Q2 2022 LTM Total Net Revenue of $21.2 Million.
Q2 2022 Total and
E-commerce Net Revenue Up 36% and 30%,
Respectively.
Generated Break-even Cash
Earnings1 in Q2 2022.
AOV increased 14% to $1,128.
MONTREAL, Aug. 10,
2022 /CNW/ - LXRandCo, Inc. ("LXR" or the
"Company") (TSX: LXR), a North American socially
responsible, digital-first omni-channel retailer of authenticated
pre-owned handbags and personal accessories, today reported its
financial results for the second quarter ended June 30, 2022 ("Q2 2022").
For the last twelve-month period ("LTM") ending
June 30, 2022, total net revenue was
$21.2 million, including LTM
e-commerce net revenue of $12.9
million, which represented an increase of 48% and 57%,
respectively, over the same period last year.
"In Q2, a generally slower quarter in the year for us, we posted
a respectable growth rate of over 30% for total and e-commerce net
revenue, we drove AOVs higher and we maintained our gross margins
at over 35%. For the second time in the last three quarters, Cash
Earnings1 came in at a break-even or better level, with
Q2 2022 Cash Earnings coming in at a break-even level as compared
to a loss of $0.7 million in Q2
2021." said Cam di Prata, the
Company's CEO.
"While we are cautious about the economic prospects for the
second half of the year, our total net revenue guidance for 2022
remains unchanged at $25 million to
$30 million and it is our current
expectation that if the higher end of this revenue range is
achieved, adjusted earnings will come in at the break-even to
slightly positive range, thus positioning the Company for
profitability next year." added Cam di
Prata.
Provided below are the financial highlights and a
discussion of our financial results for the three–months period
ended June 30, 2022, which are to be
read in conjunction with the Company's unaudited interim condensed
consolidated financial statements and the Company's Management's
Discussion and Analysis ("MD&A") for the period.
Overview of Results for Q2 2022, compared to Q2 2021
- In Q2 2022, total net revenue increased 36.1% to $5.5 million from $4.0
million.
- E-commerce net revenue increased 29.6% to $3.3 million, and e-commerce average order value
("AOV") increased 14.1% to $1,128 per transaction. E-commerce net revenue as
a proportion of total net revenue ("E-commerce penetration")
was 59.6.%.
- Retail net revenue was $2.2
million versus $1.5 million,
an increase of 47.2%. At quarter-end, we had nine stores in
operation as compared to eight in Q2 2021.
- Gross profit margin was stable at 35.5% compared to 35.7% in Q2
2021.
- Selling, general and administrative ("SG&A")
expenses increased by 6.6% to $2.7
million, representing 50.0% of total net revenue, from
$2.6 million, or 63.9% of total net
revenue. SG&A expenses in Q2 2021 included the benefits of
pandemic-related government wage subsidies. Excluding the benefit
of these subsidies, Q2 2022 SG&A increased 5.8% versus Q2
2021.
- Adjusted Net loss (a non-IFRS measure) improved to a loss of
$0.7 million versus a loss of
$1.1 million.
- Adjusted EBITDA (a non-IFRS measure) improved to a loss of
$0.5 million versus a loss of
$0.9 million.
- Free Cash Flow (a non-IFRS measure) was negative $0.7 million an improvement as compared to
negative $1.2 million.
- For the second time in the last three quarters Cash
Earnings1came in at break-even or better, with Q2 2022
Cash Earnings coming in at $778 as
compared to a loss of $0.7 million in
Q2 2021.
- Cash availability at the end of Q2 2022 was $2.9 million as compared to $3.8 million in Q4 2021, the decline attributed
primarily to increased investments in working capital and the
partial repayment of debt.
_________________________
|
1 Cash
Earnings (a non IFRS measure) means Net Profit/(Loss) plus non-cash
items.
|
Discussion of the Three-Month Periods Ended June 30, 2022 and 2021
Unless otherwise indicated, all amounts are expressed in
Canadian dollars. Certain metrics, including those expressed on an
adjusted basis, are non-IFRS measures. See "Non-IFRS Measures"
further below. For a reconciliation of non-IFRS measures to their
most directly comparable measure calculated in accordance with
IFRS, see "Select Consolidated Financial Information" further
below.
