Lulus Fashion Lounge Holdings Inc
For the period ended Jun 30, 2024. Filed Aug 14, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 14, 2024
LVLU$10.58+1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-08.
0001558370-24-007341
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001558370-24-012225
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 102 previous paragraphs and 121 current paragraphs.
71 unchanged; 23 reworded; 23 added; 8 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 16 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
During the thirteen and twenty-six weeks ended June 30, 2024, we incurred net losses of $10.8 million and $16.5 million, respectively. Despite the net losses, we generated net cash provided from operating activities of $3.7 million and $10.6 million, for the thirteen and twenty-six weeks ended June 30, 2024, respectively.
Current report
For the next twelve months, we will continue to take certain cost reduction and cash conservation measures, including adjustments to marketing and other variable and capital spend to meet our obligations and work to secure additional debt
Current report
financing as needed. As the ability to raise additional debt financing is outside of our control, we cannot conclude that our plans will be effectively implemented within twelve months from the date the condensed consolidated financial statements are issued. Accordingly, we have concluded that these plans do not alleviate substantial doubt about our ability to continue as a going concern. The condensed consolidated financial statements do not reflect any adjustments relating to the outcome of this uncertainty.
Current report
Provision for Income Taxes
Current report
We regularly assess the realizability of deferred tax assets and record a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. In assessing the realizability of our deferred tax assets, we weigh all available positive and negative evidence. This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income. Due to the weight of objectively verifiable negative evidence, we established a valuation allowance of $5.4 million against certain federal and state deferred tax assets during the thirteen weeks ended June 30, 2024. This was comprised of a valuation allowance of $5.7 million for the net deferred tax assets as of December 31, 2023 and an adjustment of $0.3 million for the twenty-six week period through June 30, 2024. The significant piece of objectively verifiable negative evidence evaluated was the recent cumulative losses. Our ability to use our deferred tax assets depends on the amount of taxable income in future periods.
Current report
Gross Profit
Current report
Selling and marketing expenses increased in the thirteen weeks ended June 30, 2024 by $0.2 million, or 1%, compared to the thirteen weeks ended July 2, 2023, primarily due to higher brand marketing spend as we invested more in brand awareness.
Current report
General and administrative expenses decreased by $3.0 million in the thirteen weeks ended June 30, 2024, or 12%, compared to the thirteen weeks ended July 2, 2023. The decrease was primarily due to a $1.3 million decrease in variable labor and benefits associated with lower sales volume and operational efficiencies, and a $2.1 million decrease related to equity-based awards, along with a $0.6 million decrease in D&O liability insurance and legal and professional fees. This was partially offset by a $0.4 million increase in non-routine items accruals, a $0.5 million increase in software, travel fixed labor, depreciation and amortization, and a $0.1 million increase in rent expense predominately due to our Melrose store.
Current report
Income Tax Provision
Current report
Our income tax provision in the thirteen weeks ended June 30, 2024 increased by $5.4 million, to $6.3 million compared to a provision of $0.9 million in the thirteen weeks ended July 2, 2023. The increase was primarily due to the valuation allowance tax expense that was recorded against federal and state deferred tax assets.
Current report
Comparisons for the Twenty-Six Weeks Ended June 30, 2024 and July 2, 2023
Current report
Net Revenue
Current report
Cost of Revenue
Current report
Cost of revenue decreased in the twenty-six weeks ended June 30, 2024 by $17.0 million, or 15%, compared to the twenty-six weeks ended July 2, 2023, which was primarily driven by the impact of lower net revenue.
Current report
Gross Profit
Current report
Gross profit decreased in thetwenty-sixweeks ended June 30, 2024 by $10.8 million, or 13% compared to thetwenty-six weeks ended July 2, 2023, which was primarily driven by the impact of the lower volume of sales.
Current report
General and Administrative Expenses
Current report
Interest expense decreased in the twenty-six weeks ended June 30, 2024 by $0.3 million, or 31%, compared to the twenty-six weeks ended July 2, 2023. The decrease is attributable to lower average borrowings, partially offset by higher interest rates driving increased interest expense and unused fees related to the 2021 Revolving Facility.
Current report
Income Tax Provision
Current report
Our income tax provision in the twenty-six weeks ended June 30, 2024 increased by $5.6 million to $5.8 million, compared to a provision of $0.2 million in the twenty-six weeks ended July 2, 2023. The increase was primarily due to the valuation allowance tax expense that was recorded against federal and state deferred tax assets.
