Kidpik Corp. (“KIDPIK” or the “Company”), an online clothing
subscription-based e-commerce company, today reported its financial
results for the fourth quarter and fiscal year 2022 ended December
31, 2022.
Fourth Quarter 2022
Highlights:
- Revenue, net: was $4.7 million, a year over year
decrease of 10.0%
- Gross margin: was 58.9%, a year over year increase of 20
basis points from 58.7% in the fourth quarter of 2021
- Shipped items: were 374,000 items, compared to 477,000
shipped items in the fourth quarter of 2021
- Average shipment keep rate: decreased to 67.6%, compared
to 70.8% in the fourth quarter of 2021
- Net Loss: was $1.8 million or $0.23 loss per share
- Adjusted EBITDA: was a loss of $1.5
Full Year 2022 Financial
Highlights:
- Revenue, net: was $16.5 million, a year over year
decrease of 24.5%
- Gross margin: was 59.9%, a year over year increase of 40
basis points from 59.5% in 2021
- Shipped items: were 1.5 million items, compared to 2.2
million shipped items in 2021
- Average shipment keep rate: decreased to 68.3% compared
to 69.0% last year
- Net Loss: was $7.6 million, or $0.99 loss per share
- Adjusted EBITDA: was a loss of $6.1 million
“Our fourth quarter revenue was $4.7 million, up by 30.6% Q/Q
while keeping our operating expenses down, resulting in a Q/Q
reduction in net loss by 26.4%, in what continues to be a very
challenging macro environment. During the fourth quarter, we began
selling the Kidpik brand on Walmart.com and recently became a
“trusted partner,” said Ezra Dabah, CEO, KIDPIK.
“We remain focused on increasing subscription box sales by
acquiring new customers through performance-based digital channels,
including content marketing and social media. Our goal is to reduce
cash burn and extend our operating runway, mainly by limiting new
inventory purchases, which we believe will support our cash flow
needs in the short term. Our complimentary styling service, which
offers personalized children’s outfits at affordable prices through
a convenient shopping experience, continues to resonate with
customers," concluded Dabah.
Q4 Fiscal 2022 Summary
($ in thousands, except earnings per
share)
Q4 FY22
Q3 FY22
Q4 FY21
Q/Q
Y/Y
Revenue
$4,744
$3,633
$5,272
Up 30.6%
Down 10%
Gross margin
58.9%
60.3%
58.7%
Down 1.4 pts
Up 0.2 pts
Operating expenses
$4,560
$4,608
$4,824
Down 1.0%
Down 5.5%
Operating loss
$(1,767)
$(2,416)
$(1,730)
Down 26.9%
Up 2.1%
Net loss
$(1,794)
$(2,438)
$(1,857)
Down 26.4%
Down 3.4%
Net loss per share
$(0.23)
$(0.32)
$(0.28)
Down 28.1%
Down 17.9%
Revenue by Channel
13 weeks ended December 31,
2022
13 weeks ended
January 1, 2022
Change ($)
Change (%)
Revenue by channel
Subscription boxes
$
3,534,962
$
4,263,840
(728,878
)
(17.1
)%
3rd party websites sales
593,446
729,070
(135,624
)
(18.6
)%
Online website sales
615,444
279,029
336,415
120.6
%
Total revenue
$
4,743,852
$
5,271,939
$
(528,087
)
(10.0
)%
52 weeks ended December 31,
2022
52 weeks ended January 1,
2022
Change ($)
Change (%)
Revenue by channel
Subscription boxes
$
12,861,293
$
18,427,057
$
(5,565,764
)
(30.2
)%
3rd party websites sales
2,170,858
2,622,884
(452,026
)
(17.2
)%
Online website sales
1,445,833
784,577
661,256
84.3
%
Total revenue
$
16,477,984
$
21,834,518
$
(5,356,534
)
(24.5
)%
Subscription Boxes Revenue
13 weeks ended December 31,
