VANCOUVER, Aug. 10, 2017 /CNW/ - RYU Apparel Inc. (TSX
VENTURE: RYU & Frankfurt Stock Exchange: RYA) (the
"Company"), creator of urban athletic apparel, is pleased to
report its financial results for the six months ended June 30, 2017.
Revenue in the second quarter of 2017 was $641,231, 113% higher than revenue of
$300,773 during the same period in
2016. Now into its second year of operations, the RYU team is
encouraged with its sales record to date and a 46% gross profit for
the quarter.
In Canadian
dollars
|
Three months
ended
June
30,
(unaudited)
|
Six months
ended
June
30,
(unaudited)
|
2017
|
2016
|
2017
|
2016
|
Revenue
|
$641,231
|
$300,773
|
$1,108,234
|
$560,500
|
Gross
profit
|
$294,776
|
$139,185
|
$514,032
|
$274,179
|
Gross profit
%
|
46%
|
46%
|
46%
|
49%
|
Second quarter 2017 results included additional revenue from the
Company's new retail store locations in Downtown Vancouver and Park Royal South in West Vancouver whereas second quarter revenue
in 2016 was comprised primarily of sales from the Flagship retail
store and e-commerce sales.
During the six months ended June 30,
2017, the Company achieved the following milestones:
- RYU continues to show a balanced ratio of apparel sales between
men and women at 46% and 54% respectively. By identifying an
underserved gap in the industry for men, and developing the
Beautiful Tough™ brand positioning that's resonating with women,
RYU has achieved an enviable gender balance that is rare in the
industry.
- As an omni-channel retailer, RYU currently has 17% of revenue
from e-commerce with a target of reaching 30% by the end of
2018.
- RYU's retail store expansion plan is on target to have five
stores open by the end of 2017. The Company currently has three
stores in operation and two under construction. In addition to the
opening of Park Royal South on
March 28, 2017, management
anticipates that the third quarter 2017 will see the opening of its
first Toronto store on
Queen Street West, and its first
enclosed mall location at Metrotown in Vancouver.
|
|
|
|
|
Retail store
expansion plan
|
|
Square
Footage
|
|
Opening
Date
|
|
|
|
|
|
Existing
Stores
|
|
|
|
|
|
Vancouver – West
4th Avenue (Flagship)
|
|
3,200
|
|
November
2015
|
|
Vancouver – Thurlow
Street
|
|
1,100
|
|
November
2016
|
|
Vancouver – Park
Royal South
|
|
3,967
|
|
March 2017
|
|
|
|
|
|
New Stores
Under Construction
|
|
|
|
|
|
Vancouver –
Metrotown
|
|
2,002
|
|
Q3 2017
|
|
Toronto – Queen
Street West
|
|
2,220
|
|
Q3 2017
|
Second quarter summary:
- Second quarter revenue of $641,231 compared with $300,773 in the same period in fiscal 2016.
Revenue increased by 113% as it included sales from three versus
one retail store and growth in e-commerce sales from its improved
website that had higher visitor traffic than in early 2016.
- Second quarter revenue was adversely affected because of a
shortage on key stock items and sizes due to higher than
anticipated demand and after keeping inventory purchases to a
minimum in 2016. In the first and second quarter of 2017, RYU
started placing inventory deposits to fill the gaps, but deliveries
did not begin until the end of the second quarter and such
deliveries are expected to continue through the end of the third
quarter of 2017. As a result, closing inventory as at June 30, 2017 increased 61% to $1,716,330 from $1,067,560 at December 31,
2016, and inventory deposits increased 369% to $539,276 from $115,017.
- Second quarter gross profit of $294,776 compared with $139,185 in the same period in fiscal 2016, an
increase of 112%. Gross profit percentage of 46% was achieved in
both the second quarter of 2017 and 2016.
- Second quarter expenses of $2,475,870 compared with $2,245,903 in the same period in fiscal 2016. The
increase of 10% is primarily due to the expansion of our retail
operations from one to three stores.
- Second quarter comprehensive loss was $2,181,094 compared with $1,680,184 in the same period in fiscal 2016. The
loss was 30% higher due to the 2016 recovery of the warrant
derivative of $261,241, a non-cash
item, and the $165,283 gain on
settlement of debt recognized in the first quarter of 2016. Without
these outliers, comprehensive loss in the second quarter of 2017
and 2016 would have been $2,181,094
and $2,106,718 respectively. The
$74,377 (4%) increase is due to
higher retail store costs, the share based payments from the stock
option grant in February 2017 and
higher depreciation of leasehold improvements.