Current report
As of June 30, 2024, we had cash and cash equivalents of $1.8 million. We will continue to take certain cost reduction and cash conservation measures, including adjustments to marketing and other variable and capital spend to meet our obligations as needed. As the ability to raise additional debt financing is outside of our control, we cannot conclude that our plans will be effectively implemented within twelve months from the date the condensed consolidated financial statements are issued. Accordingly, we have concluded that these plans do not alleviate substantial doubt about our ability to continue as a going concern. The condensed consolidated financial statements do not reflect any adjustments relating to the outcome of this uncertainty. Actual results of operations will depend on numerous factors, many of which are beyond our control, as further discussed in Part I, Item 1A, “Risk Factors” included in our 2023 10-K and risk factors set forth in Part II of this Quarterly Report on Form 10-Q.
Current report
Repurchases Pursuant to the 2024 Repurchase Program
Current report
On May 3, 2024, the Company's Board of Directors authorized a stock repurchase program to repurchase up to $2.5 million of our common stock (the “2024 Repurchase Program”). The actual timing, number, and value of shares repurchased in the future will be determined by the Company in its discretion and will depend on a number of factors, including market conditions, applicable legal requirements, our capital needs, and whether there is a better alternative use of capital. Repurchases will be funded from the Company’s existing cash and cash equivalents, or future cash flow. The 2024 Repurchase Program may be modified, suspended, or terminated at any time. During the thirteen and twenty-six weeks ended June 30, 2024, the Company repurchased 47,850 shares of common stock in open market transactions pursuant to a 10b5-1 purchase plan entered into by the Company. As of June 30, 2024, the Company had $2.4 million available under the 2024 Repurchase Program authorization. For further information on the 2024 Repurchase Program, see Note 2, Significant Accounting Policies.
Removed paragraphs (8)
Previous report
Our business has largely recovered from the significant impacts stemming from the COVID-19 pandemic that reduced demand for our product and disrupted the supply chain during 2020 and 2021. For additional discussion of risks related to the COVID-19 pandemic see“Risk Factors—Risks Related to our Business— A global health emergency or epidemics or pandemics like resurgence of COVID-19 and post COVID-19 pandemic environment could have a material adverse effect on our business, and it remains uncertain how they will impact our supply chain and consumer demand for our products” in Item 1, Part 1A of the 2023 10-K.
Previous report
We are evaluating sources of debt financing. However, we believe the cash on hand and cash provided by operations in conjunction with certain cash conservation measures to be taken as necessary, including adjustments to marketing and other variable and capital spend, will enable us to meet our obligations as they become due within one year. The condensed consolidated financial statements do not reflect any adjustments relating to the outcome of this uncertainty.
Previous report
Interest Expense
Previous report
Income Tax Benefit
Previous report
Interest Expense
Previous report
Income Tax Benefit
Previous report
Income tax benefit in the thirteen weeks ended March 31, 2024 decreased by $0.1 million to a benefit of $0.6 million, compared to a benefit of $0.7 million in the thirteen weeks ended April 2, 2023.
Previous report
As of March 31, 2024, we had cash and cash equivalents of $5.4 million. We believe that our cash and cash equivalents, cash flows from operations and the available borrowings under our Revolving Facility, will be sufficient to meet our capital expenditures, working capital needs and debt repayments for at least the next 12 months from the date of this Quarterly Report on Form 10-Q. However, we cannot ensure that our business will generate sufficient cash flow from operating activities or that future borrowings will be available under our borrowing agreements in amounts sufficient to pay indebtedness or fund other working capital needs. Actual results of operations will depend on numerous factors, many of which are beyond our control, as further discussed in Part I, Item 1A, “Risk Factors” included in our 2023 10-K.
Reworded paragraphs (23)
Previous wording
Changing macroeconomic factors, including inflation, interest rates, and overall consumer confidence with respect to current and future economic conditions, have directly impacted our sales in the first three months of 2024 as discretionary consumer spending levels and shopping behavior fluctuate with these factors. During the first three months of 2024, we have responded to these factors by taking appropriate pricing, promotional and other actions to stimulate customer demand. These factors are expected to continue to have an impact on our business, results of operations, our growth and financial condition.
