Stable Total Net Revenue of
Cash Earnings of
YTD 2022 Total Net Revenue of
YTD 2022 E-commerce Net Revenue up 38%, E-commerce Penetration 62%
Total net revenue for Q3 2022 remained stable at
"Despite a strong month of July, where our total net revenue grew 22% and e-commerce net revenue grew 35%, we experienced the effects of a weakening economy in the latter half of Q3 2022, which led to a slowing in consumer demand for our products particularly in
Provided below are the financial highlights and a discussion of our financial results for Q3 2022 and YTD 2022, which are to be read in conjunction with the Company's unaudited interim condensed consolidated financial statements and the accompanying notes thereto, the Company's Management's Discussion and Analysis ("MD&A") for the period and our most recent Annual Information Form ("AIF"), incorporated by reference herein, and as described from time to time in the reports and disclosure documents filed by the Company with the Canadian securities regulatory agencies and commissions.
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1 Cash Earnings (or net cash generated before changes in non-cash working capital), a non-IFRS measure, is defined as Net Profit or Loss plus non-cash charges. |
2 Free Cash Flow, a non-IFRS measure, is defined as net cash generated from operating activities excluding net cash used in investing activities. |
Selected financial highlights for the period include the following:
- Total net revenue remained stable at
$5.0 million . Revenue growth from theU.S. , which accounted for 74% of total revenue, grew 21%. Revenue growth inCanada declined 32%. - E-commerce net revenue increased 8% to
$2.7 million . E-commerce average order value ("AOV") was$963 per transaction. E-commerce net revenue as a proportion of total net revenue ("E-commerce penetration") was 54%. - Retail net revenue was
$2.3 million versus$2.5 million , a decrease of 7%. At quarter-end, we had nine stores in operation, unchanged from Q3 2021. - Gross profit margin was 37.5% compared to 38.4% in Q3 2021. In 2022, we secured a new sourcing partner that provided access to additional inventory on a consignment basis, but at slightly lower gross margins relative to those in our traditional direct sourcing channels. Excluding the impact of this consignment channel partner, gross margin for Q3 2022 was 39.3%.
- Selling, general and administrative ("SG&A") expenses increased 12% to
$2.3 million , representing 47% of total net revenue, from$2.1 million , or 42% of total net revenue. This net increase in SG&A expense was primarily due to an increase in stock-based compensation, a non-cash expense. - Adjusted EBITDA loss (a non-IFRS measure) was
$0.3 million versus a loss of$0.2 million . - Cash Earnings (a non-IFRS measure) were
$0.7 million as compared to$0.1 million in Q3 2021, an improvement of$0.6 million . - Free Cash Flow (a non-IFRS measure) was positive with inflows of
$1.2 million as compared to negative outflows of$2.2 million in Q3 2021, an improvement of$3.4 million .
Despite the economic headwinds experienced in Q3 2022, YTD 2022 revenue performance was strong compared to prior year due primarily to solid revenue growth in our e-commerce channel. This was aided by stable gross margins, a strong currency and continued cost containment measures, which generated near break-even levels in both Cash Earnings (a non-IFRS measure) and Free Cash Flow (a non-IFRS measure) for the period.
Selected financial highlights include the following:
- Total net revenue increased 27% to
$14.8 million . Revenue growth from theU.S. , which accounted for 70% of total revenue, grew 34%. Revenue growth inCanada increased 14%. - E-commerce net revenue increased 38% to
$9.1 million . E-commerce AOV was$1,022 per transaction. E-commerce penetration was 62%. - Retail net revenue was
$5.7 million versus$5.0 million , an increase of 13%. At quarter-end, we had nine stores in operation, unchanged from YTD 2021. - Gross profit margin was 36.1% compared to 36.2% in YTD 2021. Excluding the impact of the consignment partner arrangement referred to in Q3 2022 financial highlights, gross margin for YTD 2022 was 37.1%.
