princess TikTok with the from shift followers as influencer expertly their and customers XX% ads They year-over-year their paid balancing over by

down doubling event to video they showcases highest that piloted on leaning authentic conversations look into thousands on is where return Princess and Princess further. Subsequent in-house Princess channels spend forward combined video viewers, customers. shopping website launching of a experience a series a influencer live drew even Polly the their We see and and Polly own quarter-end, their to Polly live expectations. Live, with them between interactive shopping exceeding and

This new X.X with customers is top learn an initiative the expand channel highest text style Polly's upon of that channels, a quarters Princess be in Through promotions. over million to group and message for is learnings subscribers our an of outstanding authors marketing, of engine share across growing. Princess surveys, Text Polly to marketing learned coming and is drops, and exciting returning brands. the one which they'll continues has

last category merchandizing was compared which once quarter. growing scale leveraging They U.S. sets, matching fastest third Petal of continued proven now diversifying XX% and test-and-repeat for mix. expand and the also are this in into assortment quarter strategy accounts their to to X% their quickly accessories, & to the Pup in further the again brand our jumpsuits year, sales

they jewelry, & growth to while the higher their expand area items, accessories. their Category also expanding with follow at the us offerings which categories allows playbook, of categories Petal U.S. As of designed program is they no risk in margin. drop-ship test inventory easily such bolsters key expansion gaining as a launched rich recently insights. a come This in-house a.k.a. consumer they're assortment as for shoes exclusive new gross Pup still under-penetrated initiative and And and penetration

seasonal now in site. add categories, of for XX% account sales to Drop-ship the plans these to items with highly categories

media in attended, Princess social is and exercise. an their to their Polly, million & incredible as brand X impressions brand was influencers X,XXX piloted evolving event first passed awareness days Similar the XX event also marketing changes. people The the through July. Pup XXX rapidly The approach Nashville garnering Approximately in event. landscape over shoppable Petal

& Pup some with Reels, is reels down on Instagram and year. Rebdolls and million Petal through a Petal And cities and middle base and of confidence success to Pup and in shoppable the in Petal test events us gives country, initial of key the over this more on seeing generating Pup TikTok. & the both views. Instagram growing content traction customer video south next are & doubling the out great has large roll X

turn I call growing laser-focused Before I on that we're to Ciaran, our to emphasize the brands over current profitably. want

still no we're strategy, environment, XXXX. While in M&A macroeconomic have the acquire any of the the plans to committed given and brands to state our market we

However, conversations the when the time we right highly remain in founders, we'll shareholders. But and to active we'll and shop transact continue business best the our our brand. world only for is for talented with

enter rapidly the and changing. we environment quarter, is dynamic fourth As the macro remains

competitive a are We holiday a marketing landscape. anticipating promotional highly season and

will We necessary profitability to the pull and levers for to continue year. the remainder balance all of growth

with our the have are women's the positioned Kings an of flagship, opening ahead Culture and for season. well quarter We U.S. the exciting holiday brands

confidence flexible we platform few goals. quarters, strength of remain next the we'll gives to macroeconomic backdrop the our full our brands fluid our While the deliver me on long-term over and that anticipate

Ciaran. With it over to that, I'll turn

Ciaran Long

Jill, you, afternoon, good and Thank everyone.

evolving to despite report profitability our above environment. end sales expectations, consumer a dramatic improving with quarter pleased inventories, net are macro third metrics and and backdrop quarter We along

sales X% currency $XXX On last quarter, third $XXX constant basis, declined net net were the to flat. compared For a sales million million to year.

the customers We active XX% million. active customer On the increased quarter in basis, growth. trailing continue third to XX-month see to a X.X solid of number

last constant last third basis Total on a $XX currency a to the were average to year quarter basis. X% also $X.X and orders down reported order and at was year flat flat on of million, value

as the our and stability our the desirability average by of encouraged indicator are of it order is We a value reliable of products. brands

U.S. $XX our as of Now last growth, I'll as to our from growing million, brand few increased by third the Mnml the the Pup's provide quarter which In the net three primarily be a X% highlights driven up fastest U.S., year, regions. Petal well to third from addition & continued quarter in sales

post-pandemic. Culture constant consumers Australia macroeconomic area net stores sales decreased X% and basis. a to impacted down were well as fastest by to quarter, currency million Australia in Australia. Kings' the the third environment, the on inflationary $XX pressures sales growing Notably, in were business stores returning including as of the X% were

sales Net from of to rest quarter the Turning the in the of year. third decreased prior million XX% $XX world.

