Kidpik Corp. (“KIDPIK” or the “Company”), an online clothing
subscription-based e-commerce company, today reported its financial
results for the second quarter ended July 1, 2023.
Second Quarter 2023
Highlights:
- Revenue, net: was $3.4 million, a year over year
decrease of 8.6%
- Gross margin: was 60.2%, a year over year decrease of 80
basis points from 61.0% in the second quarter of 2022
- Shipped items: were 290,000 items, compared to 354,000
shipped items in the second quarter of 2022
- Average shipment keep rate: increased to 75.1%, compared
to 69.2% in the second quarter of 2022
- Net Loss: was $2.0 million or $0.26 per share
- Adjusted EBITDA: was a loss of $1.7 million (see
“Non-GAAP Financial Measures”, below)
“During the 2nd quarter, we continued to execute our plan to
reduce inventory levels, while maintaining our gross margin of
about 60%. Our 2nd quarter earnings were, for the most part,
consistent with our 1st quarter,” commented Ezra Dabah, CEO of
Kidpik.
“We have elevated the look and feel of our brand for
Back-to-School. Our creatives showcase the advancement, capturing
the beauty of our collection and the confidence children feel while
wearing Kidpik outfits. We invite you to visit kidpik.com and
shop.kidpik.com to view our back-to-school collection and
experience the technology that drives it,” concluded Mr. Dabah.
Kidpik Corp.
Condensed Interim Statements
of Operations
(Unaudited)
For the 13 weeks ended
For the 26 weeks ended
July 1, 2023
July 2, 2022
July 1, 2023
July 2, 2022
Revenues, net
$
3,448,919
$
3,774,668
$
7,478,397
$
8,100,665
Cost of goods sold
1,372,563
1,473,380
2,991,789
3,207,294
Gross profit
2,076,356
2,301,288
4,486,608
4,893,371
Operating expenses
Shipping and handling
949,734
959,141
2,138,956
2,091,225
Payroll and related costs
1,094,135
1,346,744
2,205,236
2,945,980
General and administrative
2,024,871
1,552,890
4,049,435
3,483,783
Depreciation and amortization
12,426
6,654
23,113
12,319
Total operating expenses
4,081,166
3,865,429
8,416,740
8,533,307
Operating loss
(2,004,810
)
(1,564,141
)
(3,930,132
)
(3,639,936
)
Other expenses
Interest expense
24,415
7,925
49,605
29,600
Other (income) expense
-
-
-
(286,795
)
24,415
7,925
49,605
(257,195
)
(2,029,225
)
(1,572,066
)
(3,979,737
)
(3,382,741
)
Provision for income taxes
-
-
-
-
Net loss
$
(2,029,225
)
$
(1,572,066
)
$
(3,979,737
)
$
(3,382,741
)
Net loss per share attributable to common
stockholders:
Basic
(0.26
)
(0.21
)
(0.52
)
(0.44
)
Diluted
(0.26
)
(0.21
)
(0.52
)
(0.44
)
Weighted average common shares
outstanding:
Basic
7,731,195
7,636,493
7,709,695
7,655,359
Diluted
7,731,195
7,636,493
7,709,695
7,655,359
Kidpik Corp.
Condensed Interim Balance
Sheets
July 1, 2023
December 31, 2022
(Unaudited)
(Audited)
Assets
Current assets
Cash
$
158,141
$
600,595
Restricted cash
4,618
4,618
Accounts receivable
156,396
336,468
Inventory
9,755,705
12,625,948
Prepaid expenses and other current
assets
897,194
1,043,095
Total current assets
10,972,054
14,610,724
Leasehold improvements and equipment,
net
120,965
67,957
Operating lease right-of-use assets
1,201,105
1,469,665
Total assets
$
12,294,124
$
16,148,346
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable
$
1,702,425
$
2,153,389
Accounts payable, related party
1,538,902
1,107,665
Accrued expenses and other current
liabilities
419,683
587,112
Operating lease liabilities, current
329,654
438,957
Short-term debt, related party
2,050,000
2,050,000
Total current liabilities
6,040,664
6,337,123
Operating lease liabilities, net of
current portion
925,014
1,061,469
Total liabilities
6,965,678
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 July 1, 2023 and December 31, 2022,
respectively
-
-
Common stock, par value $0.001, 75,000,000
shares authorized, of which 7,769,717 shares are issued and
outstanding as of July 1, 2023 and 7,688,194 shares issued and
outstanding on December 31, 2022
7,770
7,688
Additional paid-in capital
50,834,858
50,276,511
Accumulated deficit
(45,514,182
)
(41,534,445
)
Total stockholders’ equity
5,328,446
8,749,754
Total liabilities and stockholders’
equity
$
12,294,124
$
16,148,346
Kidpik Corp.