- SG&A expenses increased by 20% to
$7.1 million , representing 48% of total net revenue, from$5.9 million , or 51% of total net revenue. This increase in SG&A expense was primarily due to higher wages and salaries from headcount additions during the year. SG&A expenses in YTD 2021 included the benefits of pandemic-related government wage subsidies. Excluding the benefit of these subsidies, YTD 2022 SG&A increased 17%. - Adjusted EBITDA loss (a non-IFRS measure) was
$1.4 million versus a loss of$1.8 million . - Cash Earnings (a non-IFRS measure) were negative
$0.2 million as compared to negative$2.0 million in YTD 2021, an improvement of$1.8 million . - Free Cash Flow (a non-IFRS measure) in the period was near break-even as compared to negative outflows of
$5.0 million in YTD 2021, an improvement of over$5.0 million . - Cash availability on
September 30, 2022 was$2.2 million as compared to$3.8 million onDecember 31, 2021 . The decrease in cash of$1.6 million was due to the repayment of third-party debt during the year.
Given the current economic environment, and the resulting related uncertainty in consumer spending, our full-year 2022 total net revenue guidance is
The above forward-looking statements reflect our expectations as of
The following table summarizes LXR's recent results for the periods indicated:
($) | For the three-months ended | For the nine-months ended | |||
2022 | 2021 | 2022 | 2021 | ||
Net revenue | 5,006,612 | 4,987,628 | 14,783,395 | 11,615,727 | |
Cost of sales | 3,126,631 | 3,073,058 | 9,444,101 | 7,405,610 | |
Gross profit | 1,879,981 | 1,914,570 | 5,339,294 | 4,210,117 | |
Operating expenses | |||||
Selling, general and administrative expenses | 2,345,896 | 2,087,965 | 7,091,423 | 5,903,250 | |
Depreciation of property and equipment | 80,885 | 73,098 | 231,351 | 209,035 | |
Amortization of intangible assets | 2,034 | 5,938 | 10,848 | 37,808 | |
Loss from operating activities | (548,834) | (252,431) | (1,994,328) | (1,939,976) | |
Other income and expenses | |||||
Finance costs | 159,812 | 117,230 | 418,231 | 431,468 | |
Foreign exchange loss (gain) | (1,081,490) | (428,884) | (1,515,211) | 15,432 | |
Loss before income taxes | 372,844 | 59,223 | (897,348) | (2,386,876) | |
Income tax expense | |||||
Current | 2,634 | — | 9,960 | 18,570 | |
Net profit (loss) | 370,210 | 59,223 | (907,308) | (2,405,446) |
The following table provides a reconciliation of Net Profit or Loss to Adjusted Net Income or Adjusted Net Loss and Net Profit or Loss to EBITDA and Adjusted EBITDA for the periods indicated:
($) | For the three-months ended | For the nine-months ended | |||
2022 | 2021 | 2022 | 2021 | ||
Reconciliation of Net Profit (Loss) to Adjusted Net Profit (Loss) | |||||
Net profit (loss) | 370,210 | 59,223 | (907,308) | (2,405,446) | |
Adjustments to Net Profit (Loss): | |||||
Foreign exchange loss (gain) | (1,081,490) | (428,884) | (1,515,211) | 15,432 | |
Gain on disposal of property and equipment | — | — | — | (1,250) | |
Stock-based compensation | 148,481 | 6,544 | 310,508 | 105,781 | |
Information technology non-recurring expense | — | — | 62,479 | — | |
Government wage subsidy program | — | (4,338) | — | (177,361) | |
Adjusted Net Loss | (562,799) | (367,455) | (2,049,532) | (2,462,844) | |
($) | For the three-months ended | For the nine-months ended | |||
2022 | 2021 | 2022 | 2021 | ||
Reconciliation of Net Profit (Loss) to Adjusted EBITDA | |||||
Net profit (loss) | 370,210 | 59,223 | (907,308) | (2,405,446) | |
Adjustments to Net Profit (Loss): | |||||
Amortization and depreciation expenses | 82,919 | 79,036 | 242,199 | 246,843 | |
Finance costs | 159,812 | 117,230 | 418,231 | 431,468 | |
Income tax expense | 2,634 | — | 9,960 | 18,570 | |
EBITDA | 615,575 | 255,489 | (236,918) | (1,708,565) | |
Adjustments to EBITDA: | |||||
Foreign exchange loss (gain) | (1,081,490) | (428,884) | (1,515,211) | 15,432 | |
Gain on disposal of property and equipment | — | — | — | (1,250) | |
Stock-based compensation | 148,481 | 6,544 | 310,508 | 105,781 | |
