KIDPIK Reports Fourth Quarter and Full Year 2023 Financial Results
NEW YORK--(BUSINESS WIRE)--April 10, 2024--
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 2023 ended December 30, 2023.
Fourth Quarter 2023 Highlights:
-- Revenue, net: was $3.4 million, a year over year decrease of 28.9%
-- Gross margin: was negative 16.2%, which was the result of a one-time
inventory write-down of $2.9 million (without the adjustment gross margin
was 69.5%) from 58.9% in the fourth quarter of 2022
-- Shipped items: were 285,000 items, compared to 374,000 shipped items in
the fourth quarter of 2022
-- Average shipment keep rate: increased to 66.2%, compared to 65.3% in
the fourth quarter of 2022
-- Net Loss: was $4.0 million or $2.14 per share
-- Adjusted EBITDA: was a loss of $3.9 million (see "Non-GAAP Financial
Measures", below)
Full Year 2023 Financial Highlights:
-- Revenue, net: was $14.2 million, a year over year decrease of 13.6%
-- Gross margin: was 42.2%, a year-over-year decrease of 17.7 basis points
from 59.9% in 2022
-- Shipped items: were 1.2 million items, compared to 1.5 million shipped
items in 2022
-- Average shipment keep rate: increased to 72.8%, compared to 68.3% last
year
-- Net Loss: was $9.9 million, or $6.04 per share
-- Adjusted EBITDA: was a loss of $8.8 million (see "Non-GAAP Financial
Measures", below)
"During the 4th quarter of 2023, we continued to execute our plan to reduce inventory levels, and ceased purchasing new inventory," commented Ezra Dabah, CEO of Kidpik, who continued, "As discussed in greater detail in the press release we released on April 1, 2024, on March 29, 2024, we entered into an Agreement and Plan of Merger and Reorganization (the "Merger Agreement") with Nina Footwear Corp., a Delaware corporation ("Nina Footwear"), and Kidpik Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Kidpik ("Merger Sub"), whereby Nina Footwear will merge with and into Merger Sub, with Nina Footwear continuing as the surviving entity (the "Merger"). Pursuant to the Merger, Nina Footwear will become a wholly-owned subsidiary of Kidpik. We are extremely excited about the prospects of the Merger which is expected to increase Kidpik's revenue, cashflow and prospects, while also strengthening Kidpik's balance sheet and significantly increasing stockholder value."
The closing of the Merger is subject to customary closing conditions, including the preparation and mailing of a proxy statement by Kidpik, and the receipt of required stockholder approvals from Kidpik and Nina Footwear stockholders, and is expected to close in the third quarter of 2024.
Revenue by Subscription- For year ended 2023
Active Subscriptions (recurring boxes): decreased by 20.0% to $8.8 million
New Subscriptions (first boxes): decreased by 12.5% to $1.6 million
Total Subscriptions: decreased 18.9% to $10.4 million or 73.2% of total revenue
Balance Sheet and Cash Flow
-- Cash at the end of the fourth quarter totaled $0.2 million compared to
$0.6 million last year.
-- Net cash used in operating activities decreased to $0.3 million in
2023, compared to $6.6 million of cash used in operating activities in
2022.
-- As of December 30, 2023, we had $6.0 million in total current assets,
$5.3 million in total current liabilities and a working capital of $0.7
million.
Kidpik will not be holding an earnings call to discuss fourth quarter 2023 or year-end 2023 results, as the Company moves forward with the Merger.
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.
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.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this press release regarding matters that are not historical facts, are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). These include, but are not limited to, statements regarding the anticipated completion and effects of the proposed Merger, projections and estimates of Kidpik's corporate strategies, future operations and plans, including the costs thereof; and other statements regarding management's intentions, plans, beliefs, expectations or forecasts for the future. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. Kidpik and Nina Footwear undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by law. We use words such as "anticipates," "believes," "plans," "expects," "projects," "future," "intends," "may," "will," "should," "could," "estimates," "predicts," "potential," "continue," "guidance," and similar expressions to identify these forward-looking statements that are intended to be covered by the safe-harbor provisions of the PSLRA. Such forward-looking statements are based on our expectations and involve risks and uncertainties; consequently, actual results may differ materially from those expressed or implied in the statements due to a number of factors, including, but not limited to, the outcome of any legal proceedings that may be instituted against Nina Footwear or Kidpik following the announcement of the Merger; the inability to complete the Merger, including due to the failure to obtain approval of the stockholders of Kidpik or Nina Footwear; delays in obtaining, adverse conditions contained in, or the inability to obtain necessary regulatory approvals or complete regular reviews required to complete the Merger, if any; the inability to recognize the anticipated benefits of the Merger, which may be affected by, among other things, competition, the ability of the combined company to grow and successfully execute on its business plan; costs related to the Merger; changes in the applicable laws or regulations; the possibility that the combined company may be adversely affected by other economic, business, and/or competitive factors; the combined company's ability to manage future growth; the combined company's ability to raise funding; the complexity of numerous regulatory and legal requirements that the combined company needs to comply with to operate its business; the reliance on the combined company's management; the prior experience and successes of the combined company's management team are not indicative of any future success; Kidpik's and the combined company's ability to meet
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