Kidpik Corp. (NASDAQ: PIK) (“KIDPIK” or the “Company”), an
online clothing subscription-based e-commerce company, today
reported its financial results for the third quarter ended October
1, 2022.
Third Quarter 2022
Highlights:
- Revenue, net: was $3.6 million, a year over year
decrease of 34.8%
- Gross margin: was 60.3%, a year over year increase of
210 basis points from 58.2% in the third quarter of 2021
- Shipped items: were 358,000 items, compared to 559,000
shipped items in the third quarter of 2021
- Average shipment keep rate: of 68.5%, compared to 68.8%
in the third quarter of 2021
- Net Loss: was $2.4 million or $0.32 loss per share
- Adjusted EBITDA: was a loss of $2.1 million compared to
a loss of $1.4 million in the third quarter of 2021 (see also
“Non-GAAP Financial Measures”, below)
“Our third quarter results were, for the most part, consistent
with our most recent earnings despite the increasingly challenging
macro environment and the continued impact of changes in social
media privacy policy on new customer acquisitions,” said Ezra
Dabah, CEO, KIDPIK.
“In the face of a challenging consumer environment, we are
taking actions to ensure the health of our company. We have
substantially reduced purchases of new inventory and are focused on
increasing sales from our current elevated inventory level which we
believe will support our cash flow needs in the short term. We are
focused on growing our member base through new and existing paid
and unpaid channels. During the third quarter we have managed to
level off and keep the number of active subscribers constant,”
concluded Dabah.
Revenue by Subscription (For the 13
weeks ended October 1, 2022)
Active Subscriptions (recurring boxes): decreased by
40.6% to $2.3 million
New Subscriptions (first boxes): decreased by 35.2% to
$0.6 million
Total Subscriptions: decreased by 39.6% to $2.9 million
or 78.9% of total revenue
Balance Sheet and Cash
Flow
- Cash at the end of the third quarter totaled $0.2 million
compared to $8.4 million as of January 1, 2022.
- Net cash used in operating activities for the 39 weeks ended
October 1, 2022 was $7.0 million compared to $5.6 million of cash
used in operating activities in the comparable period in 2021.
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
1-844-825-9789 or 412-317-5180 for international callers. The
conference ID is 10170361.
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
10170361. The replay will be available until August 23, 2022.
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.
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.
Condensed Interim Statements
of Operations
(Unaudited)
For the 13 weeks ended
For the 39 weeks ended
October 1, 2022
October 2, 2021
October 1, 2022
October 2, 2021
Revenues, net
$
3,633,467
$
5,574,099
$
11,734,132
$
16,562,579
Cost of goods sold
1,442,258
2,327,335
4,649,552
6,659,012
Gross profit
2,191,209
3,246,764
7,084,580
9,903,567
Operating expenses
Shipping and handling
1,042,186
1,451,065
3,133,411
4,543,341
Payroll and related costs
1,191,515
1,023,241
4,137,495
2,953,993
General and administrative
2,366,283
2,169,283
5,850,066
6,318,183
Depreciation and amortization
7,670
5,226
19,989
21,355
Total operating expenses
4,607,654
4,648,815
13,140,961
13,836,872
Operating loss
(2,416,445
)
(1,402,051
)
(6,056,381
)
(3,933,305
)
Other expenses
Interest expense
21,885
229,657
51,485
584,466
Other (income) expense
-
(442,352
)
(286,795
)
(429,045
)
Total other (income) expenses
21,885
(212,695
)
(235,310
)
155,421
Loss before provision for income taxes
(2,438,330
)
(1,189,356
)
(5,821,071
)
(4,088,726
)
Provision for income taxes
-
-
-
1,332
Net loss
$
(2,438,330
)
$
(1,189,356
)
$
(5,821,071
)
$
(4,090,058
)
Net loss per share attributable to common
stockholders:
Basic
(0.32
)
(0.22
)
(0.76
)
(0.77
)
Diluted
(0.32
)
(0.22
)
(0.76
)
(0.77
)
Weighted average common shares
outstanding:
Basic
7,688,194
5,500,187
7,653,790
5,300,308
Diluted
7,688,194
5,500,187
7,653,790
5,300,308
Kidpik Corp.