2022
13 weeks ended January 1,
2022
Change ($)
Change (%)
Subscription boxes revenue from
Active subscriptions – recurring boxes
$
2,934,645
$
4,091,031
$
(1,156,386
)
(28.3
)%
New subscriptions - first box
600,317
172,809
427,508
247.4
%
Total Subscription boxes revenue
$
3,534,962
$
4,263,840
$
(728,878
)
(17.1
)%
52 weeks ended December 31,
2022
52 weeks ended January 1,
2022
Change ($)
Change (%)
Subscription boxes revenue from
Active subscriptions – recurring boxes
$
11,007,517
$
15,565,533
$
(4,558,016
)
(29.3
)%
New subscriptions - first box
1,853,776
2,861,524
(1,007,748
)
(35.2
)%
Total Subscription boxes revenue
$
12,861,293
$
18,427,057
$
(5,565,764
)
(30.2
)%
Revenue by Product Line
13 weeks ended December 31,
2022
13 weeks ended January 1,
2022
Change ($)
Change (%)
Revenue by product line
Girls’ apparel
$
3,499,888
$
4,016,285
$
(516,397
)
(12.9
)%
Boys’ apparel
988,939
1,011,104
(22,165
)
(2.2
)%
Toddlers’ apparel
255,026
244,550
10,476
4.3
%
Total revenue
$
4,743,853
$
5,271,939
$
(528,086
)
(10.0
)%
52 weeks ended December 31,
2022
52 weeks ended January 1,
2022
Change ($)
Change (%)
Revenue by product line
Girls’ apparel
$
12,211,914
$
16,663,366
$
16,663,366
)
(26.7
)%
Boys’ apparel
3,437,117
4,352,523
4,352,523
)
(21.0
)%
Toddlers’ apparel
828,953
818,629
818,629
1.3
%
Total revenue
$
16,477,984
$
21,834,518
$
21,834,518
)
(24.5
)%
Balance Sheet and Cash Flow
- Cash at the end of the fourth quarter totaled $0.6 million
compared to $8.4 million last year.
- Net cash used in operating activities decreased to $6.7 million
in 2022, compared to $11.0 million of cash used in operating
activities in 2021.
- As of December 31, 2022, we had $14.6 million in total current
assets, $6.3 million in total current liabilities and a working
capital of $8.3 million.
Kidpik Corp.
Statements of
Operations
Years Ended December 31, 2022
and January 1, 2022
For the 13 weeks ended
For the 52 weeks ended
December 31, 2022
January 1, 2022
December 31, 2022
January 1, 2022
Revenues, net
$
4,743,852
$
5,271,939
$
16,477,984
$
21,834,518
Cost of goods sold
1,950,455
2,177,872
6,600,007
8,836,884
Gross profit
2,793,397
3,094,067
9,877,977
12,997,634
Operating expenses
Shipping and handling
1,201,517
1,543,942
4,334,928
6,087,283
Payroll, related costs and non-cash
stock-based compensation
1,139,224
1,304,611
5,276,719
4,258,604
General and administrative
2,211,759
1,969,936
8,061,825
8,288,119
Depreciation and amortization
7,925
5,559
27,914
26,914
Total operating expenses
4,560,425
4,824,048
17,701,386
18,660,920
Operating loss
(1,767,028
)
(1,729,981
)
(7,823,409
)
(5,663,286
)
Other (income) expenses
Interest expense
27,162
127,508
78,646
711,974
Other income
-
-
(286,794
)
(429,045
)
Total other (income) expenses
27,162
127,508
(208,148
)
282,929
Loss before provision for income taxes
(1,794,190
)
(1,857,489
)
(7,615,261
)
(5,946,215
)
Provision for income taxes
-
-
1,332
Net loss
$
(1,794,190
)
$
(1,857,489
)
$
(7,615,261
)
$
(5,947,547
)
Net loss per share attributable to common
stockholders:
Basic
$
(0.23
)
$
(0.28
)
$
(0.99
)
$
(1.05
)
Diluted
$
(0.23
)
$
(0.28
)
$
(0.99
)
$
(1.05
)
Weighted average common shares
outstanding:
Basic
7,688,194
6,700,187
7,662,486
5,648,344
Diluted
7,688,194
6,700,187
7,662,486
5,648,344
Kidpik Corp.