Given shift we dollar, the from higher and the to our regions, have significant dollars the U.S. and U.S. that decision of marketing appreciation Europe a made the main marketing to strategic U.S. returns. Australia

of Additionally, our U.S. the to U.S. outside markets the for model and pricing is dollar. Australia tied

So when our more in strengthens, international for products the expensive regions. dollar become customers

Moving to profitability.

with related initiatives value gross highlighted we The million margins in included driven the was in a we third the compared to margin increase As year adjustment sequential XX.X% the last due acquisition quarter. in by pleased the Kings are profitability, prior Reported the Jill gross Culture were mentioned, point fair quarter. last XX.X% to in XXX basis year. to improvement $X

on increased activity and points improved XX by due basis capitalizing impact, as profitability. margin maximizing this over gross Sequentially, Excluding QX. balance XXX margins basis demand gross to we contracted promotional points

by to million million. $XX expenses Selling $X.X increased

of As The store percentage compared was due selling XX.X% to the revenue, to facilities. distribution of XX.X% were primarily point for XXX-basis quarter a third deleverage expenses and future increased in cost XXXX.

saw to points basis forward and selling the XX into of we in QX, continue expenses a we carry QX. XXX-basis sequential While improvement expect point over improvement

expense by million Marketing to $X increased million. $XX

was has revenues, of well costs. inclusion marketing a the a in third This quarter As advertising spend of XXXX. overall XXX-basis percent increase primarily higher point to of a marketing as increase as were expenses which of Mnml, the to increases rate due XX.X%, compared

areas higher returns. on to Based efficiencies seen We as marketing marketing we basis have a XXX a sales by of investments to compared working reallocating to improvement sequential these actions, points improve of with in percentage are marketing actively QX.

primarily in $XX G&A quarter of efficiency expenses The third third a sales were XX.X% net of XXXX. of to equity-based decrease G&A of reduction the XX.X% were improvement million XXXX. quarter to in compared compensation initiatives. to due sales was million compared $XX the other in net and expenses

we quarter, million expense These on $X took resources. our During annual team G&A going our actions align the action forward. to approximately better rightsize will reduce structures an to by basis

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

X.X% On improvement year to a basis EBITDA delivered quarter. the XX.X% basis, adjusted Our of QX margin XXX in third sequential points prior of XXXX. compared over we

XXXX of compared of zero in million or the third Net to was per or million $X.XX loss $X.X a cents net loss share share quarter XXXX. the for $X.X quarter per third

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

the the equivalents quarter, million end, to $XX with Subsequent million quarter our $XX holiday entered including we $XX liquidity revolver We ended available balance Turning approximately million into million, on our sheet. quarter total the debt. we $XXX the million to and $XX in of as the cash credit At on drew facility. cash had in we end of and period.

Culture end end of are the associated currency a addition to the U.S. with constant new and Mnml. compared Kings' second end million quarter, store at was primarily increase quarter in million of basis. center, Inventory on opening inventory Compared of the at the $XXX third the on of the of the a to flat we The inventory XXXX. quarter was $XX fulfillment

in did inventory women's and fiscal a we constant a decline to the more see for dollars in that sequential XXXX. our year composition for inventory, We the fully And comfortable our brands end basis. our believe of we're see a with are test-and-repeat we and of well inventory model. decline sequential quality Overall, on on positioned expect we at current are

operating the cash generated positive fiscal quarter, generation $XX Touching quarter on first cash XXXX. million flows. In marking in flow cash flow, we of the third of

$X flagship Culture side new in invested our to also CapEx We store. Kings million

for $XX year. million be the full to expenditures capital expect We

Turning outlook. our to

are enter business As can operations. while the we disciplined quarter, a our controlling approach, across managing efficiencies what fourth we our with we control, driving

on in we As we'll plan to optimizing investments, did QX, and costs we noncustomer-facing reduce in actions continue marketing taking on QX, activities.