- The Company closed a non-brokered private placement, raising
gross proceeds of $2,252,841 on
June 22, 2017.
Year-to-date summary:
- Six month revenue of $1,108,234
compared with $560,500 in the same
period in fiscal 2016. Revenue increased by 98% as it included
sales from three versus one retail store and growth in e-commerce
sales from its improved website that had higher visitor traffic
than in early 2016. The Park Royal location opened March 2017.
- Six month revenue was adversely affected because of a shortage
on key stock items and sizes due to higher than anticipated demand
and after keeping inventory purchases to a minimum in 2016. In the
first and second quarter of 2017, RYU started placing inventory
deposits to fill the gaps, but deliveries did not begin until the
end of the second quarter and such deliveries are expected to
continue through the end of the third quarter of 2017. As a result,
closing inventory as at June 30, 2017
increased 61% to $1,716,330 from
$1,067,560 at December 31, 2016, and inventory deposits
increased 369% to $539,276 from
$115,017.
- Six month gross profit of $514,032 compared with $274,179 in the same period in fiscal 2016, an
increase of 87%. Gross profit percentage of 46% in the six months
ended June 30, 2017 was lower than
gross profit of 49% in 2016 due to the difference in the weighted
average cost of finished goods inventory and the amount of sales
discounts applied in each period.
- Six month expenses of $4,802,273
compared with $4,176,593 in the same
period in fiscal 2016. The increase of 15% is partially due to
depreciation, foreign currency fluctuations and share based
payments in relation to stock option grants. Without these three
items, expenses increased $286,541
(7%) during the comparative periods, aligned with the increase in
retail operations from one to three stores.
- Six month comprehensive loss was $4,280,537 compared with $2,420,290 in the same period in fiscal 2016. The
loss was 77% higher due to the 2016 recovery of the warrant
derivative of $1,267,504, a non-cash
item, and the $214,620 gain on
settlement of debt for two transactions that took place in 2016.
Without these outliers, comprehensive loss during the six months
ended June 30, 2017 and 2016 would
have been $4,288,241 and $3,902,414 respectively. The $385,827 (10%) increase is due to the additional
depreciation from the Thurlow and
Park Royal stores, the share based payments from the stock option
grant in February 2017 and foreign
currency fluctuations.
- The Company closed a short form prospectus offering, raising
gross proceeds of $3,734,441 on
February 2, 2017 and a non-brokered
private placement, raising gross proceeds of $2,252,841 on June 22,
2017.
For convenience, copies of the Company's unaudited condensed
consolidated interim statements of financial position,
comprehensive loss and cash flows for the periods discussed herein
are attached to this news release. Readers are encouraged to
review such statements in their entirety, including the notes
thereto, on SEDAR. Full details of the Company's financial
performance can be obtained by viewing the unaudited condensed
consolidated interim financial statements and corresponding
MD&A available on SEDAR.
For regular updates on RYU Apparel visit: http://ryu.com
About RYU
RYU Apparel Inc. is tailored innovation for
the urban athlete. An award winning athletic apparel and
accessories brand engineered for the fitness, training and
performance of the multi-discipline athlete. Designed without
compromise for comfort, style and durability, RYU exists to
facilitate human performance. For more information, visit:
http://ryu.com
On Behalf of the Board
RYU APPAREL INC.
"Marcello
Leone"
Marcello Leone,
CEO, President and Chairman of the Board
Tel: 604-235-2880
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
This news release contains forward-looking information that
involve various risks and uncertainties regarding future events.