Information technology non-recurring expense | — | — | 62,479 | — | |
Government wage subsidy program | — | (4,338) | — | (177,361) | |
Adjusted EBITDA | (317,434) | (171,189) | (1,379,142) | (1,765,963) |
The following tables provide a reconciliation of Net Profit or Loss to Cash Earnings and Free Cash Flow for the periods indicated:
For the three-months ended | |||||
($) | 2022 | 2021 | Increase | ||
Reconciliation of Net Profit to Cash Earnings and Free Cash Flow | |||||
Net profit | 370,210 | 59,223 | 310,987 | ||
Adjustments to Net Profit (Loss): Non-cash items: | |||||
Depreciation of property and equipment | 80,885 | 73,099 | 7,786 | ||
Amortization of intangible assets | 2,034 | 5,937 | (3,903) | ||
Amortization of deferred financing costs | 7,202 | 7,203 | (1) | ||
Stock-based compensation expense | 148,481 | 6,544 | 141,937 | ||
Unrealized foreign exchange loss (gain) | 108,201 | (5,496) | 113,697 | ||
346,803 | 87,287 | 259,516 | |||
Cash Earnings | 717,013 | 146,510 | 570,503 | ||
Net change in non-cash working capital balances | 470,826 | (2,322,046) | 2,792,872 | ||
Cash flows (used) generated in operating activities | 1,187,839 | (2,175,536) | 3,363,375 | ||
Less: Acquisitions of property and equipment | (4,050) | (15,436) | 11,386 | ||
Free Cash flow | 1,183,789 | (2,190,972) | 3,374,761 | ||
For the nine-months ended | |||||
($) | 2022 | 2021 | Increase | ||
Reconciliation of Net Profit (Loss) to Cash Earnings and Free Cash Flow | |||||
Net profit (loss) Adjustments to Net Profit (Loss): | (907,308) | (2,405,446) | 1,498,138 | ||
Non-cash items: | |||||
Depreciation of property and equipment | 231,351 | 209,035 | 22,316 | ||
Amortization of intangible assets | 10,848 | 37,808 | (26,960) | ||
Amortization of deferred financing costs | 21,373 | 21,373 | - | ||
Stock-based compensation expense | 310,508 | 105,781 | 204,727 | ||
Gain on disposal of property and equipment | - | (1,250) | 1,250 | ||
Unrealized foreign exchange loss | 115,968 | 10,601 | 105,367 | ||
690,048 | 383,348 | 306,700 | |||
Cash Earnings | (217,260) | (2,022,098) | 1,804,838 | ||
Net change in non-cash working capital balances | 218,256 | (2,983,432) | 3,201,688 | ||
Cash flows (used) generated in operating activities | 996 | (5,005,530) | 5,006,526 | ||
Less: Acquisitions of property and equipment | (14,547) | (40,027) | 25,480 | ||
Free Cash flow | (13,551) | (5,045,557) | 5,032,006 | ||
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 the COVID-19 pandemic 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 | Q3-2022 | Q2-2022 | Q1-2022 | Q4-2021 | Q3-2021 | Q2-2021 | Q1-2021 | Q4-2020 |
Total net revenue | 5,006,612 | 5,481,267 | 4,295,516 | 6,415,527 | 4,987,628 | 4,026,028 | 2,602,071 | 3,391,813 |
E-commerce revenue | 2,669,366 | 3,268,570 | 3,149,395 | 3,958,670 | 2,506,850 | 2,522,682 | 1,572,640 | 1,715,804 |
E-commerce revenue % of total net | 53.9 % | 59.6 % | 73.3 % | 61.7 % | 50.3 % | 62.7 % | 60.4 % | 50.6 % |
Gross margin | 37.5 % | 35.5 % | 35.3 % | 37.3 % | 38.4 % | 35.7 % | 33.0 % | 32.7 % |
Adjusted Net (Loss) Income | (562,799) | (696,424) | (790,309) | 123,230 | (367,455) | (1,085,937) | (1,009,452) | (886,788) |
Adjusted EBITDA | (317,434) | (486,244) | (575,464) | 298,025 | (171,189) | (857,764) | (737,010) | (708,297) |
Adjusted EBITDA % of total net | (6.3 %) | (8.9 %) | (13.4 %) | 4.6 % | (3.4 %) | (21.3 %) | (28.3 %) | (20.9 %) |
Run rate metrics and growth: | ||||||||
Total net revenue – last 12 months | 21,198,922 | 21,179,938 | 19,724,699 | 18,031,254 | 15,007,540 | 12,877,630 | 10,281,886 | 13,777,419 |
E-commerce revenue – last 12 | 13,076,001 | 12,883,485 | 12,137,597 | 10,560,842 | 8,317,976 | 6,691,499 | 4,976,771 | 4,379,723 |
Free Cash Flow: | ||||||||
Net profit (loss) | 370,210 | (353,552) | (923,966) | (492,803) | 59,223 | (1,580,635) | (884,034) | (2,208,618) |
Add: non-cash items | 346,803 | 354,340 | (11,095) | 724,391 | 87,287 | 390,704 | (94,643) | 137,960 |
Cash Earnings | 717,013 | 788 | (935,061) | 231,588 | 146,510 | (1,189,931) | (978,677) | (2,070,658) |
