Kidpik Corp. (“KIDPIK” or the “Company”), an online clothing
subscription-based e-commerce company, today reported its financial
results for the first quarter ended April 1, 2023.
First Quarter 2023
Highlights:
- Revenue, net: was $4.0 million, a year over year
decrease of 6.9%
- Gross margin: was 59.8%, a year over year decrease of 10
basis points from 59.9% in the first quarter of 2022
- Shipped items: were 340,000 items, compared to 371,000
shipped items in the first quarter of 2022
- Average shipment keep rate: decreased to 68.1%, compared
to 70.4% in the first quarter of 2022
- Net Loss: was $1.95 million or $0.25 per share
- Adjusted EBITDA: was a loss of $1.65 million
“In the first quarter, we continued to execute our plan to
reduce inventory levels and generate cash flow while maintaining a
consistent gross margin of about 60%,” commented Ezra Dabah, CEO of
Kidpik.
“Looking forward, we are focused on improving our conversion
rate across key channels, brand building, implementing efficiency
initiatives, and increasing our average dollar sale per
subscription box that we believe will further strengthen our
foundation for long-term growth. Our complimentary styling service
that delivers convenience, value, and style continues to attract
long-term, engaged customers," concluded Dabah.
Kidpik Corp.
Condensed Interim Statements
of Operations
(Unaudited)
13 Weeks Ended
April 1, 2023
April 2, 2022
Revenue, net
$
4,029,478
$
4,325,997
Cost of goods sold
1,619,226
1,733,914
Gross profit
2,410,252
2,592,083
Operating expenses
Shipping and handling
1,189,222
1,132,084
Payroll, related costs and equity-based
compensation
1,111,101
1,599,236
General and administrative
2,024,562
1,930,893
Depreciation and amortization
10,689
5,665
Total operating expenses
4,335,574
4,667,878
Operating loss
(1,925,322
)
(2,075,795
)
Other expenses (income)
Interest expense
25,190
21,674
Other income
-
(286,794
)
Total other expenses (income)
25,190
(265,120
)
Net loss
$
(1,950,512
)
$
(1,810,675
)
Net loss per share attributable to common
stockholders:
Basic
$
(0.25
)
$
(0.24
)
Diluted
$
(0.25
)
$
(0.24
)
Weighted average common shares
outstanding
Basic
7,688,194
7,617,834
Diluted
7,688,194
7,617,834
Kidpik Corp.
Condensed Interim Balance
Sheets
April 1, 2023
December 31, 2022
(Unaudited)
(Audited)
Assets
Current assets
Cash
$
264,669
$
600,595
Restricted cash
4,618
4,618
Accounts receivable
192,718
336,468
Inventory
11,110,934
12,625,948
Prepaid expenses and other current
assets
905,574
1,043,095
Total current assets
12,478,513
14,610,724
Leasehold improvements and equipment,
net
132,506
67,957
Operating lease right-of-use assets
1,335,385
1,469,665
Total assets
$
13,946,404
$
16,148,346
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable
$
1,716,630
$
2,153,389
Accounts payable, related party
1,338,047
1,107,665
Accrued expenses and other current
liabilities
395,646
587,112
Operating lease liabilities, current
384,681
438,957
Short-term debt, related party
2,050,000
2,050,000
Total current liabilities
5,885,004
6,337,123
Operating lease liabilities, net of
current portion
994,682
1,061,469
Total liabilities
6,879,686
7,398,592
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 April 1, 2023 and December 31, 2022,
respectively
-
-
Common stock, par value $0.001, 75,000,000
shares authorized, of which 7,688,194 shares are issued and
outstanding as of April 1, 2023 and December 31, 2022,
respectively
7,688
7,688
Additional paid-in capital
50,543,987
50,276,511
Accumulated deficit
(43,484,957
)
(41,534,445
)
Total stockholders’ equity
7,066,718
8,749,754
Total liabilities and stockholders’
equity
$
13,946,404
$
16,148,346
Kidpik Corp.