Such forward-looking information can include without limitation
statements based on current expectations involving a number of
risks and uncertainties and are not guarantees of future
performance of the Company, such as statements that: (i) the
Company has a target of reaching 30% of revenue from e-commerce by
the end of 2017; (ii) the expansion plan is to have five stores
open by the end of 2017, and the intention to open the Toronto store on Queen
Street West and the Company's first enclosed mall location
in Metrotown within the third quarter of 2017; and (iii) deliveries
of inventory are expected to continue through the end of the third
quarter 2017. There are numerous risks and uncertainties that could
cause actual results and the Company's plans and objectives to
differ materially from those expressed in the forward-looking
information, including the ability of the company to finance
operations, the ability of the management team to execute on its
business plan, risks in the apparel industry in general, and delays
and risks associated with renovating and opening new store
locations. Actual results and future events could differ materially
from those anticipated in such information. These and all
subsequent written and oral forward-looking information are based
on estimates and opinions of management on the dates they are made
and are expressly qualified in their entirety by this notice.
Except as required by law, the Company does not intend to update
these forward-looking statements.
RYU APPAREL
INC.
|
CONDENSED
CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL
POSITION
|
(Expressed in
Canadian dollars)
|
As
at
|
|
|
|
|
|
|
June
30,
2017
(unaudited)
|
December
31,
2016
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
Cash
|
|
$
|
882,511
|
$
|
767,263
|
|
Accounts
receivable
|
|
98,367
|
82,297
|
|
Inventory
|
|
1,716,330
|
1,067,560
|
|
Prepaid expenses and
deposits
|
|
669,531
|
263,912
|
|
|
3,366,739
|
2,181,032
|
|
|
|
|
Non-current
|
|
|
|
|
Deposits
|
|
163,216
|
172,521
|
|
Property and
equipment
|
|
1,802,438
|
1,439,500
|
|
Intangible
assets
|
|
2,324
|
6,549
|
|
|
$
|
5,334,717
|
$
|
3,799,602
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
Accounts
payable
|
|
$
|
956,812
|
$
|
745,894
|
|
Accrued
liabilities
|
|
181,242
|
169,404
|
|
Current portion of
finance lease
|
|
14,417
|
14,779
|
|
Deferred
revenue
|
|
71,675
|
64,732
|
|
|
1,224,146
|
994,809
|
|
|
|
|
Non-current
|
|
|
|
|
Finance
lease
|
|
53,932
|
63,296
|
|
Derivative
liability
|
|
-
|
7,703
|
|
|
53,932
|
1,065,808
|
|
|
|
|
Equity
|
|
|
|
|
Share
capital
|
|
47,479,100
|
42,230,355
|
|
Equity
reserve
|
|
7,281,991
|
6,927,354
|
|
Deficit
|
|
(50,771,546)
|
(46,491,009)
|
|
Accumulated other
comprehensive income
|
|
67,094
|
67,094
|
|
|
4,056,639
|
2,733,794
|
|
|
$
|
5,334,717
|
$
|
3,799,602
|
RYU APPAREL
INC.
|
CONDENSED
CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS -
UNAUDITED
|
(Expressed in
Canadian dollars)
|
|
|
|
|
Three months
ended
June 30
|
Six months
ended
June 30
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
641,231
|
$
|
300,773
|
$
|
1,108,234
|
$
|
560,500
|
Cost of
sales
|
|
346,455
|
|
161,588
|
|
594,202
|
|
286,321
|
Gross
profit
|
|
294,776
|
|
139,185
|
|
514,032
|
|
274,179
|
|
|
46%
|
|
46%
|
|
46%
|
|
49%
|
Expenses
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
123,922
|
|
60,820
|
|
190,609
|
|
118,646
|
|
Foreign exchange loss
(gain)
|
|
7,539
|
|
16,479
|
|
33,514
|
|
(130,969)
|
|
Interest and bank
charges
|
|
6,151
|
|
46,556
|
|
36,317
|
|
107,213
|
|
Investor
relations
|
|
81,663
|
|
421,929
|
|
135,111
|
|
641,138
|
|
Office and
general
|
|
579,337
|
|
215,955
|
|
1,036,505
|
|
477,604
|
|
Product
creation
|
|
113,303
|
|
168,480
|
|
315,784
|
|
184,479
|
|
Professional fees
|
|
165,604
|
|
379,527
|
|
188,004
|
|
833,445
|
|
Salaries and
benefits
|
|
906,320
|
|
808,388
|
|
1,660,789
|
|
1,394,021
|
|
Selling and
marketing
|
|
374,578
|
|
11,913
|
|
859,622
|
|
363,049
|
|
Share-based
payments
|
|
52,686
|
|
90,590
|
|
255,768
|
|
153,074
|
|
Travel and
entertainment
|
|
64,767
|
|
25,266
|
|
90,249
|
|
34,893
|
|
|
(2,475,870)
|
|
(2,245,903)
|
|
(4,802,272)
|
|
(4,176,593)
|
|
|
|
|
|
|
|
|
|
Other
items
|
|
|
|
|
|
|
|
|
|
Gain on settlement of
debt
|
|
-
|
|
165,283
|
|
-
|
|
214,620
|
|
Recovery of
warrant derivative
liability
|
|
-
|
|
261,241
|
|
7,703
|
|
1,267,504
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss
|
$
|
(2,181,094)
|
$
|
(1,680,194)
|
$
|
(4,280,537)
|
$
|
(2,420,290)
|
|
|
|
|
|
|
|
|
|
Loss per share -
Basic and diluted
|
$
|
(0.01)
|
$
|
(0.02)
|
$
|
(0.02)
|
$
|
(0.03)
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common
|
|
|
|
|
|
|
|
|
shares outstanding
- basic and diluted
|
|
188,213,601
|
|
95,605,753
|
|
182,434,070
|
|
89,313,614
|
RYU APPAREL
INC.