Condensed Interim Balance
Sheets
October 1, 2022
January 1, 2022
(Unaudited)
Assets
Current assets
Cash
$
216,552
$
8,415,797
Restricted cash
4,618
4,703
Accounts receivable
229,341
342,274
Inventory
14,293,277
11,618,597
Prepaid expenses and other current
assets
1,046,157
1,726,516
Total current assets
15,789,945
22,107,887
Leasehold improvements and equipment,
net
69,882
46,968
Operating lease right-of-use assets
1,603,945
-
Total assets
$
17,463,772
$
22,154,855
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable
$
2,057,194
$
2,560,361
Accounts payable, related party
979,652
913,708
Accrued expenses and other current
liabilities
509,418
800,972
Advance payable
-
932,155
Operating lease liabilities, current
492,443
-
Short-term debt, related party
2,050,000
2,200,000
Total current liabilities
6,088,707
7,407,196
Operating lease liabilities, net of
current portion
1,127,101
-
Total liabilities
7,215,808
7,407,196
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 October 1, 2022 and January 1, 2022
-
-
Common stock, par value $0.001, 75,000,000
shares authorized, of which 7,688,194 and 7,617,834 shares are
issued and outstanding as of October 1, 2022 and January 1, 2022,
respectively
7,688
7,618
Additional paid-in capital
49,980,531
48,659,225
Accumulated deficit
(39,740,255
)
(33,919,184
)
Total stockholders’ equity
10,247,964
14,747,659
Total liabilities and stockholders’
equity
$
17,463,772
$
22,154,855
Kidpik Corp.
Condensed Interim Statements
of Cash Flows
39 Weeks Ended
October 1, 2022
October 2, 2021
Cash flows from operating activities
Net loss
$
(5,821,071
)
$
(4,090,058
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
19,989
21,355
Amortization of debt issuance costs
-
29,377
Forgiveness of loan payable
-
(442,352
)
Equity-based compensation
1,355,068
-
Bad debt expense
456,388
614,239
Changes in operating assets and
liabilities:
Accounts receivable
(343,455
)
(666,864
)
Inventory
(2,674,680
)
(1,123,932
)
Prepaid expenses and other current
assets
680,359
(292,684
)
Operating lease right-of-use assets and
liabilities
15,599
-
Accounts payable
(503,167
)
(123,612
)
Accounts payable, related parties
65,944
619,227
Accrued expenses and other current
liabilities
(291,554
)
(182,064
)
Net cash used in operating activities
(7,040,580
)
(5,637,368
)
Cash flows from investing activities
Purchases of leasehold improvements and
equipment
(42,903
)
-
Net cash used in investing activities
(42,903
)
-
Cash flows from financing activities
Proceeds from issuance of long-term debt
from related party
-
2,000,000
Proceeds from issuance of common stock
-
500,000
Cash used to settle net share equity
awards
(33,692
)
-
Net proceeds from line of credit
-
1,138,505
Net proceeds (repayments) from advance
payable
(932,155
)
367,712
Net proceeds (repayments) from loan
payable related party
(150,000
)
1,300,000
Net cash (used in) provided by financing
activities
(1,115,847
)
5,306,217
Net decrease in cash and restricted
cash
(8,199,330
)
(331,151
)
Cash and restricted cash, beginning of
period
8,420,500
685,296
Cash and restricted cash, end of
period
$
221,170
$
354,145
Reconciliation of cash and restricted
cash:
Cash
$
216,552
$
204,877
Restricted cash
4,618
149,268
$
221,170
$
354,145
Supplemental disclosure of cash flow
data:
Interest paid
$
21,830
$
500,905
Taxes paid
$
-
$
1,332
Supplemental disclosure of non-cash
data:
Record right-of use asset and operating
lease liabilities
$
1,857,925
$
-
Conversion of shareholder debt
$
-
$
2,000,000
RESULTS OF OPERATIONS
The Company’s revenue, net is disaggregated based on the
following categories:
For the 13 weeks ended
For the 39 weeks ended
October 1, 2022
October 2, 2021
October 1, 2022
October 2, 2021
Subscription boxes
$
2,867,930
$
4,745,932
$
9,326,331
$
14,163,217
Amazon sales
468,835
568,948
1,577,412
1,893,814
Online website sales
296,702
259,219
830,389
505,548
Total revenue
$
3,633,467
$
5,574,099
$
11,734,132
$
16,562,579
Gross Margin
Gross profit is equal to our net sales (revenues, net) 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, defective merchandise returned from
customers, receiving costs, inventory write-offs, and other
miscellaneous shrinkage.