Condensed Interim Statements
of Cash Flows
(Unaudited)
13 Weeks Ended
April 1, 2023
April 2, 2022
Cash flows from operating activities
Net loss
$
(1,950,512
)
$
(1,810,675
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
10,689
5,665
Equity-based compensation
267,476
617,164
Bad debt expense
80,153
93,142
Changes in operating assets and
liabilities:
Accounts receivable
63,597
66,171
Inventory
1,515,014
(650,649
)
Prepaid expenses and other current
assets
137,521
81,608
Operating lease right-of-use assets and
liabilities
13,217
1,896
Accounts payable
(436,759
)
28,282
Accounts payable, related parties
230,382
(194,142
)
Accrued expenses and other current
liabilities
(191,466
)
(472,125
)
Net cash flows used in operating
activities
(260,688
)
(2,233,663
)
Cash flows from investing activities
Purchases of leasehold improvements and
equipment
(75,238
)
(17,018
)
Net cash used in investing activities
(75,238
)
(17,018
)
Cash flows from financing activities
Net repayments from advance payable
-
(735,126
)
Net cash used in financing activities
-
(735,126
)
Net decrease in cash and restricted
cash
(335,926
)
(2,985,807
)
Cash and restricted cash, beginning of
period
605,213
8,420,500
Cash and restricted cash, end of
period
$
269,287
$
5,434,693
Reconciliation of cash and restricted
cash:
Cash
$
264,669
$
5,430,075
Restricted cash
4,618
4,618
$
269,287
$
5,434,693
Supplemental disclosure of cash flow
data:
Interest paid
$
-
$
3,890
Supplemental disclosure of noncash
investing and financing activities:
Record right-of-use asset and operating
lease liabilities
$
-
$
418,951
Revenue by Channel
13 weeks ended April 1,
2023
13 weeks ended April 2,
2022
Change ($)
Change (%)
Revenue by channel
Subscription boxes
$
2,971,567
$
3,483,851
$
(512,284
)
(14.7
)%
3rd party sellers
436,298
549,500
(113,202
)
(20.6
)%
Online website sales
621,613
292,646
328,967
112.4
%
Total revenue
$
4,029,478
$
4,325,997
$
(296,519
)
(6.9
)%
Subscription Boxes Revenue
13 weeks ended April 1,
2023
13 weeks ended April 2,
2022
Change ($)
Change (%)
Subscription boxes revenue from
Active subscriptions – recurring boxes
$
2,401,026
$
3,136,569
$
(735,543
)
(23.5
)%
New subscriptions - first box
570,541
347,282
223,259
64.3
%
Total subscription boxes revenue
$
2,971,567
$
3,483,851
$
(512,284
)
(14.7
)%
Revenue by Product Line
13 weeks ended April 1,
2023
13 weeks ended April 2,
2022
Change ($)
Change (%)
Revenue by product line
Girls’ apparel
$
3,047,756
$
3,256,893
$
(209,137
)
(6.4
)%
Boys’ apparel
787,159
867,794
(80,635
)
(9.3
)%
Toddlers’ apparel
194,563
201,310
(6,747
)
(3.4
)%
Total revenue
$
4,029,478
$
4,325,997
$
(296,519
)
(6.9
)%
Balance Sheet and Cash Flow
- Cash at the end of the first quarter totaled $0.3 million
compared to $0.6 million as of 12/31/2022.
- Net cash used in operating activities was $0.3 million compared
to $2.2 million of cash used in operating activities in the first
quarter of 2022.
- As of April 1, 2023, we had $12.5 million in total current
assets, $5.9 million in total current liabilities and a working
capital of $6.6 million.
RESULTS OF OPERATIONS
The Company’s revenue, net is disaggregated based on the
following categories:
April 1, 2023
April 2, 2022
Revenue by channel
Subscription boxes
$
2,971,567
$
3,483,851
3rd party websites
436,298
549,500
Online website sales
621,613
292,646
Total revenue
$
4,029,478
$
4,325,997
Gross Margin
For the 13 weeks ended
April 1, 2023
April 2, 2022
Gross margin
59.8
%
59.9
%
Gross profit is equal to our net sales 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, returns from customers, inventory write-offs,
and other miscellaneous shrinkage.
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
(In thousands)
April 1, 2023
April 2, 2022
Shipped Items
340
371
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
April 1, 2023
April 2, 2022
Average Shipment Keep Rate
68.1
%
70.4
%
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
April 1, 2023
April 2, 2022
Net loss
$
(1,950,512
)
$
(1,810,675
)
Add (deduct):
Interest expense
25,190
21,674
Other income, net
-
(286,794
)
Depreciation and amortization
10,689
5,665
Equity-based compensation
267,476
617,164
Adjusted EBITDA
$
(1,647,157
)
$
(1,452,966
)
Earnings Call Information:
Today 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 at
1-877-407-9039 or at 1-201-689-8470 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:
13738787. The replay will be available until May 23, 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230516005878/en/
Investor Relations Contact: ir@kidpik.com
Media: press@kidpik.com
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