|
CONDENSED
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS -
UNAUDITED
|
(Expressed in
Canadian dollars)
|
For the six months
ended June 30
|
|
|
|
|
|
|
|
|
|
|
2017
|
2016
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
Net loss
|
|
$
|
(4,280,537)
|
$
|
(2,420,290)
|
|
Items not affecting
cash:
|
|
|
|
|
|
Depreciation
|
|
190,609
|
118,646
|
|
|
Share-based
payments
|
|
255,768
|
153,074
|
|
|
Foreign
exchange
|
|
-
|
(69,299)
|
|
|
Accrued
interest
|
|
-
|
66,175
|
|
|
Gain on settlement of
debt
|
|
-
|
(214,620)
|
|
|
Recovery of warrant
derivative liability
|
|
(7,703)
|
(1,267,504)
|
|
|
|
|
|
Changes in non-cash
working capital
|
|
|
|
|
|
Accounts
receivable
|
|
(16,070)
|
144,202
|
|
|
Inventory
|
|
(648,770)
|
(31,792)
|
|
|
Prepaid expenses and
deposits
|
|
(396,314)
|
(239,326)
|
|
|
Accounts payable and
accrued liabilities
|
|
169,733
|
425,308
|
|
|
Deferred
revenue
|
|
6,943
|
9,418
|
|
|
|
|
|
Net cash flows used
in operating activities
|
|
(4,726,341)
|
(3,326,008)
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
Property and
equipment
|
|
(463,235)
|
(101,090)
|
|
|
|
|
|
Net cash flows used
in investing activities
|
|
(463,235)
|
(101,090)
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
Issuance of common
shares
|
|
5,987,282
|
3,848,760
|
|
|
Cash share issuance
costs
|
|
(683,949)
|
(148,412)
|
|
|
Short-term loans
received
|
|
154,000
|
709,050
|
|
|
Repayment of
short-term loans
|
|
(154,000)
|
(836,208)
|
|
|
Exercise of
warrants
|
|
8,800
|
-
|
|
|
Finance
lease
|
|
(7,309)
|
(7,981)
|
|
|
|
|
|
Net cash flows
provided by financing activities
|
|
5,304,824
|
3,565,209
|
|
|
|
|
Change in
cash
|
|
115,248
|
138,111
|
|
|
|
|
Cash –
beginning
|
|
767,263
|
104,518
|
|
|
|
|
Cash –
end
|
|
$
|
882,511
|
$
|
242,629
|
|
|
|
|
Cash paid for
interest
|
|
$
|
697
|
$
|
4,208
|
Supplemental cash
flow disclosure – non cash transactions
|
|
|
|
|
|
Additions of property
and equipment included in accounts payable
|
|
$
|
86,087
|
$
|
5,325
|
|
|
Common shares issued
for settlement of accounts payable
|
|
$
|
-
|
$
|
719,260
|
|
|
Common shares issued
for services
|
|
$
|
35,481
|
$
|
140,600
|
|
|
Finders' warrants
issued for share issuance costs
|
|
$
|
98,869
|
$
|
26,381
|
SOURCE RYU Apparel Inc.