Current wording
Changing macroeconomic factors, including inflation, interest rates, and overall consumer confidence with respect to current and future economic conditions, have directly impacted our sales in the first six months of 2024 as discretionary consumer spending levels and shopping behavior fluctuate with these factors. During the first six months of 2024, we have responded to these factors by taking appropriate pricing, promotional and other actions to stimulate customer demand. These factors are expected to continue to have an impact on our business, results of operations, our growth and financial condition.
Previous wording
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of March 31, 2024, we had total cash and cash equivalents of $5.5 million and amounts due under the revolving line of credit of $6.0 million.
Current wording
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. During the thirteen and twenty-six weeks ended June 30, 2024, we incurred net losses of $10.8 million and $16.5 million, respectively.
Previous wording
In November 2021, we entered into a Credit Agreement to provide the Revolving Facility that provides for borrowings up to $50.0 million. The credit agreement contains various financial covenants and matures on November 15, 2024 as described in Note 5,Debt.
Current wording
In November 2021, we entered into a Credit Agreement (the “2021 Credit Agreement”) with Bank of America to provide a Revolving Facility (the “2021 Revolving Facility”) that provided for borrowings up to $50.0 million. The 2021 Credit Agreement contained various financial covenants and had a maturity date of November 15, 2024 as described in Note 5,Debt. As of June 30, 2024, we had total cash and cash equivalents of $1.8 million and no amounts due under the 2021 Revolving Facility. On July 22, 2024, we entered into an amendment to the 2021 Credit Agreement (the “2024 Amended Credit Agreement”) as described in Note 13, Subsequent Events.
Previous wording
Adjusted EBITDA is a non-GAAP financial measure that we calculate as loss before interest expense, income taxes, depreciation and amortization and adjusted to exclude the effects of equity-based compensation expense. Adjusted EBITDA is a key measure used by management to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.
Current wording
Adjusted EBITDA is a non-GAAP financial measure that we calculate as net loss before interest expense, income taxes, depreciation and amortization adjusted to exclude the effects of equity-based compensation expense and other non-routine expenses. Adjusted EBITDA is a key measure used by management to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.
Previous wording
Due to these limitations, Adjusted EBITDA and Adjusted EBITDA Margin should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP measures only supplementally. As noted in the table below, Adjusted EBITDA includes adjustments to exclude the impact of depreciation and amortization, interest expense, income taxes, and equity-based compensation expense. It is reasonable to expect that some of these items will occur in future periods. However, we believe these adjustments are appropriate because the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our business and may complicate comparisons of our internal results of operations and results of operations of other companies over time. In addition, Adjusted EBITDA includes adjustments for other items that we do not expect to regularly record. Each of the normal recurring adjustments and other adjustments described in this paragraph and in the following reconciliation table help management with a measure of our core operating performance over time by removing items that are not related to day-to-day operations. Adjusted EBITDA Margin is a non-GAAP financial measure that we calculate as Adjusted EBITDA (as defined above) as a percentage of our net revenue.
Current wording
primarily on our GAAP results and using these non-GAAP measures only supplementally. As noted in the table below, Adjusted EBITDA includes adjustments to exclude the impact of depreciation and amortization, interest expense, income taxes, equity-based compensation expense and other non-routine expenses. It is reasonable to expect that some of these items will occur in future periods. However, we believe these adjustments are appropriate because the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our business and may complicate comparisons of our internal results of operations and results of operations of other companies over time. In addition, Adjusted EBITDA includes adjustments for other items that we do not expect to regularly record. Each of the normal recurring adjustments and other adjustments described in this paragraph and in the following reconciliation table help management with a measure of our core operating performance over time by removing items that are not related to day-to-day operations. Adjusted EBITDA Margin is a non-GAAP financial measure that we calculate as Adjusted EBITDA (as defined above) as a percentage of our net revenue.
Previous wording
A reconciliation to non-GAAP Free Cash Flow from net cash provided by operating activities for the thirteen weeks ended March 31, 2024 and April 2, 2023 is as follows:
Current wording
A reconciliation to non-GAAP Free Cash Flow from net cash provided by operating activities for the thirteen and twenty-six weeks ended June 30, 2024 and July 2, 2023 is as follows:
Previous wording
Our continued success depends in part on our ability to retain and drive repeat purchases from our existing customers. We monitor retention across our entire customer base. Our goal is to attract and convert visitors into Active Customers and foster relationships that drive repeat purchases. During the trailing 12 months ended March 31, 2024, we served 2.8 million Active Customers compared to 3.2 million for the trailing 12 months ended April 2, 2023.