Balance Sheets
December 31, 2022 and January
1, 2022
2022
2021
Assets
Current assets
Cash
$
600,595
$
8,415,797
Restricted cash
4,618
4,703
Accounts receivable
336,468
342,274
Inventory
12,625,948
11,618,597
Prepaid expenses and other current
assets
1,043,095
1,726,516
Total current assets
14,610,724
22,107,887
Leasehold improvements and equipment,
net
67,957
46,968
Operating lease right-of-use assets
1,469,665
-
Total assets
$
16,148,346
$
22,154,855
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable
$
2,153,389
$
2,560,361
Accounts payable, related party
1,107,665
913,708
Accrued expenses and other current
liabilities
587,112
800,972
Advance payable
-
932,155
Operating lease liabilities
438,957
-
Short-term debt, related party
2,050,000
2,200,000
Total current liabilities
6,337,123
7,407,196
Operating lease liabilities, net of
current portion
1,061,469
-
Total liabilities
7,398,592
7,407,196
Commitments and contingencies
Stockholders’ equity
Preferred stock, par value $0.001,
25,000,000 shares authorized, of which no shares are issued and
outstanding as of December 31, 2022 and January 1, 2022,
respectively
-
-
Common stock, par value $0.001, 75,000,000
shares authorized, of which 7,688,194 and 7,617,834 shares are
issued and outstanding as of December 31, 2022 and January 1, 2022,
respectively
7,688
7,618
Additional paid-in capital
50,276,511
48,659,225
Accumulated deficit
(41,534,445
)
(33,919,184
)
Total stockholders’ equity
8,749,754
14,747,659
Total liabilities and stockholders’
equity
$
16,148,346
$
22,154,855
Kidpik Corp.
Statements of Cash
Flows
Years Ended December 31, 2022
and January 1, 2022
2022
2021
Cash flows from operating activities
Net loss
$
(7,615,261
)
$
(5,947,547
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
27,914
26,914
Amortization of debt issuance costs
-
58,397
Forgiveness of loan payable
-
(442,352
)
Equity-based compensation
1,651,048
328,515
Bad debt expense
742,037
783,979
Changes in operating assets and
liabilities:
Accounts receivable
(736,231
)
(805,807
)
Inventory
(1,007,351
)
(4,138,525
)
Prepaid expenses and other current
assets
683,421
(903,937
)
Operating lease right-of-use assets and
liabilities
30,761
-
Accounts payable
(406,972
)
(601,264
)
Accounts payable, related parties
193,957
313,897
Accrued expenses and other current
liabilities
(213,860
)
311,862
Net cash flows used in operating
activities
(6,650,537
)
(11,015,868
)
Cash flows from investing activities
Purchases of leasehold improvements and
equipment
(48,903
)
(45,394
)
Net cash used in investing activities
(48,903
)
(45,394
)
Cash flows from financing activities
Proceeds from issuance of long-term debt
from related party
-
2,000,000
Net repayment to line of credit
-
(2,090,515
)
Net proceeds (repayments) from loan
related party
(150,000
)
2,200,000
Net proceeds (repayments) from advance
payable
(932,155
)
103,125
Cash used to settle net share equity
awards
(33,692
)
-
Receipts of initial public offering, net
of offering costs
-
16,083,856
Proceeds from issuance of common stock
-
500,000
Net cash (used in) provided by financing
activities
(1,115,847
)
18,796,466
Net (decrease) increase in cash and
restricted cash
(7,815,287
)
7,735,204
Cash and restricted cash, beginning of
year
8,420,500
685,296
Cash and restricted cash, end of year
$
605,213
$
8,420,500
Supplemental disclosure of cash flow
data:
Interest paid
$
38,607
$
573,618
Taxes paid
$
-
$
1,332
Supplemental disclosure of noncash
investing and financing activities:
Record right-of use asset and operating
lease liabilities
1,857,925
-
Conversion of shareholder debt
$
-
$
2,000,000
RESULTS OF OPERATIONS
The Company’s revenue, net is disaggregated based on the
following categories:
For the 13 weeks ended
For the 52 weeks ended
December 31, 2022
January 1, 2022
December 31, 2022
January 1, 2022
Subscription boxes
$
3,534,962
$
4,263,840
$
12,861,293