Total Net Revenue
For Q2 2022, total net revenue increased by 36.1% to
$5.5 million from $4.0 million in Q2 2021. During this period,
approximately 59.6% of our total net revenue was generated from
e-commerce and 40.4% from retail activities (stores and wholesale
channels combined), as compared to 62.7% and 37.3%, respectively,
in Q2 2021.
During this period, approximately 69.2% of our net revenue was
generated in the U.S., with the balance coming from Canada, as compared to 67.3% from the U.S. in
Q2 2021.
E-commerce
E-commerce net revenue during Q2 2022 was $3.3 million, an increase of 29.6% compared to
the prior period. E-commerce penetration decreased to 59.6% versus
62.7% in Q2 2021. AOV during the period was $1,128, an increase of 14.1% versus the
comparable period last year.
Retail
Retail net revenue during Q2 2022 was $2.2 million, an increase of 47.2% compared to
$1.5 million in Q2 2021. The increase
reflects the partial recovery of our retail activities from the
adverse economic impact of COVID-19 on customer foot traffic and
store opening restrictions.
Our store network consisted of nine stores, of which all were
open in Q2 2022, compared to ten stores as at June 30, 2021, of which eight were open. During
Q2 2022, we closed 1 store location.
Gross Profit & Gross Profit Margin
Gross profit in Q2 2022 increased 35.4% to $1.9 million as compared to $1.4 million in Q2 2021. The increase in gross
profit is attributable to the increase in total net revenue, which
grew 36.1%.
Gross margin in Q2 2022, remained consistent at 35.5% compared
to 35.7% in Q2 2021, primarily due the ability to
maintain effective inventory management and product sourcing.
SG&A Expenses
In Q2 2022, SG&A expenses increased by 6.6% to $2.7 million, compared to $2.6 million in Q2 2021. This net increase of
$0.1 million in expense was primarily
growth-related and due to higher wages and salaries from headcount
additions, offset by lower marketing spend. During Q2 2022, nine
stores were in operation as compared to eight stores in operation
in Q2 2021 which, in turn, increased store related wages and
salaries and licensing fees. In Q2-2022, wages and salaries
included a reformed commission structure and retroactive
adjustments to January 1, 2022. In Q1
2021, SG&A expenses included the benefits of pandemic-related
government wage subsidies in the amount of $18,255. Excluding the benefit of these
subsidies, Q2 2022 SG&A increased by 5.8% versus Q2 2021.
On June 30, 2022, we employed 61
people across our nine retail stores, and our two office locations
in Montreal, Canada and
Tokyo, Japan. At the end of Q2
2021, our employee headcount was 54.
Net Loss
Despite an increase in gross profit to $1.9 million, as described above, SG&A
expense increased to $2.7 million
offset by foreign exchange gain of 0.7 million, which resulted in a
reported Net Loss in Q2 2022 of $0.4
million as compared to a Net Loss of $1.6 million in Q2 2021.
Adjusted Net Loss
In Q2 2022, Adjusted Net Loss was $0.7
million as compared to an Adjusted Net Loss of $1.1 million. Adjusted Net Loss as a percent of
total net revenue was 12.7% compared to 27.0% in Q2 2021. This
$0.4 million improvement was
primarily due to a higher gross profit during Q2 2022 combined with
a favorable foreign exchange position.
Adjusted EBITDA
In Q2 2022, Adjusted EBITDA improved by 43.3% to a loss of
$0.5 million as compared to an
Adjusted EBITDA loss of $0.9 million
in Q2 2021. This improvement was primarily due to a higher gross
profit during Q2 2022 combined with a favorable foreign exchange
position.
Cash earnings and Free Cash Flow
As set forth below, for the second time in the last three
quarters, Cash Earnings (or net cash generated before changes in
non-cash working capital) for Q2 2022 came in at a significantly
improved break-even level ($788)
compared to a loss of $1,189,931 in
Q2 2021.