Current wording
Our continued success depends in part on our ability to retain and drive repeat purchases from our existing customers. We monitor retention across our entire customer base. Our goal is to attract and convert visitors into Active Customers and foster relationships that drive repeat purchases. During the trailing 12 months ended June 30, 2024, we served 2.7 million Active Customers compared to 3.1 million for the trailing 12 months ended July 2, 2023.
Previous wording
We will continue to invest in our operations and infrastructure to facilitate further growth of our business. While we expect our expenses to increase accordingly, we will harness the strength of our existing platform and our on-trend fashion expertise to make informed investment decisions. We intend to invest in headcount, inventory, fulfillment, logistics, and our software and data capabilities in order to improve our platform, expand into international markets, and drive operational efficiencies. We cannot guarantee that increased spending on these investments will be cost effective or result in future growth in our customer base. However, we set a high bar for approval of any capital spending initiative. We believe that our disciplined approach to capital spending will enable us to generate positive returns on our investments over the long term.
Current wording
We will continue to invest in our operations and infrastructure to facilitate further operational efficiencies and growth of our business, while managing expenses to align with our net revenue expectations and goals to return to profitability. We will continue to set a high bar for any new investments or capital spending initiatives as we believe that a disciplined approach to capital spending will enable us to generate positive returns on our investments over the long term.
Previous wording
The benefit for income taxes represents federal, state, and local income taxes. The effective rate differs from the statutory rate primarily due to non-deductible equity-based compensation expenses, non-deductible officer compensation, and state taxes. Our effective tax rate will change from quarter to quarter based on recurring and nonrecurring factors including, but not limited to, the geographical mix of earnings, enacted tax legislation, state and local income taxes, the impact of permanent tax adjustments, and the interaction of various tax strategies.
Current wording
The provision for income taxes represents federal, state, and local income taxes. The effective rate differs from the statutory rate primarily due tothe establishment of valuation allowance as the Company could not provide sufficient positive evidence that the deferred taxes will be more-likely-than-not realized in the future. Our effective tax rate will change from quarter to quarter based on recurring and nonrecurring factors including, but not limited to, the geographical mix of earnings, enacted tax legislation, state and local income taxes, the impact of permanent tax adjustments, tax audit settlements, and the interaction of various tax strategies.
Previous wording
Net revenue decreased in the thirteen weeks ended March 31, 2024 by $13.7 million, or 15%, compared to the thirteen weeks ended April 2, 2023. The decrease is primarily the result of a 17% decrease in Total Orders Placed, as well as higher return rates, partially offset by higher AOV compared to the thirteen weeks ended April 2, 2023.
Current wording
Net revenue decreased in the thirteen weeks ended June 30, 2024 by $14.2 million, or 13%, compared to the thirteen weeks ended July 2, 2023. The decrease is primarily the result of a 14% decrease in Total Orders Placed, as well as higher return rates, partially offset by higher AOV compared to the thirteen weeks ended July 2, 2023.
Previous wording
Cost of revenue decreased in the thirteen weeks ended March 31, 2024 compared to the same period of the prior year by $8.4 million, or 16%, compared to the same period last year, which was primarily driven by the impact of lower net revenue.
Current wording
Cost of revenue decreased in the thirteen weeks ended June 30, 2024 by $8.6 million, or 15% compared to the same period of the prior year, which was primarily driven by the impact of lower net revenue.
Previous wording
Impact of the COVID-19 Pandemic
Current wording
Gross profit decreased in the thirteen weeks ended June 30, 2024 by $5.5 million, or 12% compared to the same period of the prior year which was primarily driven by the impact of the lower volume of sales.
Previous wording
Interest expense decreased in the thirteen weeks ended March 31, 2024 by $0.1 million, or 27%, compared to the thirteen weeks ended April 2, 2023. The decrease is attributable to lower average borrowings related to the Revolving Facility.
Current wording
Interest expense decreased in the thirteen weeks ended June 30, 2024 by $0.2 million, or 37%, compared to the thirteen weeks ended July 2, 2023. The decrease is attributable to lower average borrowings, offset by higher interest rates driving increased interest expense and unused fees related to the 2021 Revolving Facility.