For the 13 weeks ended
For the 39 weeks ended
October 1, 2022
October 2, 2021
October 1, 2022
October 2, 2021
Gross margin
60.3
%
58.2
%
60.4
%
59.8
%
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 39 weeks ended
October 1, 2022
October 2, 2021
October 1, 2022
October 2, 2021
Shipped Items
358
559
1,083
1,680
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 39 weeks ended
October 1, 2022
October 2, 2021
October 1, 2022
October 2, 2021
Average Shipment Keep Rate
68.5%
68.8
%
69.4%
68.5
%
Revenue by Channel
13 weeks ended October 1,
2022
13 weeks ended October 2,
2021
Change ($)
Change (%)
Revenue by channel
Subscription boxes
$
2,867,930
$
4,745,933
$
(1,878,003
)
(39.6
)%
Amazon sales
468,835
568,947
(100,112
)
(17.6
)%
Online website sales
296,702
259,219
37,483
14.5
%
Total revenue
$
3,633,467
$
5,574,099
$
(1,940,632
)
(34.8
)%
39 weeks ended October 1,
2022
39 weeks ended October 2,
2021
Change ($)
Change (%)
Revenue by channel
Subscription boxes
$
9,326,331
$
14,163,217
$
(4,836,886
)
(34.2
)%
Amazon sales
1,577,412
1,893,814
(316,402
)
(16.7
)%
Online website sales
830,389
505,548
324,841
64.3
%
Total revenue
$
11,734,132
$
16,562,579
$
(4,828,447
)
(29.2
)%
Subscription Boxes Revenue
13 weeks ended October 1,
2022
13 weeks ended October 2,
2021
Change ($)
Change (%)
Subscription boxes revenue from
Active subscriptions – recurring boxes
$
2,297,212
$
3,865,550
$
(1,568,338
)
(40.6
)%
New subscriptions - first box
570,718
880,382
(309,664
)
(35.2
)%
Total subscription boxes revenue
$
2,867,930
$
4,745,932
$
(1,878,002
)
(39.6
)%
39 weeks ended October 1,
2022
39 weeks ended October 2,
2021
Change ($)
Change (%)
Subscription boxes revenue from
Active subscriptions – recurring boxes
$
8,084,104
$
11,474,502
$
(3,390,398
)
(29.5
)%
New subscriptions - first box
1,242,227
2,688,715
(1,446,488
)
(53.8
)%
Total subscription boxes revenue
$
9,326,331
$
14,163,217
$
(4,836,886
)
(34.2
)%
Revenue by Product Line
13 weeks ended October 1,
2022
13 weeks ended October 2,
2021
Change ($)
Change (%)
Revenue by product line
Girls’ apparel
$
2,692,466
$
4,189,538
$
(1,497,072
)
(35.7
)%
Boys’ apparel
758,733
1,111,509
(352,776
)
(31.7
)%
Toddlers’ apparel
182,268
273,052
(90,784
)
(33.2
)%
Total revenue
$
3,633,467
$
5,574,099
$
(1,940,632
)
(34.8
)%
39 weeks ended October 1,
2022
39 weeks ended October 2,
2021
Change ($)
Change (%)
Revenue by product line
Girls’ apparel
$
8,712,027
$
12,647,081
$
(3,935,054
)
(31.1
)%
Boys’ apparel
2,448,178
3,341,419
(893,241
)
(26.7
)%
Toddlers’ apparel
573,927
574,079
(152
)
-
Total revenue
$
11,734,132
$
16,562,579
$
(4,828,447
)
(29.2
)%
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
For the 39 weeks ended
October 1, 2022
October 2, 2021
October 1, 2022
October 2, 2021
Net loss
$
(2,438,330
)
$
(1,189,356
)
$
(5,821,071
)
$
(4,090,058
)
Add (deduct)
Interest expense
21,885
229,657
51,485
584,466
Other (income)/expense
-
(442,352
)
(286,795
)
(429,045
)
Provision for income taxes
-
-
-
1,332
Depreciation and amortization
7,670
5,226
19,989
21,355
Equity-based compensation
303,980
-
1,355,068
-
Adjusted EBITDA
$
(2,104,795
)
$
(1,396,825
)
$
(4,681,324
)
$
(3,911,950
)
See also “Non-GAAP Financial Measures”, above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221115006397/en/
Investor Relations: ir@kidpik.com
Media: Julianne Beffa press@kidpik.com (212) 399-2784
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