($000s)
|
Net profit /
(loss)
|
Add: Non-cash
charges
|
Cash Earnings
(or net cash
generated
before
changes in
non-cash
working
capital)
|
Add: Changes
in non-cash
working
capital
|
Less: Capital
expenditures
|
Free cash
flow
|
|
|
|
|
|
|
|
Q3-2020
|
(2,786)
|
1,136
|
(1,650)
|
1,712
|
-
|
62
|
Q4-2020
|
(2,209)
|
138
|
(2,071)
|
1,436
|
(17)
|
(652)
|
Q1-2021
|
(884)
|
(95)
|
(979)
|
(629)
|
(15)
|
(1,623)
|
Q2-2021
|
(1,581)
|
391
|
(1,190)
|
(32)
|
(10)
|
(1,232)
|
Q3-2021
|
59
|
87
|
146
|
(2,322)
|
(15)
|
(2,191)
|
Q4-2021
|
(493)
|
724
|
231
|
1,221
|
(4)
|
1,448
|
Q1-2022
|
(924)
|
(11)
|
(935)
|
394
|
(4)
|
(545)
|
Q2-2022
|
(354)
|
354
|
-
|
(646)
|
(6)
|
(652)
|
In Q2 2022, we generated negative Free Cash Flow of $0.7 million, a significant improvement as
compared to negative Free Cash Flow of $1.2
million in Q2 2021. This $0.6
million improvement was primarily due to superior results
from continuing operations resulting in a lower net profit or loss
compared to prior period. Capital expenditures, as was the case in
Q2 2021, were negligible.
Selected Consolidated Financial Information
The
following table summarizes LXR's recent results for the periods
indicated:
|
For the three-months
ended
June
30,
|
|
For the six-months
ended
June
30,
|
|
2022
|
2021
|
|
2022
|
2021
|
|
|
|
|
|
|
Net
revenue
|
5,481,267
|
4,026,028
|
|
9,776,783
|
6,628,099
|
Cost of
sales
|
3,537,665
|
2,590,265
|
|
6,317,470
|
4,332,552
|
Gross
profit
|
1,943,602
|
1,435,763
|
|
3,459,313
|
2,295,547
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
Selling, general and
administrative expenses
|
2,743,075
|
2,574,011
|
|
4,745,527
|
3,815,285
|
Depreciation of
property and equipment
|
81,702
|
63,865
|
|
150,466
|
135,937
|
Amortization of
intangible assets
|
4,407
|
12,142
|
|
8,814
|
31,870
|
Loss from operating
activities
|
(885,582)
|
(1,214,255)
|
|
(1,445,494)
|
(1,687,545
|
Other income and
expenses
|
|
|
|
|
|
Finance
costs
|
116,745
|
133,596
|
|
258,419
|
314,238
|
Foreign exchange loss
(gain)
|
(656,101)
|
214,214
|
|
(433,721)
|
444,316
|
Loss before income
taxes
|
(346,226)
|
(1,562,065)
|
|
(1,270,192)
|
(2,446,099)
|
|
|
|
|
|
|
Income tax
expense
|
|
|
|
|
|
Current
|
7,326
|
18,570
|
|
7,326
|
18,570
|
Net
loss
|
(353,552)
|
(1,580,635)
|
|
(1,277,518)
|
(2,464,669)
|
The following table provides a reconciliation of Net Loss to
Adjusted Net Income or Adjusted Net Loss and Net Loss to EBITDA and
Adjusted EBITDA for the periods indicated:
|
For the three-months
ended
June
30,
|
|
For the six-months
ended
June
30,
|
|
2022
|
2021
|
|
2022
|
2021
|
Reconciliation of
Net Loss to Adjusted Net Loss
|
|
|
|
|
|
Net Loss
|
(353,552)
|
(1,580,635)
|
|
(1,277,518)
|
(2,464,669)
|
Adjustments to Net
Loss:
|
|
|
|
|
|
Foreign exchange loss
(gain)
|
(656,101)
|
214,214
|
|
(433,721)
|
444,316
|
Government wage subsidy
program
|
—
|
(18,254)
|
|
|
(173,023)
|
Gain on disposal of
property and equipment
|
—
|
(1,250)
|
|
—
|
(1,250)
|
Stock-based
compensation expense
