PIK - KIDPIK Reports First Quarter 2022 Financial Results

May, 16 2022 04:05 PM Kidpik Corp.

Kidpik Corp. (NASDAQ: PIK) (“KIDPIK” or the “Company”), an online clothing subscription-based e-commerce company, today reported its financial results for the first quarter ended April 1, 2022.

First Quarter Highlights:

Revenue, net: was $4.3 million, a year over year decrease of 18.7%
Gross margin: was 59.9%, compared with 60.9% in the first quarter of 2021
Shipped items: were 370,985 items, compared to 543,243 shipped items in the first quarter of 2021
Average shipment keep rate: increased to 70.4%, compared to 67.7% in the first quarter of 2021
Net Loss: was $1.8 million or $0.24 per share
Adjusted EBITDA: was a loss of $1.5 million

“Lower customer acquisition rates across the traditional social advertising channels persisted throughout the industry in the first quarter, negatively impacting our net sales and results. This was partially offset by improvement in our KIDPIK shop online website sales,” commented Ezra Dabah, CEO of KIDPIK. “We continue to see consistent gross margins of approximately 60%, and our ‘keep rate’ again surpassed 70% for the quarter. We are taking actions to increase conversions and optimize our acquisitions costs.”

“The online shopping experience our platform provides remains a valued service for families, and we continue to work hard to delight our members. We recently introduced our Summer 2022 subscription box offerings, which now give customers the option to receive a box that contains either 8 or 12 items, as opposed to just 8 items that we’ve traditionally offered. Given we are seeing about half of new subscribers opt for the 12-piece box, this will positively impact our future sales. We continue to pursue additional channels to attract new members, including a third-party software we’ve engaged that will allow us to sell the KIDPIK brand on other top retailer’s e-commerce platforms. We remain dedicated to providing our members with the best possible experience when it comes to outfitting their kids, and to delivering value for our stockholders,” concluded Mr. Dabah.

Revenue by Subscription (For first quarter 2022)

Active Subscriptions (recurring boxes): decreased 16.0% to $3.1 million

New Subscriptions (first boxes): decreased 59.2% to 0.35 million

Total Subscriptions: decreased 24.0% to $3.5 million or 81.0% of total revenue

Balance Sheet and Cash Flow

Cash at the end of the first quarter totaled $5.4 million compared to $8.4 million as of 1/01/2022
Net cash used in operating activities was $2.2 million compared to $2.7 million of cash used in operating activities in the first quarter of 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.

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 10167253. The replay will be available until May 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 .

Forward-Looking Statements

This press release may contain statements that constitute “forward-looking statements.” The Private Securities Litigation Reform Act of 1995 provides a safe-harbor for forward-looking statements. Forward-looking statements are subject to numerous conditions, many of which are beyond the control of the Company. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to the Company on the date of this release. These forward-looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including, without limitation, those set forth in the “Risk Factors” section of the Company's Quarterly Report on Form 10-Q, as well as its Registration Statement and prospectus filed with the SEC. Thus, actual results could be materially different. The Company undertakes no obligation to update these statements whether as a result of new information, future events or otherwise, after the date of this release, except as required by law, and takes no obligation to update or correct information prepared by third parties that is not paid for by the Company.

Kidpik Corp.
Condensed Interim Statements of Operations
(Unaudited)









13 Weeks Ended



April 2, 2022


April 3, 2021

Revenue, net

$
4,325,997


$
5,320,533










Cost of goods sold


1,733,914



2,082,202










Gross profit


2,592,083



3,238,331










Operating expenses








Shipping and handling


1,132,084



1,534,454

Payroll, related costs and equity-based compensation


1,599,236



958,639

General and administrative


1,930,893



2,072,053

Depreciation and amortization


5,665



9,721










Total operating expenses


4,667,878



4,574,867










Operating loss


(2,075,795
)


(1,336,536
)









Other expenses








Interest expense


21,674



160,627

Other (income) expense


(286,794
)


316










Total other (income) expenses


(265,120
)


160,943










Loss before provision for income taxes


(1,810,675
)


(1,497,479
)









Provision for income taxes


-



507










Net loss

$
(1,810,675
)

$
(1,497,986
)









Net loss per share attributable to common stockholders:








Basic

$
(0.24
)

$
(0.30
)
Diluted

$
(0.24
)

$
(0.30
)
Weighted average common shares outstanding








Basic


7,617,834



5,075,444

Diluted


7,617,834



5,075,444

Kidpik Corp.
Condensed Interim Statements of Cash Flows
(Unaudited)









13 Weeks Ended



April 2, 2022


April 3, 2021

Cash flows from operating activities

















Net loss

$
(1,810,675
)

$
(1,497,986
)
Adjustments to reconcile net loss to net cash used in operating activities:








Depreciation and amortization


5,665



9,721

Amortization of debt issuance costs


-



44,086

Equity-based compensation


617,164



-

Bad debt expense


93,142



131,788

Changes in operating assets and liabilities:








Accounts receivable


66,171



(39,624
)
Inventory


(650,649
)


(1,718,654
)
Prepaid expenses and other current assets


81,608



(7,746
)
Operating lease right-of-use assets and liabilities


1,896



-

Accounts payable


28,282



297,772

Accounts payable, related parties


(194,142
)


134,649

Accrued expenses and other current liabilities


(472,125
)


(41,150
)









Net cash flows used in operating activities


(2,233,663
)


(2,687,144
)









Cash flows from investing activities








Purchases of leasehold improvements and equipment


(17,018
)


-

Net cash used in investing activities


(17,018
)


-

Cash flows from financing activities








Net proceeds from line of credit


-



99,128

Net proceeds (repayments) from advance payable


(735,126
)


415,233

Proceeds from loan payable


-



2,100,000

Net cash provided by (used in) financing activities


(735,126
)


2,614,361

Net decrease in cash and restricted cash


(2,985,807
)


(72,783
)









Cash and restricted cash, beginning of period


8,420,500



685,297

Cash and restricted cash, end of period

$
5,434,693


$
612,514










Reconciliation of cash and restricted cash:








Cash

$
5,430,075


$
132,079

Restricted cash


4,618



480,435



$
5,434,693


$
612,514

Supplemental disclosure of cash flow data:








Interest paid

$
3,890


$
133,141

Taxes paid

$
-


$
507

Supplemental disclosure of non-cash flow data:








Record right-of-use asset and operating lease liabilities

$
418,951


$
-

SUPPLEMENTAL INFORMATION- RESULTS OF OPERATIONS

The Company’s revenue, net is disaggregated based on the following categories:



April 2, 2022


April 3, 2021

Revenue by channel








Subscription boxes

$
3,483,851


$
4,584,612

Amazon sales


549,500



608,250

Online website sales


292,646



127,671

Total revenue

$
4,325,997


$
5,320,533

Gross Margin

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, returned from customers, inventory write-offs, and other miscellaneous shrinkage.



For the 13 weeks ended



April 2, 2022


April 3, 2021










Gross margin


59.9
%


60.9
%

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 2, 2022

April 3, 2021

Shipped Items

371

543

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 2, 2022


April 3, 2021










Average Shipment Keep Rate


70.4
%


67.7
%

Revenue by Channel



13 weeks ended April 2, 2022


13 weeks ended April 3, 2021


Change ($)


Change (%)

Revenue by channel
















Subscription boxes

$
3,483,851


$
4,584,612


$
(1,100,761
)


(24.0
)%
Amazon sales


549,500



608,250



(58,750
)


(9.7
)%
Online website sales


292,646



127,671



164,975



129.2
%
Total revenue

$
4,325,997


$
5,320,533


$
(994,536
)


(18.7
)%

Subscription Boxes Revenue



13 weeks ended April 2, 2022


13 weeks ended April 3, 2021


Change ($)


Change (%)

Subscription boxes revenue from
















Active subscriptions – recurring boxes

$
3,136,569


$
3,733,722


$
(597,153
)


(16.0
)%
New subscriptions - first box


347,282



850,890



(503,608
)


(59.2
)%
Total subscription boxes revenue

$
3,483,851


$
4,584,612


$
(1,100,761
)


(24.0
)%

Revenue by Product Line



13 weeks ended April 2, 2022


13 weeks ended April 3, 2021


Change ($)


Change (%)

Revenue by product line
















Girls’ apparel

$
3,256,893


$
4,182,652


$
(925,761
)


(22.1
)%
Boys’ apparel


867,794



1,130,474



(262,680
)


(23.2
)%
Toddlers’ apparel


201,310



7,407



193,903



2,618
%
Total revenue

$
4,325,997


$
5,320,533


$
(994,536
)


(18.7
)%

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 measures 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.

Adjusted 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 2, 2022


April 3, 2021

Net loss

$
(1,810,675
)

$
(1,497,986
)
Add (deduct):








Interest expense


21,674



160,627

Other (income) expense, net


(286,794
)


316

Provision for income taxes


-



507

Depreciation and amortization


5,665



9,721

Equity-based compensation


617,164



-










Adjusted EBITDA

$
(1,452,966
)

$
(1,326,815
)

View source version on businesswire.com: https://www.businesswire.com/news/home/20220516005876/en/

Investor Relations:
ir@kidpik.com

Media:
Sarah Tropeano
press@kidpik.com
(212) 399-2784

Company Name:	Kidpik Corp.
Stock Symbol:	PIK
Market:	NASDAQ
Website:	kidpik.com

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