QX adjusted expectations its of result a the net currency headwinds, EBITDA. company and the has sales for As significant incremental

We to sales $XXX the million of now $XXX expect million. range net QX in

we to headwind million our results, our when outlook to $XX the revised QX. end QX of FX year-over-year we $X headwind be an Our contemplates million projected incremental results the additional to at released

QX expecting headwind $XX.X FX, million $XXX,XXX to of a $XX adjusted now EBITDA contemplates from initiatives. offset saving are by of $X.X million the the impact We This of million. cost

I'll also for a XXXX. touch points on modeling couple of

FX remain forecasting fiscal currently to rates in significant our are We 'XX. financial levels the at have through current and to impact XXXX on performance FY

had lower our million experienced we current Through will first revenue months nine rates XXXX, the exchange if period. $XX of for the that be

of most for first With to our strong XXXX. sales quarter due our these be expect comparison will we FX a challenging quarter first net headwinds, XXXX in

become to of remainder the FY 'XX. comps expect we We through go as easier

a We believe support efficient brands and and we long-term that will highly have growth differentiated business profitability. model

that, With turn to I over for the Q&A. call the operator will

Operator

[Operator is of open of from go floor question coming The The today you. Bank for Thank first Instructions] now questions. ahead. America. is Lorraine Please Hutchinson

Lorraine Hutchinson

afternoon. if specifically Australia? the that you. reacted just the Thank have maybe, in U.S. you're behavior in to Good customer more I'm price added? how seeing any And versus differences you've curious increases customers surgical

Jill Ramsey

Look, pressure Lorraine. across seeing the and Hi, brands demand across our regions. we're Yeah.

that So and the really impact. And benefit the certainly pressure. measure to seeing we're macroeconomic that portfolio you're of is having able understand a

And in-store reopened do into have seen over customer we have shift the there. where the back as I growth into one back Culture Seeing nice Australia guess, in stores events is, we've stores, Kings that activations. really we distinction and stores gotten

from last year. Of course, they closures are lapping some

is and a focus lot we of U.S. runway the have continued Our where growth really market, ahead.

ahead, with about Culture for opening. Kings days and what's very especially early that store Just excited

plan this Did closely. nice We're to increases, sequentially always On not a our see any profitability gross not we back are of constantly get to and additional made We able first-party XX the in high quarter-over-quarter. earlier very margins bps mix our some that on increase monitored increases time, and price we course QX increases exclusive had brands able do price we although can in pricing, control. very at controlling and of what just focused price given optimize and impact.

Lorraine Hutchinson

Thank you.

Operator

ahead. Please next from is The Chen Cowen. question go coming you. of Thank Oliver

Oliver Chen

Hi, Ciaran. Jill. Hi,

sounded Regarding have And And the promotional that? in environment inventories what are are control activity seeing and ahead gross good the your forecasting you and for it freshness. what there? are the good margin, under you like

the costs costs follow second efficiencies a regarding the seeing. on or the Customer up. acquisition and you're different And call comments marketing

has forward, consideration it's be of a a Thanks. that you going been dynamic So for lot to companies? stabilized? continue it expect to as Do

Jill Ramsey

Yeah. the let Ciaran Thanks, gross Oliver. margin to come we'll back the in. I'll comment and ahead around then on and And promotions CACs. jump

First, we of environment promotional course anticipating are QX. for highly a

see position course, It Of whole year for inventory starting forward that. has market. very this last very certainly environment, year, we're different to pulled already different versus the

we certainly have feel our really good and very the agile model we needed flexible position. of quarter. our adjust as where that into outlook. a pivot are a into have and We and QX in in factored And good quite going brands inventory, a our composition inventory From can quality

to add anything on that we into forecasted the just Ciaran, model? how

Ciaran Long

Yeah.

be assume I little will in experienced QX, lower promotions. the than we a level think bit QX we of with just

margin, airfreight bringing the improvements as in or cost seeing and of think in product. I gross think are we we about reductions

activity seen any will on kind kind to top of I think that counteract us we've increased of that. of allow promotional

So that of we've feeling good gross in QX. about modeled kind for the margins

and the inventory we the inventory, to of the relates with it really happy that composition As we're quality have.

QX we versus sorry, QX As QX. in within in brands, units versus our we're on women's Down down dollars. dollars in flat -- I are mentioned, think we

that of strength shows really it So of kind model. test-and-repeat the

brands, to men's the still do. have work on some we think I

and quickly not third-party more as adjust kind to there. have they of Just vendors able

just quality and see that year. happy of next as But the QX into go with overall, very I the of think we we'll inventory. more in

Jill Ramsey

imagery CACs, of of as as customers question about to impact video, which is change course, from And have the Instagram The in on to there shift will being we iOS. from seen major TikTok. stabilize of happening impact landscape. I and marketing have lapped say downstream migrate driving lot changes. that one, a biggest away we There's platform your over lot CACs the a the the is

TikTok now, learning and Our brands some time our out for testing have there. and efficiency tuning been on really

seeing able our are we returning Now highest us that spend shift and channels of to one for as there. some our of

is into As incredibly also well, on and which efficient focus we shift do in-house us. for SMS,

and plan to shift efficient these ability a we and that very For to factored to spend reasons, committed adjust diversified all have and XX% very the and into marketing marketing is our hold, mix and outlook.