Condensed Interim Statements
of Cash Flows
(Unaudited)
26 Weeks Ended
July 1, 2023
July 2, 2022
Cash flows from operating activities
Net loss
$
(3,979,737
)
$
(3,382,741
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
23,113
12,319
Amortization of debt issuance costs
-
-
Equity-based compensation
558,429
1,051,088
Bad debt expense
151,362
241,057
Changes in operating assets and
liabilities:
Accounts receivable
28,710
(69,959
)
Inventory
2,870,243
(1,180,833
)
Prepaid expenses and other current
assets
145,901
57,175
Operating lease right-of-use assets and
liabilities
22,802
5,033
Accounts payable
(450,965
)
(1,061,068
)
Accounts payable, related parties
431,238
(129,753
)
Accrued expenses and other current
liabilities
(167,429
)
(345,378
)
Net cash used in operating activities
(366,333
)
(4,803,060
)
Cash flows from investing activities
Purchases of leasehold improvements and
equipment
(76,121
)
(31,317
)
Net cash used in investing activities
(76,121
)
(31,317
)
Cash flows from financing activities
Cash used to settle net share equity
awards
-
(33,692
)
Net proceeds from line of credit
-
-
Net proceeds (repayments) from advance
payable
-
(932,155
)
Net proceeds (repayments) from loan
payable
-
(150,000
)
Net cash provided by (used in) financing
activities
-
(1,115,847
)
Net (decrease)/increase in cash and
restricted cash
(442,454
)
(5,950,224
)
Cash and restricted cash, beginning of
period
605,213
8,420,500
Cash and restricted cash, end of
period
$
162,759
$
2,470,276
Reconciliation of cash and restricted
cash:
Cash
$
158,141
$
2,465,831
Restricted cash
4,618
4,445
$
162,759
$
2,470,276
Supplemental disclosure of cash flow
data:
Interest paid
$
-
$
20,577
Taxes paid
$
-
$
-
Supplemental disclosure of non-cash flow
data:
Record right-of use asset and operating
lease liabilities
$
-
1,857,925
Revenue by Channel
13 weeks ended July 1,
2023
13 weeks ended July 2,
2022
Change ($)
Change (%)
Revenue by channel
Subscription boxes
$
2,607,543
$
2,974,550
$
(367,007
)
(12.3
)%
3rd party websites
426,914
559,077
(132,163
)
(23.6
)%
Online website sales
414,462
241,041
173,421
71.9
%
Total revenue
$
3,448,919
$
3,774,668
$
(325,749
)
(8.6
)%
26 weeks ended July 1,
2023
26 weeks ended July 2,
2022
Change ($)
Change (%)
Revenue by channel
Subscription boxes
$
5,579,110
$
6,458,401
$
(879,291
)
(13.6
)%
3rd party websites
863,212
1,108,577
(245,365
)
(22.1
)%
Online website sales
1,036,075
533,687
502,388
94.1
%
Total revenue
$
7,478,397
$
8,100,665
$
(622,268
)
(7.7
)%
Subscription Boxes Revenue
13 weeks ended July 1,
2023
13 weeks ended July 2,
2022
Change ($)
Change (%)
Subscription boxes revenue from
Active subscriptions – recurring boxes
$
2,177,298
$
2,650,324
$
(473,026
)
(17.8
)%
New subscriptions - first box
430,245
324,226
106,019
32.7
%
Total subscription boxes revenue
$
2,607,543
$
2,974,550
$
(367,007
)
(12.3
)%
26 weeks ended July 1,
2023
26 weeks ended July 2,
2022
Change ($)
Change (%)
Subscription boxes revenue from
Active subscriptions – recurring boxes
$
4,578,324
$
5,786,892
$
(1,208,568
)
(20.9
)%
New subscriptions - first box
1,000,786
671,509
329,277
49.0
%
Total subscription boxes revenue
$
5,579,110
$
6,458,401
$
(879,291
)
(13.6
)%
Revenue by Product Line
13 weeks ended July 1,
2023
13 weeks ended July 2,
2022
Change ($)
Change (%)
Revenue by product line
Girls’ apparel
$
2,636,965
$
2,762,669
$
(125,704
)
(4.6
)%
Boys’ apparel
640,937
821,650
(180,713
)
(22.0
)%
Toddlers’ apparel
171,017
190,349
(19,332
)
(10.5
)%
Total revenue
$
3,448,919
$
3,774,668
$
(325,749
)
(8.6
)%
26 weeks ended July 1,
2023
26 weeks ended July 2,
2022
Change ($)
Change (%)
Revenue by product line
Girls’ apparel
$
5,684,721
$
6,019,561
$
(334,840
)
(5.6
)%
Boys’ apparel
1,428,096
1,689,445
(261,349
)
(15.5
)%
Toddlers’ apparel
365,580
391,659
(26,079
)
(6.7
)%
Total revenue
$
7,478,397
$
8,100,665
$
(622,268
)
(7.7
)%
Balance Sheet and Cash Flow
- Cash at the end of the second quarter of 2023 totaled $0.2
million compared to $0.6 million as of December 31, 2022.