Previous wording
Selling and marketing expenses decreased in the thirteen weeks ended March 31, 2024 by $1.8 million, or 9%, compared to the thirteen weeks ended April 2, 2023 due to lower marketing spend and favorability in merchant processing fees due to the lower sales volume.
Current wording
Selling and marketing expenses decreased in the twenty-six weeks ended June 30, 2024 by $1.6 million, or 4%, compared to the twenty-six weeks ended July 2, 2023 due to lower performance marketing spend and favorability in merchant processing fees due to the lower sales volume, partially offset by higher brand marketing spend as we invested more in brand awareness.
Previous wording
General and administrative expenses decreased by $3.2 million in the thirteen weeks ended March 31, 2024, or 13%, compared to the thirteen weeks ended April 2, 2023. The decrease was primarily due to $2.8 million decrease in stock based compensation expense and a decrease of $0.8 million in variable labor and benefits associated with lower sales volume and operational efficiencies. This was partially offset by an increase in fixed labor and benefits.
Current wording
General and administrative expenses decreased by $6.2 million in the twenty-six weeks ended June 30, 2024, or 13%, compared to the twenty-six weeks ended July 2, 2023. The decrease was primarily due to a $4.9 million decrease in equity based compensation expense, a $2.1 million decrease in variable labor and benefits costs primarily associated with lower sales volume and operational efficiencies, and a $0.6 million decrease in D&O insurance costs, partially offset by $0.5 million higher fixed labor costs, a $0.4 million increase in non-routine items accruals, a $0.3 million increase in depreciation and amortization and a $0.2 million increase in software expenses.
Previous wording
We experience moderate seasonal fluctuations in aggregate sales volume during the year. Seasonality in our business does not follow that of traditional retailers, such as a typical concentration of revenue in the holiday quarter. In 2023, consistent with most years, our net revenue was the highest during the second quarter due to the typically higher demand for event dresses in the spring and summer. Net revenue was the lowest during the fourth quarter given we are not a holiday gifting destination and event dress demand is typically lower during that time of year. The seasonality of our business has resulted in variability in our total net revenue quarter-to-quarter. We believe that this seasonality has affected and will continue to affect our results of operations.
Current wording
We experience moderate seasonal fluctuations in aggregate sales volume during the year. Seasonality in our business does not follow that of traditional retailers, such as a typical concentration of revenue in the holiday quarter. Our net revenue is typically highest in the second and third quarters due to the highest demand for event dresses in the spring and summer. Net revenue is typically the lowest in the first and fourth quarters when event dresses are less in demand. The seasonality of our business has resulted in variability in our total net revenue quarter-to-quarter. We believe that this seasonality has affected and will continue to affect our results of operations.
Previous wording
Our primary sources of liquidity and capital resources are cash generated from operating activities and borrowings under our Revolving Facility. Our primary requirements for liquidity and capital are inventory purchases, payroll and general operating expenses, capital expenditures associated with distribution, network expansion and capitalized software and debt service requirements.
Current wording
Our primary sources of liquidity and capital resources are cash generated from operating activities and borrowings under our 2021 Revolving Facility, as amended by the 2024 Amended Credit Agreement**.** Our primary requirements for liquidity and capital are inventory purchases, payroll and general operating expenses, capital expenditures associated with distribution, network expansion and capitalized software and debt service requirements.
Previous wording
During November 2021, we entered into the 2021 Credit Agreement with Bank of America to provide a revolving facility that provides for borrowings up to $50.0 million. During the term of the 2021 Credit Agreement, we may increase the aggregate amount of the 2021 Revolving Facility up to an additional $25.0 million (for maximum aggregate lender commitments of up to $75.0 million), subject to the satisfaction of certain conditions under the 2021 Credit Agreement, including obtaining the consent of the administrative agent and an increased commitment from existing or new lenders. In addition, the 2021 Credit Agreement may be used to issue letters of credit up to $7.5 million. During the thirteen weeks ended March 31, 2024, the Company borrowed $10.0 million under the 2021 Revolving Facility and repaid $12.0 million of the outstanding balance. The 2021 Revolving Facility matures on November 15, 2024, while the Letter of Credit matures on November 8, 2024. As of March 31, 2024, we had $6.0 million outstanding under the 2021 Revolving Facility and had utilized $0.3 million under the Letter of Credit. Subject to the satisfaction of certain conditions under the 2021 Credit Agreement, as of March 31, 2024, the Company had $43.7 million available for borrowing under the 2021 Revolving Facility and $7.2 million available to issue letters of credit. For further information on the 2021 Credit Agreement and Revolving Facility, see Note 5,Debt.