$
18,427,057
3rd party websites sales
593,446
729,070
2,170,858
2,622,884
Online website sales
615,444
279,029
1,445,833
784,577
Total revenue
$
4,743,852
$
5,271,939
$
16,477,984
$
21,834,518
Gross Margin
Gross profit is equal to our net sales (revenues, net) less cost
of goods sold. Gross profit as a percentage of our net sales is
referred to as gross margin. Cost of sales consists of the purchase
price of merchandise sold to customers and includes import duties
and other taxes, freight in, defective merchandise returned from
customers, receiving costs, inventory write-offs, and other
miscellaneous shrinkage.
For the 13 weeks ended
For the 52 weeks ended
December 31, 2022
January 1, 2022
December 31, 2022
January 1, 2022
Gross Margin
58.9%
58.7%
59.9%
59.5%
Shipped Items
We define shipped items as the total number of items shipped in
a given period to our customers through our active subscription,
Amazon and online website sales.
For the 13 weeks ended
For the 52 weeks ended
(In thousands)
(In thousands)
December 31, 2022
January 1, 2022
December 31, 2022
January 1, 2022
Shipped Items
374
477
1,457
2,157
Average Shipment Keep Rate
Average shipment keep rate is calculated as the total number of
items kept by our customers divided by total number of shipped
items in a given period.
For the 13 weeks ended
For the 52 weeks ended
December 31, 2022
January 1, 2022
December 31, 2022
January 1, 2022
Average Shipment Keep Rate
67.6%
70.8%
68.3%
69.0%
Non-GAAP Financial Measures
We report our financial results in accordance with generally
accepted accounting principles in the United States (“GAAP”).
However, management believes that certain non-GAAP financial
measures provide users of our financial information with additional
useful information in evaluating our performance. We believe that
adjusted EBITDA is frequently used by investors and securities
analysts in their evaluations of companies, and that this
supplemental measure facilitates comparisons between companies.
This non-GAAP financial measure may be different than similarly
titled measures used by other companies.
Our non-GAAP financial measure should not be considered in
isolation from, or as substitutes for, financial information
prepared in accordance with GAAP. Adjusted EBITDA has limitations
as an analytical tool, and you should not consider it in isolation
or as a substitute for analysis of our results as reported under
GAAP. Some of these limitations are:
- Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized may have to be replaced
in the future, and Adjusted EBITDA does not reflect cash capital
expenditure requirements for such replacements or for new capital
expenditure requirements;
- Adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs;
- Adjusted EBITDA does not consider the potentially dilutive
impact of equity-based compensation;
- Adjusted EBITDA does not reflect tax payments that may
represent a reduction in cash available to us;
- Adjusted EBITDA does not reflect certain non-routine items that
may represent a reduction in cash available to us; and
- Other companies, including companies in our industry, may
calculate Adjusted EBITDA differently, which reduces its usefulness
as a comparative measure.
We compensate for these limitations by providing a
reconciliation of this non-GAAP measure to the most comparable GAAP
measure. We encourage investors and others to review our business,
results of operations, and financial information in their entirety,
not to rely on any single financial measure, and to view this
non-GAAP measure in conjunction with the most directly comparable
GAAP financial measure. For more information on these non-GAAP
financial measure, please see the section titled “Unaudited
Reconciliation of Net Loss to Adjusted Earnings before Interest,
Taxes, Depreciation and Amortization (EBITDA)”, included at the end
of this release.