Oliver Chen

Best regards. holidays. you. Thank Happy

Ciaran Long

Oliver. Thanks,

Operator

Thank you. of from coming go Edward Sandler. Piper The next Please ahead. is Yruma question

Edward Yruma

guess, Hey, little on much it to did was change for bit -- quarter? can for thanks maybe seeing any conservatism? could versus bit velocity, just make the give little quarter, much much, the insight trajectory I Thank a how you. look either to And taking And so of that be back if Kind great. due you FX trends how question. so what like first, refine the you strictly the performance the of the you a guidance fourth third you're comments the quarter? exit of us in would the if on is

Ciaran Long

the we to dollar it we've it to all is of moving rate of Ed, Yeah, kind we as about of $XX but Australia October X.XX. QX year. of to all I relates and modeled When X.XX it rest related related modeling It's of the we the would -- moment, it there U.S. were is the gave X.X, at to saw of obviously through change kind really at kind million of about really day say at the FX. guidance, every in Sure. all is kind through that FX,

August. say in as to would the through it's July I QX, was And kind trajectory kind -- of then just stronger it it of and going relates

certainly month, in September, the the soften. late to through in quarter went late it's kind started we of As

well, that and impact, in did some FX that period our we Obviously, international impact does see particularly customers. high as

rest to rate and what out QX, project modeled run of the the we've of that's kind into that QX, for kind As we've of seen taking using QX we're year. we're those that of out

Edward Yruma

you. Thank

Ciaran Long

know broken. operation machine that Just the is doesn't

just patient it. we'll be minute So for could through a or and two, work if we

Operator

your Thank you for My for apologies that. patience.

Our KeyBanc from Zatzkin ahead. Please next question is coming go of Markets. Capital Noah

Noah Zatzkin

Hi. Thanks for taking my questions.

Just Kings and be on any the any just U.S. opening, helpful. on thinking you. really color you're if on the of provide the how the color would economics store opportunity there four-walls could over Thank about you time Culture the that just in

Jill Ramsey

Noah, for thanks for thanks and question, opening. your the to Yeah. out coming grand see

We are incredibly store and to founder, excited and huge just incredible Simon stores. appreciation nothing for the Tahnee. have a about these vision Really congratulations like out and an the They there. else out

with very gates. pleased feel -- and last the it content. very with merch the pleased just of Feel early out but very, the the weekend, early that nailed and opened mix days, really the the marketing I location, the format, we've

continue that location is you of the foot Traffic that. just We other necessarily big. is -- incredible certainly going a stores back real ton and test-and-learn will an not look nailed a get all model, really are a and markets traffic, to Vegas. take where large tourist and That opportunities. We'll approach, be is to Vegas we not at in flagship

other scale great As tourist It's look to brand for out to high a look markets. we market, will we a broader your fast. way roll to

reach are quickly. changing can of customers that a lot unique You

U.S. potential brand scale really incredible awareness excited and started, we're this has getting grow the in And to just here. and the So it about just element

I'll the let Ciaran on comment four-wall in economics. jump and

Ciaran Long

bit counting little would we're and that up. from Yeah. I us, store. of we'll profitable. expecting say, a on kind store the -- be obviously get basis, payback And the to a of expecting to Hey, ramp kind years take time certainly kind four-wall not the of will just on five benefit of broad Obviously, for four between Noah, four-wall it

is a GAAP XX,XXX basis. about million on foot is rent of space, square store -- $X.X The retail XX,XXX about

You very of from -- And a will initial well is can kind EBITDA kind store the perspective of ramp. bit economics say, than AOV over an as you strong little see would the once we I gets that be feel higher online. usually

Noah Zatzkin

Thank you.