Current wording
On November 15, 2021, we entered into the 2021 Credit Agreement with Bank of America to provide the 2021 Revolving Facility that provided for borrowings up to $50.0 million. During the twenty-six weeks ended June 30, 2024, we borrowed $20.0 million under the 2021 Revolving Facility and repaid $28.0 million of the outstanding balance. As of June 30, 2024, we had $0.3 million outstanding under the Letter of Credit. Subject to the satisfaction of certain conditions under the 2021 Credit Agreement, as of June 30, 2024, we had $49.7 million available for borrowing under the 2021 Revolving Facility and $7.2 million available to issue letters of credit. For further information on the 2021 Credit Agreement and Revolving Facility, see Note 5,Debt.
Previous wording
The 2021 Revolving Facility matures on November 15, 2024, and borrowings thereunder will accrue interest at a rate equal to, at our option, either (x) the term SOFR rate, plus the applicable SOFR adjustment plus a margin of 1.75% per annum or (y) the base rate plus a margin of 0.75% (with the base rate being the highest of the federal funds rate plus 0.50%, the prime rate and term SOFR for a period of one month plus 1.00%). The 2021 Revolving Facility contains a financial maintenance covenant requiring a maximum total leverage ratio of no more than 2.50:1.00, stepping down to 2.00:1.00 after 18 months. A commitment fee of 37.5 basis points will be assessed on unused commitments under the 2021 Revolving Facility.
Current wording
The 2021 Revolving Facility had a maturity date of November 15, 2024, and borrowings thereunder accrued interest at a rate equal to, at our option, either (x) the term SOFR rate, plus the applicable SOFR adjustment plus a margin of 1.75% per annum or (y) the base rate plus a margin of 0.75% (with the base rate being the highest of the federal funds rate plus 0.50%, the prime rate and term SOFR for a period of one month plus 1.00%). The 2021 Revolving Facility contained a financial maintenance covenant requiring a maximum total leverage ratio of no more than 2.50:1.00, stepping down to 2.00:1.00 after 18 months. A commitment fee of 37.5 basis points was assessed on unused commitments under the 2021 Revolving Facility.
Previous wording
During the thirteen weeks ended March 31, 2024, net cash provided by operating activities increased by $3.2 million, as compared to the same period in 2023. The increase was largely due to a $2.8 million reduction in inventory purchases due to lower sales and efficient inventory management, $2.5 million increase related to accrued expenses and other current liabilities mainly due to an increase in accrued inventory due to normal inventory builds ahead of our peak sales season, increase in return reserve due to a higher mix of product categories with higher return rates, and a timing related increase in accrued marketing. There was also a $1.6 million reduction in accounts receivable and a $0.9 million decrease related to assets for recovery, both attributed to lower sales, and $0.4 million timing-related decrease in prepaids and other current assets. This was partially offset by an increase of $0.5 million in net loss after adjusting for non-cash items, a decrease of $2.2 million in accounts payable primarily related to the timing of payments related to our credit card payables, an increase of $1.8 million in income taxes refund receivable, $0.4 million decrease related to other current liabilities and a $0.1 million decrease related to operating lease liabilities.
Current wording
During the twenty-six weeks ended June 30, 2024, net cash provided by operating activities increased by $2.2 million, as compared to the same period in 2023. The increase was largely due to a $10.5 million increase related to accrued expenses and other current liabilities mainly due to timing-related increases in accrued inventory of $5.2 million and accrued marketing of $2.4 million, a $1.7 million increase due to a non-routine legal reserve accrual, and a $1.4 million increase in miscellaneous accruals. There was also a $1.7 million increase related to other current liabilities, $0.8 million reduction in inventory purchases and a $0.4 million decrease related to assets for recovery, both of which were attributed to lower sales, as well as a $0.1 million timing-related decrease in prepaids and other current assets. This was partially offset by an increase of $7.2 million in our net loss after adjusting for non-cash items, an increase of $1.8 million in income taxes refund receivable, an increase of $1.0 million in accounts receivable, a decrease of $1.0 million in accounts payable primarily related to the timing of payments related to our credit card payables and a $0.3 million decrease related to operating lease liabilities.