- Net cash used in operating activities was $0.4 million for the
26 weeks ended July 1, 2023, compared to $4.8 million of cash used
in operating activities for the 26 weeks ended July 2, 2022.
- As of July 1, 2023, we had $11.0 million in total current
assets, $6.0 million in total current liabilities and working
capital of $4.9 million.
RESULTS OF OPERATIONS
The Company’s revenue, net, is disaggregated based on the
following categories:
For the 13 weeks ended
For the 26 weeks ended
July 1, 2023
July 2, 2022
July 1, 2023
July 2, 2022
Subscription boxes
$
2,607,543
$
2,974,550
$
5,579,110
$
6,458,401
3rd party websites
426,914
559,077
863,212
1,108,577
Online website sales
414,462
241,041
1,036,075
533,687
Total revenue
$
3,448,919
$
3,774,668
$
7,478,397
$
8,100,665
Gross Margin
For the 13 weeks ended
For the 26 weeks ended
July 1, 2023
July 2, 2022
July 1, 2023
July 2, 2022
Gross margin
60.2
%
61.0
%
60.0
%
60.4
%
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
For the 26 weeks ended
(in thousands)
(in thousands)
July 1, 2023
July 2, 2022
July 1, 2023
July 2, 2022
Shipped Items
290
354
630
725
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 26 weeks ended
July 1, 2023
July 2, 2022
July 1, 2023
July 2, 2022
Average Shipment Keep Rate
75.1
%
69.2
%
71.3
%
69.8
%
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 measures 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 below.
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 26 weeks ended
July 1, 2023
July 2, 2022
July 1, 2023
July 2, 2022
Net loss
$
(2,029,225
)
$
(1,572,066
)
$
(3,979,737
)
$
(3,382,741
)
Add (deduct)
Interest expense
24,415
7,925
49,605
29,600
Other (income)/expense, net
-
-
-
(286,795
)
Provision for income taxes
-
-
-
-
Depreciation and amortization
12,426
6,654
23,113
12,319
Equity-based compensation
290,953
433,924
558,429
1,051,088
Adjusted EBITDA
$
(1,701,431
)
$
(1,123,563
)
$
(3,348,590
)
$
(2,576,529
)
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 August 25, 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
ability to obtain additional funding, the terms of such funding and
potential dilution caused thereby; the continuing effect of rising
interest rates and inflation on our operations, sales, and market
for our products; deterioration of the global economic environment;
rising interest rates and inflation and our ability to control our
costs, including employee wages and benefits and other operating
expenses; our history of losses; our ability to achieve
profitability; 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 global pandemics,
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; disruptions to the internet;
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;
our ability to comply with the covenants of future loan and lending
agreements and covenants; 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,
and 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, including, but not limited to its Annual
Report on Form 10-K for the year ended December 31, 2022 and its
Quarterly Report on Form 10-Q for the quarter ended July 1, 2023.
These reports are available at www.sec.gov and on our website at
https://investor.kidpik.com/sec-filings. 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/20230815103964/en/
Investor Relations Contact: ir@kidpik.com Media:
press@kidpik.com
Kidpik (NASDAQ:PIK)
Historical Stock Chart
From Jun 2024 to Jul 2024
Kidpik (NASDAQ:PIK)
Historical Stock Chart
From Jul 2023 to Jul 2024