|
250,750
|
299,988
|
|
162,027
|
99,237
|
Information technology
non-recurring expense
|
62,479
|
—
|
|
62,479
|
—
|
Adjusted Net
Loss
|
(696,424)
|
(1,085,937)
|
|
(1,486,733)
|
(2,095,389)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three-months
ended
June
30,
|
|
For the six-months
ended
June
30,
|
|
2022
|
2021
|
|
2022
|
2021
|
Reconciliation of
Net Loss to Adjusted EBITDA
|
|
|
|
|
|
Net Loss
|
(353,552)
|
(1,580,635)
|
|
(1,277,518)
|
(2,464,669)
|
Adjustments to Net
Loss:
|
|
|
|
|
|
Amortization and
depreciation expenses
|
86,109
|
76,007
|
|
159,280
|
167,807
|
Finance
costs
|
116,745
|
133,596
|
|
258,419
|
314,238
|
Income Tax
Expense
|
7,326
|
18,570
|
|
7,326
|
18,570
|
EBITDA
|
(143,372)
|
(1,352,462)
|
|
(852,493)
|
(1,964,054)
|
|
|
|
|
|
|
Adjustments to
EBITDA:
|
|
|
|
|
|
Foreign exchange loss
(gain)
|
(656,101)
|
214,214
|
|
(433,721)
|
444,316
|
Government wage subsidy
program
|
—
|
(18,254)
|
|
|
(173,023)
|
Gain on disposal of
property and equipment
|
—
|
(1,250)
|
|
—
|
(1,250)
|
Stock-based
compensation
|
250,750
|
299,988
|
|
162,027
|
99,237
|
Information technology
non-recurring expense
|
62,479
|
—
|
|
62,479
|
—
|
Adjusted
EBITDA
|
(486,244)
|
(857,764)
|
|
(1,061,708)
|
(1,594,774)
|
Selected Quarterly Financial Information
The following table summarizes certain of our financial results
for the most recently completed eight quarters for which financial
statements have been prepared by us as a reporting issuer. This
unaudited quarterly information has been prepared in accordance
with IFRS. Due to the impact of COVID-19 and other factors such as
seasonality, the results of operations for any quarter are not
necessarily indicative of the results of operations for the full
year.
($)
|
|
|
Consolidated
statements of loss
|
Q2-2022
|
Q1-2022
|
Q4-2021
|
Q3-2021
|
Q2-2021
|
Q1-2021
|
Q4-2020
|
Q3-2020
|
Total net
revenue
|
5,481,267
|
4,295,516
|
6,415,527
|
4,987,628
|
4,026,028
|
2,602,071
|
3,391,813
|
2,857,718
|
E-commerce
revenue
|
3,268,570
|
3,149,395
|
3,958,670
|
2,506,850
|
2,522,682
|
1,572,640
|
1,715,804
|
880,373
|
E-commerce revenue % of
total net revenue
|
59.6 %
|
73.3 %
|
61.7 %
|
50.3 %
|
62.7 %
|
60.4 %
|
50.6 %
|
30.8 %
|
Gross margin
|
35.5 %
|
35.3 %
|
37.3 %
|
35.2 %
|
35.7 %
|
33.0 %
|
32.7 %
|
28.2 %
|
Adjusted Net (Loss)
Income
|
(696,424)
|
(790,309)
|
123,230
|
(190,094)
|
(1,085,937)
|
(1,009,452)
|
(886,788)
|
(746,691)
|
Adjusted
EBITDA
|
(486,244)
|
(575,464)
|
298,025
|
6,172
|
(857,764)
|
(737,010)
|
(708,297)
|
(372,369)
|
Adjusted EBITDA % of
total net revenue
|
(8.9 %)
|
(13.4 %)
|
4.6 %
|
0.1 %
|
(21.3 %)
|
(28.3 %)
|
(20.9 %)
|
(13.0 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Run rate metrics and
growth:
|
|
|
|
|
|
|
|
|
Total net revenue –
last 12 months
revenue run-rate
|
21,179,938
|
19,724,699
|
18,031,254
|
15,007,540
|
12,877,630
|
10,281,886
|
13,777,419
|
24,825,779
|
E-commerce revenue –
last 12
months revenue run-rate
|
12,883,485
|
12,137,597