Adjusted EBITDA
Unaudited Reconciliation of Net Loss to Adjusted Earnings
before Interest, Taxes, Depreciation and Amortization
(EBITDA)
We define adjusted EBITDA as net loss excluding interest income,
other (income) expense, net, provision for income taxes,
depreciation and amortization, and equity-based compensation
expense. The following table presents a reconciliation of net loss,
the most comparable GAAP financial measure, to adjusted EBITDA for
each of the periods presented:
For the 13 weeks ended
For the 52 weeks ended
December 31, 2022
January 1, 2022
December 31, 2022
January 1, 2022
Net loss
$
(1,794,190
)
$
(1,857,489
)
$
(7,615,261
)
$
(5,947,547
)
Add (deduct)
Interest expense
27,162
127,508
78,646
711,974
Other income
-
-
(286,794
)
(429,045
Provision for income taxes
-
-
-
1,332
Depreciation and amortization
7,925
5,559
27,914
26,914
Equity based compensation
295,980
328,515
1,651,048
328,515
Adjusted EBITDA
$
(1,463,123
)
$
(1,395,907
)
$
(6,144,447
)
$
(5,307,857
)
Earnings Call Information:
On Monday, April 3, 2023 at 4:30pm ET, the company will host a
live teleconference call that is accessible over the internet at
the company’s website, https://investor.kidpik.com and additionally
by dialing 1-833-816-1388 or 1-412-317-0481 for international
callers.
A replay of the conference call will be available approximately
two hours after the conclusion of the call on the investor
relations section of the KIDPIK website at
https://investor.kidpik.com or by dialing 1-844-512-2921, or
1-412-317-6671, internationally, with the Replay Pin Number:
10177169. The replay will be available until April 10, 2023.
About Kidpik Corp.
Founded in 2016, KIDPIK (NASDAQ:PIK) is an online clothing
subscription box for kids, offering mix & match, expertly
styled outfits that are curated based on each member’s style
preferences. KIDPIK delivers a surprise box monthly or seasonally,
providing an effortless shopping experience for parents and a fun
discovery for kids. Each seasonal collection is designed in-house
by a team with decades of experience designing childrenswear.
KIDPIK combines the expertise of fashion stylists with proprietary
data and technology to translate kids’ unique style preferences
into surprise boxes of curated outfits. We also sell our branded
clothing and footwear through our e-commerce website,
shop.kidpik.com. For more information, visit www.kidpik.com.
Forward-Looking Statements
This press release may contain statements that constitute
“forward-looking statements” within the federal securities laws,
including The Private Securities Litigation Reform Act of 1995,
which provide a safe-harbor for forward-looking statements. In
particular, when used in the preceding discussion, the words “may,”
“could,” “expect,” “intend,” “plan,” “seek,” “anticipate,”
“believe,” “estimate,” “predict,” “potential,” “continue,”
“likely,” “will,” “would” and variations of these terms and similar
expressions, or the negative of these terms or similar expressions
are intended to identify forward-looking statements within the
meaning of such laws, and are subject to the safe harbor created by
such applicable laws. Any statements made in this news release
other than those of historical fact, about an action, event or
development, are forward-looking statements. These statements
involve known and unknown risks, uncertainties and other factors,
which may cause the results of KIDPIK to be materially different
than those expressed or implied in such statements. The
forward-looking statements may include projections and estimates of
KIDPIK’s corporate strategies, future operations and plans,
including the costs thereof. We have based these forward-looking
statements on our current expectations and assumptions and analyses
made by us in light of our experience and our perception of
historical trends, current conditions and expected future
developments, as well as other factors we believe are appropriate
under the circumstances. However, whether actual results and
developments will conform with our expectations and predictions is
subject to a number of risks and uncertainties, including our
history of losses, our ability to achieve profitability, our
potential need for additional funding and the availability and
terms of such funding; our ability to execute our growth strategy
and scale our operations and risks associated with such growth, our
ability to maintain current members and customers and grow our
members and customers; risks associated with the effect of the
COVID-19 pandemic, and governmental responses thereto on our
operations, those of our vendors, our customers and members and the
economy in general; risks associated with our supply chain and
third-party service providers, interruptions in the supply of raw