Operator

Please next coming Telsey Dana Group. Advisory Thank is Telsey you. The from ahead. of go question

Dana Telsey

everyone. afternoon, Good

a differ the obviously, regions, it you. think in about seeing? the Australia, do and And the does brand? the Australia you U.S. are you in go moderation Thank how forward? -- the little What planning it U.S., North As U.S. you seemed a how you bit. improved deceleration America, And like but how are by

Jill Ramsey

have say, regions. stores though, uniquely of that Australia will I stores that over saw have customer a in And Yeah. Australia, demand brands and as pressure across across and into events back we really started shifting general, seen in-store we activation. in in back bit and we to

that on the certainly Culture some helped to really So pressure. of the part demand online of helped business improve offset the Kings'

about about to U.S. are started, store the Kings really, growing Culture And on it's in ahead time excited what market. for the potential We're brands focused we excited seeing a most is perfect getting keep these U.S. be opening the we're to and here. scaling leaning really and just the and in and

Dana Telsey

spend What you Jill, see And reallocation? -- the what how of do you of and you as spend marketing spend, the mentioned marketing the the on marketing. and that? what as -- are reallocation the doing just result then side the a does this And is is

Jill Ramsey

our mix marketing marketing the great business also texts we've where and shifting shift as starting returns channels, returning and to between our in tuned like adjustments make as of Well, have higher more QX reallocated more higher TikTok, into see focus did and Yeah. in-house where some we to we return. SMS really, into QX, efficiency really in, well a

of of but we marketing shifted Europe, rest out. had We into Shifting put that spend out some world.

not to Europe U.S. adjustments, into more given of the that regional an need dollar. we right so some time ideal And push now the into shifting It's strength the of

most and profitability we efficient focused So marketing getting are ensuring that our return. on

and into that XX% we forward, around spend So to committed going the are all model. that at marketing factored is

Dana Telsey

Thank you.

Operator

is Thank you. next of Please go Truist from Youssef ahead. coming question Securities. The Squali

Youssef Squali

very guys. All right. Thank you much,

So questions. of a couple

Arguably, in some you of for around is numbers, business. U.S. QX of that to quantify but to be terms first I maybe us. the think there's growth based love and probably going The the for just what's implied I'd guide just the deceleration on

idea XXXX, that of sheet will kind the address side you And maybe of about, follow-up. ultimately any the you then at and you capital. through cash you other enough look free make then flow ongoing get balance to the trends as I of you XXXX, those business M&A. generation kind also, have and just quick whether one, liquidity? the Yeah, two, without But can have the to decided I need know a you not any for it

Ciaran Long

level Yeah, in think for deceleration we the we've of Sure. that guidance would do Mnml. adjust Youssef, say, think same if growth organic QX, you of seen think for we as QX, kind the I expect, I about I organic or

So a or had Mnml. this period. we in in weeks XX-week last had of QX, And of there quarter we full Mnml the year, for XX year

a there'll be that. little So from headwind bit of

think we I we seeing from an we're of most we as seeing certainly out. AOV is the where are pressure pressure unpack model as that perspective, it,

I be think flat bit we volume. again in might a little order of kind

And growth. think from single-digit then perspective, active an low I think be I there'll customer

was are really that the last will we big U.S. kind of of you kind out, where QX-QX We dropping of customers, off impact coming think some quarters that. if acquired year where

flow. revolver. to us sheet balance -- for the quarter big in really capital obviously, and QX perspective, to We And the did think to we Culture in in got had a see particular, the a down we sorry, of good Kings the $XX back QX QX, some really strong store. payments, in couple spend in from think of it's I draw I gains early -- early generating or then operating operating see. cash And was good that million for

the We and old mnml also Princess sales had legacy at for Polly. acquisition tax for some payments some

there. So there's stuff of kind some one-off

cash, cash we think generating feel be FY think and as positive and do forward I perspective I in go operating continue QX into again to 'XX. we'll we that back that an flow from we'll

to still we're the support to acquisitions. think and drive committed organic that have. very growth brands do looking I we the We're growth first of the

think focus on of that I we'll kind first.

Youssef Squali

earn-outs, Any year? earn-outs next big

Ciaran Long

earn-outs no No, at all.

Youssef Squali

this at operating that of best pretty for talked you're new a about or about Can Jill, for then, And you? expand brands? times right. relatively the maybe you point Maybe which on text that. for It All marketing. and Is message SMS excited you. like which channels seems you a channel you Thank number are that?