|
10,560,842
|
8,317,976
|
6,691,499
|
4,976,771
|
4,379,723
|
3,839,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow:
|
|
|
|
|
|
|
|
|
Net loss
|
(353,552)
|
(923,966)
|
(492,803)
|
59,223
|
(1,580,635)
|
(884,034)
|
(2,208,618)
|
(2,786,350)
|
Add: non-cash
items
|
354,340
|
(11,095)
|
724,391
|
87,287
|
390,704
|
(94,643)
|
137,960
|
1,135,973
|
Cash
Earnings
|
788
|
(935,061)
|
231,588
|
146,510
|
(1,189,931)
|
(978,677)
|
(2,070,658)
|
(1,650,377)
|
Add: Net change in
non-cash working
capital
|
(646,138)
|
393,568
|
1,221,311
|
(2,322,046)
|
(32,427)
|
(628,959)
|
1,435,622
|
1,712,028
|
Cash flows
provided/(used) in
operating activities
|
(645,350)
|
(541,493)
|
1,452,899
|
(2,175,536)
|
(1,222,358)
|
(1,607,636)
|
(635,036)
|
61,651
|
Less: acquisition of
property and
equipment
|
(6,062)
|
(4,435)
|
(4,283)
|
(15,436)
|
(9,998)
|
(14,593)
|
(17,273)
|
-
|
Free Cash
Flow
|
(651,412)
|
(545,928)
|
1,448,616
|
(2,190,972)
|
(1,232,356)
|
(1,622,229)
|
(652,309)
|
61,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity:
|
|
|
|
|
|
|
|
|
Cash
availability
|
2,934,437
|
3,662,768
|
3,810,767
|
2,640,169
|
4,481,560
|
4,775,470
|
7,334,425
|
1,213,542
|
Working
capital
|
(59,214)
|
6,833,114
|
7,052,502
|
7,083,280
|
7,033,183
|
7,133,717
|
8,949,997
|
2,877,864
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalization:
|
|
|
|
|
|
|
|
|
Shares
outstanding
|
91,425,499
|
92,783,155
|
92,783,155
|
92,783,155
|
92,783,155
|
92,783,155
|
92,783,155
|
32,783,145
|
Closing share
price
|
0.11
|
0.11
|
0.14
|
0.10
|
0.13
|
0.12
|
0.25
|
0.20
|
Market
capitalization
|
10,056,805
|
10,206,147
|
12,989,642
|
9,278,316
|
12,061,810
|
11,133,979
|
22,731,873
|
6,556,629
|
Add: Total
debt
|
6,619,796
|
6,526,453
|
5,999,440
|
6,272,286
|
5,758,443
|
4,814,459
|
5,733,129
|
5,173,259
|
Less: Cash
|
2,884,427
|
3,570,681
|
3,695,677
|
2,603,395
|
4,315,918
|
4,653,792
|
7,289,957
|
501,033
|
Enterprise value
(EV)
|
13,792,174
|
13,161,919
|
15,293,405
|
12,947,207
|
13,504,335
|
11,294,646
|
21,175,045
|
11,228,855
|
Multiple of EV/Last 12
months
revenue
|
0.65x
|
0.67x
|
0.85x
|
0.86x
|
1.05x
|
1.10x
|
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About LXR
LXR is a socially responsible, digital-first omni-channel
retailer of authenticated pre-owned handbags and personal
accessories. Since 2010, we have been providing consumers with
authenticated branded luxury products from Hermès, Louis Vuitton, Gucci, Prada and Chanel, among
other high-quality brands, by promoting their reuse and providing
an environmentally responsible way for consumers to purchase luxury
products. We achieve this through our digital-first strategy by
selling directly to consumers through our website
at www.lxrco.com and indirectly by powering the
e-commerce and other platforms of key channel partners. Our
omni-channel model is also supported by retail "shop-in-shop"
experience centers and by wholesale activities with select retail
partners across North America.