materials and merchandise, increased costs of raw materials,
products and shipping costs due to inflation, disruptions at our
warehouse facility and/or of our data or information services,
issues affecting our shipping providers, and disruptions to the
internet, any of which may have a material adverse effect on our
operations; risks that effect our ability to successfully market
our products to key demographics; the effect of data security
breaches, malicious code and/or hackers; increased competition and
our ability to maintain and strengthen our brand name; changes in
consumer tastes and preferences and changing fashion trends;
material changes and/or terminations of our relationships with key
vendors; significant product returns from customers, excess
inventory and our ability to manage our inventory; the effect of
trade restrictions and tariffs, increased costs associated
therewith and/or decreased availability of products; our ability to
innovate, expand our offerings and compete against competitors
which may have greater resources; certain anti-dilutive, drag-along
and tag-along rights which may be deemed to be held by a former
minority stockholder; our significant reliance on related party
transactions and loans; the fact that our Chief Executive Officer
has majority voting control over the Company; if the use of
“cookie” tracking technologies is further restricted, regulated, or
blocked, or if changes in technology cause cookies to become less
reliable or acceptable as a means of tracking consumer behavior,
the amount or accuracy of internet user information would decrease,
which could harm our business and operating results; our ability to
comply with the covenants of our loan and lending agreements and
future loan covenants, and the fact that our lending facilities are
secured by substantially all of our assets; our ability to prevent
credit card and payment fraud; the risk of unauthorized access to
confidential information; our ability to protect our intellectual
property and trade secrets, claims from third-parties that we have
violated their intellectual property or trade secrets and potential
lawsuits in connection therewith; our ability to comply with
changing regulations and laws, penalties associated with any
non-compliance (inadvertent or otherwise), the effect of new laws
or regulations, our ability to comply with such new laws or
regulations, changes in tax rates; our reliance and retention of
our current management; the outcome of future lawsuits, litigation,
regulatory matters or claims; the fact that we have a limited
operating history; the effect of future acquisitions on our
operations and expenses; our significant indebtedness; and others
that are included from time to time in filings made by KIDPIK with
the Securities and Exchange Commission, many of which are beyond
our control, including, but not limited to, in the “Cautionary Note
Regarding Forward-Looking Statements” and “Risk Factors” sections
in its Form 10-Ks and Form 10-Qs and in its Form 8-Ks, which it has
filed, and files from time to time, with the U.S. Securities and
Exchange Commission. These reports are available at www.sec.gov.
The Company cautions that the foregoing list of important factors
is not complete. All subsequent written and oral forward-looking
statements attributable to the Company or any person acting on
behalf of the Company are expressly qualified in their entirety by
the cautionary statements referenced above. Other unknown or
unpredictable factors also could have material adverse effects on
KIDPIK’s future results and/or could cause our actual results and
financial condition to differ materially from those indicated in
the forward-looking statements. The forward-looking statements
included in this press release are made only as of the date hereof.
KIDPIK cannot guarantee future results, levels of activity,
performance or achievements. Accordingly, you should not place
undue reliance on these forward-looking statements. We undertake no
obligation to update publicly any of these forward-looking
statements to reflect actual results, new information or future
events, changes in assumptions or changes in other factors
affecting forward-looking statements, except to the extent required
by applicable laws and take no obligation to update or correct
information prepared by third parties that is not paid for by the
Company. If we update one or more forward-looking statements, no
inference should be drawn that we will make additional updates with
respect to those or other forward-looking statements.
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Investor Relations Contact: ir@kidpik.com Media:
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