Add: Net change in non-cash working | 470,826 | (646,138) | 393,568 | 1,221,311 | (2,322,046) | (32,427) | (628,959) | 1,435,622 |
Cash flows provided/(used) in | 1,187,839 | (645,350) | (541,493) | 1,452,899 | (2,175,536) | (1,222,358) | (1,607,636) | (635,036) |
Less: acquisition of property and | (4,050) | (6,062) | (4,435) | (4,283) | (15,436) | (9,998) | (14,593) | (17,273) |
Free Cash Flow | 1,183,789 | (651,412) | (545,928) | 1,448,616 | (2,190,972) | (1,232,356) | (1,622,229) | (652,309) |
Liquidity: | ||||||||
Cash availability | 2,231,325 | 2,934,437 | 3,662,768 | 3,810,767 | 2,640,169 | 4,481,560 | 4,775,470 | 7,334,425 |
Working capital | (551,302) | (59,214) | 6,833,114 | 7,052,502 | 7,083,280 | 7,033,183 | 7,133,717 | 8,949,997 |
Capitalization: | ||||||||
Shares outstanding | 91,425,499 | 91,425,499 | 92,783,155 | 92,783,155 | 92,783,155 | 92,783,155 | 92,783,155 | 92,783,155 |
Closing share price | 0.11 | 0.11 | 0.11 | 0.14 | 0.10 | 0.13 | 0.12 | 0.25 |
Market capitalization | 10,056,805 | 10,056,805 | 10,206,147 | 12,989,642 | 9,278,316 | 12,061,810 | 11,133,979 | 22,731,873 |
Add: Total debt | 4,645,115 | 6,619,796 | 6,526,453 | 5,999,440 | 6,272,286 | 5,758,443 | 4,814,459 | 5,733,129 |
Less: Cash | 2,007,396 | 2,884,427 | 3,570,681 | 3,695,677 | 2,603,395 | 4,315,918 | 4,653,792 | 7,289,957 |
Enterprise value (EV) | 12,694,524 | 13,792,174 | 13,161,919 | 15,293,405 | 12,947,207 | 13,504,335 | 11,294,646 | 21,175,045 |
On
Since the onset of the COVID-19 pandemic in
There can be no assurance that the strategic review process will result in any transaction or other alternative nor any assurance as to its outcome or timing. The Company has not set a timetable for completion of the review process and does not intend to periodically or otherwise disclose developments related to the process unless it determines that such disclosure is necessary or appropriate.
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,
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", "Cash Earnings","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 core 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 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, Cash Earnings and Free Cash Flow, and a reconciliation of these non-IFRS measures to IFRS measures, see the above tables presented.
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 include, but are not limited to, statements concerning the financial results and condition of the Company, expectations regarding market trends, overall market growth rates and the Company's growth rates, future objectives and strategies to achieve those objectives, including, without limitation, e-commerce growth and penetration, the state of wholesale demand, new store openings, store productivity, margin improvements, and future acquisitions, 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 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", "continue" or similar expressions suggesting future outcomes or events and the negative of any of these terms.
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 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 or closings in
Given the recent rise in global interest rates and inflationary expectations, our results in the future may be materially affected by the overall state of economic growth, customer demand and spending (including the impact of recessionary fears), the level of inflation, interest rates, regional labor market and global supply chain constraints, world events, the rate of growth of online commerce, and cloud services, and various other related factors. In the latter part of Q3 2022, we experienced a slow-down in consumer spending, this trend may continue into Q4 2022 and into 2023.
Generally, and especially given this unprecedented period of uncertainty brought about by the COVID-19 pandemic (including any variant) and geo-political events or acts of terrorism (such as the military conflict between
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.
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