Previous wording
During the thirteen weeks ended March 31, 2024, as compared to the same period in 2023, net cash used in investing activities decreased by $0.1 million. This was attributable to $0.2 million less invested in capitalized software development costs and $0.1 million higher capital expenditures for furniture, leasehold improvements, equipment, and construction in progress for our general operations.
Current wording
During the twenty-six weeks ended June 30, 2024, as compared to the same period in 2023, net cash used in investing activities decreased by $0.2 million. This was attributable to $0.3 million less invested in capitalized software development costs and $0.1 million higher capital expenditures for furniture, leasehold improvements, equipment, and construction in progress for our general operations.
Previous wording
During the thirteen weeks ended March 31, 2024, net cash used in financing activities decreased by $2.0 million compared to the same period in 2023. The decrease was primarily due to $8.0 million higher borrowings on our 2021 Revolving Facility which was offset by $5.0 million higher repayment on our 2021 Revolving Facility, $0.5 million increase of finance lease payments primarily attributed to new finance leases for distribution center equipment, $0.4 million increase in withholding tax payments related to vesting of RSUs and $0.1 million decrease in proceeds received from issuance of common stock under our ESPP.
Current wording
During the twenty-six weeks ended June 30, 2024, net cash used in financing activities decreased by $1.2 million compared to the same period in 2023. The decrease was primarily due to higher net borrowings of $2.0 million on our 2021 Revolving Facility, $0.4 million increase in finance lease payments primarily attributed to leased equipment for our distribution facilities, $0.2 million increase in withheld tax payments related to vesting of RSUs, $0.1 million decrease in proceeds received from issuance of common stock under our ESPP and $0.1 million increase related to the 2024 Repurchase Program.
Previous wording
There have been no other material changes to our contractual obligations and commitments as disclosed in our 2023 10-K.
Current wording
Other than the 2024 Amended Credit Agreement discussed in Note 13,Subsequent Events, there have been no other material changes to our contractual obligations and commitments as disclosed in our 2023 10-K.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Due to these limitations, Adjusted EBITDA and Adjusted EBITDA Margin should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying
Current report — wording carried from elsewhere
Net revenue decreased in the twenty-six weeks ended June 30, 2024 by $27.9 million, or 14%, compared to the twenty-six weeks ended July 2, 2023. The decrease is primarily the result of a 15% decrease in Total Orders Placed, as well as higher return rates, partially offset by higher AOV compared to thetwenty-six weeks ended July 2, 2023.
Current report — wording carried from elsewhere
On July 22, 2024, we entered into the 2024 Amended Credit Agreement as described in Note 13, Subsequent Events. The 2024 Amended Credit Agreement reduced the 2021 Revolving Facility to $15.0 million and further reduces the 2021 Revolving Facility to $10.0 million on March 31, 2025. During the term of the 2024 Amended Credit Agreement, we may increase the aggregate amount of the facility up to an additional $10.0 million, subject to the satisfaction of certain conditions under the 2024 Amended Credit Agreement, including obtaining the consent of the administrative agent and an increased commitment from existing or new lenders. In addition, the 2024 Amended Credit Agreement may be used to issue letters of credit up to $5.0 million.
Current report — wording carried from elsewhere
The 2024 Amended Credit Agreement provides for a nine month extension of the maturity date to August 15, 2025, and borrowings thereunder will accrue interest at a rate equal to, at our option, either (x) the term SOFR rate, plus the applicable SOFR adjustment plus a margin of 2.25% per annum (up from 1.75%) or (y) the base rate plus a margin of 1.25% (up from 0.75%). The 2024 Amended Credit Agreement contains a financial maintenance covenant requiring a maximum total leverage ratio of no more than 2.00:1.00 for fiscal quarters ending on or after June 30, 2023. The 2024 Amended Credit Agreement also provides for a Consolidated Fixed Charge Coverage Ratio commencing June 30, 2024, to be no less than 1.15:1.0. A commitment fee of 37.5 basis points will be assessed on unused commitments under the 2024 Amended Credit Agreement. Capitalized terms used without definition are as defined in the 2024 Amended Credit Agreement.