Non-IFRS Measures
This press release refers to certain non-IFRS measures. These
measures are not recognized under IFRS, do not have a standardized
meaning prescribed by IFRS and are therefore unlikely to be
comparable to similar measures presented by other companies.
Rather, these measures are provided as additional information to
complement IFRS measures by providing further understanding of
LXR's performance and results of operations from management's
perspective. Accordingly, these measures should not be considered
in isolation nor as a substitute for analysis of LXR's financial
information reported under IFRS. Management uses non-IFRS measures
including: "EBITDA," "Adjusted EBITDA," "Adjusted Net Loss", "Free
Cash Flow", "LTM Total Net Revenue", "LTM E-commerce Net Revenue"
and "Inventory Turns". These non-IFRS measures are used to provide
investors with supplemental measures of LXR's operating performance
and thus highlight trends in LXR's business that may not otherwise
be apparent when relying solely on IFRS measures. Management
believes that securities analysts, investors and other interested
parties frequently use non-IFRS measures in the evaluation of
company performance. Management also uses non-IFRS measures in
order to facilitate operating performance comparisons from period
to period, to prepare annual operating budgets and forecasts and to
determine components of management compensation. For a definition
of EBITDA, Adjusted EBITDA, and Adjusted Net Loss, and a
reconciliation of these non-IFRS measures to IFRS measures, see the
above tables presented.
Caution Regarding Forward-Looking Statements
Certain statements in this press release are prospective in
nature and constitute forward-looking information or
forward-looking statements within the meaning of applicable
securities laws (collectively, "forward-looking statements").
Forward-looking statements generally, but not always, can be
identified by the use of forward-looking terminology such as
"outlook", "objective", "may", "could", "would", "will", "expect",
"intend", "estimate", "forecasts", "project", "seek", "anticipate",
"believes", "should", "plans" or "continue", or similar expressions
suggesting future outcomes or events and the negative of any of
these terms. Forward-looking statements in this news release
include, but are not limited to, statements concerning future
objectives and strategies to achieve those objectives, including,
without limitation, store openings and closures, as well as other
statements with respect to management's beliefs, plans, estimates
and intentions, and similar statements concerning anticipated
future events, results, outlook, circumstances, performance or
expectations that are not historical facts. Forward-looking
statements reflect management's current beliefs, expectations and
assumptions and are based on information currently available to
management, which includes assumptions about continued revenues
based on historical past performance, management's historical
experience, perception of trends and current business conditions,
expected future developments, including the Company's capacity to
secure additional financing, and other factors which management
considers appropriate. With respect to the forward-looking
statements included in this press release, management has made
certain assumptions with respect to, among other things, the
Company's ability to meet its future objectives and strategies, the
Company's ability to achieve its future projects and plans and that
such projects and plans will proceed as anticipated, the expected
growth of the Company's e-commerce revenue, the expected number and
timing of store openings, entering into new and/or expanded retail
partnerships, the Company's ability to source products, the
Company's competitive position in the vintage luxury industry, and
beliefs and intentions regarding the ownership of material
trademarks and domain names used in connection with the marketing,
distribution and sale of the Company's products as well as
assumptions concerning general economic and market growth rates,
currency exchange and interest rates and competitive intensity,
notably in the context of the current COVID-19 outbreak.
Readers are cautioned not to place undue reliance on
forward-looking statements, as there can be no assurance that the
future circumstances, outcomes or results anticipated or implied by
such forward-looking statements will occur or that plans,
intentions or expectations upon which the forward-looking
statements are based will occur.
All forward-looking statements included in and incorporated
into this press release are qualified by these cautionary
statements. Unless otherwise indicated, the forward-looking
statements contained herein are made as of the date of this press
release, and except as required by applicable law, the Company does
not undertake any obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
Readers are cautioned that the actual results achieved will
vary from the information provided herein and that such variations
may be material. Consequently, there are no representations by LXR
that actual results achieved will be the same in whole or in part
as those set out in the forward-looking statements.
SOURCE LXRandCo, Inc.