Jill Ramsey

Yes.

them where the the in-house SMS customers' reach to able really collect of phone and We've is e-mail subscriber replacing was So really to very text We customer new that efficient favorite from grow learn base or about the text their been one and cell promotions. as channels. focus customers. via most marketing drops us groups and our was way and clear did hear and our recently, product you new

really very we've a with quickly seen be effective customer. that to So communicate way the to

new influencers wide scaled customer we're certainly and smaller wider tend so retention really that network does still it's ambassadors social more drive a But have and influencer returning -- out. grown much after customers, and It of focused program. but of college and for media acquisition, a to very that great course, tool. broader, our on with repeat We go

is also are the super are brands us very of really excited excited testing our streaming and shopping certainly learning ultimately, But front about video. new be on and their going leaning constantly But ahead we innovative of that into marketing and lot channels. about. a is live I'm out to platform a and market for what tuning Live and the others

Youssef Squali

All right. Thank you, both.

Operator

Thank next Please you. is Boruchow Wells from Ike ahead. Fargo. question The coming go of

Jesse Sobelson

taking women's Ike. were elevated is sounded question Thanks I just wondering, little while some for Hey, on inventory. year-over-year now, comments Jesse due right was This a that included here. third-party to men's remains for guys. inventory there my -- down

of what the end So year. men's I'm were clean now happened actually it of liquidations just sounds expectations like what are and by curious inverse prior to for there. women's

heading forward, a holiday heavy are And be environment there any into differentiated consider then gender, Thank anticipated to this year? looking promotional you. what's by to if dynamics

Ciaran Long

Hey, Jesse. is Ciaran. This

super on the just me inventory. clear be Let

particular just been I say. very model, Because test-and-repeat would we committing the they're any They're liquidations, of buying out short to are the brands that inventory. women's So -- doing doing periods. haven't not and

they're much, sequentially And but closer. still QX those we versus able models. down. So the and adjust down their much inventory that brands why dollars in They're year-over-year, they test-and-repeat that are very up QX, on our are was their quicker. are that slightly buys inventory That's to much right, where women's dollars much, saw inventory much

their The able men's from not third-party are because to vendors, as inventory they they're quick. brands, buying adjust

stays Like their men's it said, it longer that's I relevant have to take with adjust and for will us so what for we happy much why very period And inventory. longer with inventory. more a

going composition the we period, have just I adjust the that longer on would the take we will dollars. So into But holiday. to men's a say, like

Jesse Sobelson

just I'd Yeah. add bought that on of the our is inventory majority model. that test-and-repeat

adding over All streetwear buying. our and mix businesses inventory. which men's that, we time and that more And derisks expanding of on lead into of our your our women's buying on are to brands are short that really now

even So next into eager that inventory control expand as upon have in to we year. management more

Jesse Sobelson

that Thanks investors. for for elucidating

Operator

of The you. next Thank coming ahead. Michael from is Binetti Please Suisse. go question Credit

Carson Paull

Hey, for guys. is This Michael. Carson on

instances We've a how you that consumers banners? nice taking Are for thanks our to inventory down if here. for congrats off, some you trade quarter. on point within price of categories First seeing heard positioning the lower guys and on spring? And brands. so, starting And are your question

you quarter? one, another rate correctly for hear Did did was in there? change in forecasting with a that perform the September Thanks. there then September? October fourth And the we you trend Or line exit used

Jill Ramsey

Hey, Carson. the Look, back August seeing that Yeah. and we we guided a and your for across in Thanks are we demand -- seeing regions. anticipated pressured half, are brands as question.

As far say of little bit clear as an of reg seen mix I'd like in down, have sales. we our signals versus markdown a uptick of trade

bit deal-seeking customer on markdown, a bit that macro have I seeing and little just a think So reflecting the customer being put that, little are backdrop. more where mindset we we into things frugal more shifting with some the

and comment the outlook, out that. we As on Ciaran trended I'll business far how let the as

Ciaran Long

and used days QX been November So Carson. using we've most October trends, we've sales model Hey, We've from of XX kind for the is out to been right? first what the recent seeing perspective. of what Yeah. a

Carson Paull

Make Thanks. sense.

Operator

this the turn floor to any management Thank or At over closing you. for comments. back like time, additional I'd to

Jill Ramsey

Yeah.

haven't and get store, out. new yet out you've joining. see seen. Just ever Vegas you it And invite incredible. to thank It's chance the It's you anything for we unlike all had if to a you to come check

all. thank So you

Operator

you and for Ladies participation. thank your concludes event. This today's gentlemen,

the disconnect rest enjoy day. webcast may of lines at log-off And your or your time. this the You

a.k.a. Brands Holding (AKA) 10 Nov 222022 Q3 Earnings call transcript