VANCOUVER, Nov. 17, 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 nine months ended September 30, 2017.
Revenue in the third quarter of 2017 was $745,226 125% higher than revenue of $331,700 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 45% gross profit for the quarter.
|
Three months
ended
|
Nine months
ended
|
|
September
30,
|
September
30,
|
|
(unaudited)
|
(unaudited)
|
In Canadian
dollars
|
2017
|
2016
|
2017
|
2016
|
Revenue
|
$745,226
|
$331,700
|
$1,853,460
|
$892,199
|
Gross
profit
|
$338,789
|
$139,352
|
$852,821
|
$413,530
|
Gross profit
%
|
45%
|
42%
|
46%
|
46%
|
Third quarter 2017 results included additional revenue from the
Company's new retail store locations in Downtown Vancouver, Park Royal South in West Vancouver and Queen St. West in Toronto, whereas third quarter revenue in 2016
was comprised primarily of sales from the Flagship retail store and
e-commerce sales. The Queen St. West
location in Toronto was only open
for twelve days within the quarter.
During the nine months ended September
30, 2017, the Company achieved the following milestones:
- RYU partnered with netamorphosis, an award winning digital and
creative agency from New York
City, to facilitate and maximize RYU's digital and ecommerce
business across the United States
and globally. Work has begun to further accelerate and expand
e-commerce revenue and performance. High priority tasks will start
to deploy in the fourth quarter of 2017 and will continue into the
first half of 2018.
- RYU continues to show a balanced ratio of apparel sales between
men and women at 51% and 49% 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.
- RYU's retail store expansion plan is on target to have five
stores open by the end of 2017. The Company currently has four
stores in operation and one under construction. In addition to the
opening of Park Royal South on
March 28, 2017 and Queen St. West in Toronto on September
19, 2017, management anticipates that the fourth quarter
2017 will see the opening of its first enclosed mall location at
Metrotown in Vancouver.
- RYU secured its first USA
retail store location in Williamsburg, in the New York City borough of Brooklyn. The 2,800 square foot store in the
newly renovated heritage building on 76, North 4th St. will
perfectly connect RYU's urban aesthetic and appeal with
Williamsburg's style and
community. The store is scheduled to open during Q2 2018.
- Subsequent to quarter end, the Leone Family continued to
support the RYU brand by advancing $1,385,000 in unsecured, non-interest bearing
promissory notes. This is continued confidence by the Leone Family
for the vision of the brand.
Third quarter summary:
- Third quarter revenue of $745,226
compared with $331,700 in the same
period in fiscal 2016. Revenue increased by 125% 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. Our fourth retail store location at Queen
St. West location in Toronto was only open for twelve days within
the quarter.
- Third quarter gross profit of $338,789 compared with $139,352 in the same period in fiscal 2016, an
increase of 143%. Gross profit percentage of 45% was achieved in
the third quarter of 2017.
- Third quarter expenses of $2,705,913 compared with $1,791,632 in the same period in fiscal 2016. The
increase of 51% is primarily due to the expansion of our retail
operations from one to four stores.
- Third quarter comprehensive loss was $2,367,124 compared with $1,420,175 in the same period in fiscal 2016. The
loss was 67% higher due to the 2016 recovery of the warrant
derivative of $232,105, a non-cash
item. Without these outliers, comprehensive loss in the third
quarter of 2017 and 2016 would have been $2,367,124 and $1,652,280 respectively. The $714,844 (43%) increase is due to variances in
gross profit net of higher occupancy costs and depreciation from
running four retail stores versus one.
- The Company closed a short form prospectus offering, raising
gross proceeds of $3,737,500 on
July 25, 2017.
Year-to-date summary:
- Nine month revenue of $1,853,460
compared with $892,199 in the same
period in fiscal 2016. Revenue increased by 108% as it included
sales from three stores 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 and the Queen St. West location in Toronto opened September 19, 2017.
- Nine month revenue in 2017 was adversely affected following a
challenging period of approximately six months during which we
experienced shortages in styles and sizes and sold out of bags due
to popular demand. In 2017, we have dedicated significant resources
to produce innovative new product, place inventory deposits to fill
gaps, and restock our core items. Deliveries of our 2017 buy plan
began at the end of the second quarter of 2017 and are scheduled to
continue into the first quarter of 2018.
- Nine month gross profit of $852,821 compared with $413,530 in the same period in fiscal 2016, an
increase of 106%. Gross profit percentage of 46% in the nine months
ended September 30, 2017 was in line
with the comparative period in 2016.
- Nine month expenses of $7,508,185
compared with $5,968,224 in the same
period in fiscal 2016. The increase of 26% is due to the increase
in retail operations from one to four stores and the development of
our 2017 marketing strategy.
- Nine month comprehensive loss was $6,647,661 compared with $3,840,465 in the same period in fiscal 2016. The
loss was 73% higher due to the 2016 recovery of the warrant
derivative of $1,499,609, 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 nine months
ended September 30, 2017 and 2016
would have been $6,655,364 and
$5,554,694 respectively. The
$1,100,670 (20%) increase is mostly
due to the higher occupancy costs attached to running four versus
one retail stores, net of the additional gross profit
generated.
- The Company closed a short form prospectus offering, raising
gross proceeds of $3,734,441 on
February 2, 2017, a non-brokered
private placement, raising gross proceeds of $2,252,841 on June 22,
2017, and a short form prospectus offering, raising gross
proceeds of $3,737,500 on
July 25, 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
Respect Your Universe is an award winning urban athletic apparel
and accessories brand. Designed without compromise for fit,
comfort, 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
expansion plan is to have five stores open by the end of 2017, and
the intention to open the Company's first enclosed mall location in
Metrotown within the fourth quarter of 2017; (ii) the intention to
open its New York City location
during the second quarter of 2018; (iii) that high priority tasks
with netamorphosis will start to deploy in the fourth quarter of
2017 to accelerate and expand e-commerce revenue and performance
and will continue into the first half of 2018; and (iv) that
deliveries of inventory are expected to continue into the first
quarter of 2018. 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
|
|
|
|
|
|
|
September
30,
2017
(unaudited)
|
December
31,
2016
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
Cash
|
|
$
|
701,582
|
$
|
767,263
|
|
Accounts
receivable
|
|
98,383
|
82,297
|
|
Inventory
|
|
1,857,378
|
1,067,560
|
|
Prepaid expenses and
deposits
|
|
736,145
|
263,912
|
|
|
3,393,488
|
2,181,032
|
|
|
|
|
Non-current
|
|
|
|
|
Deposits
|
|
397,306
|
172,521
|
|
Property and
equipment
|
|
2,226,455
|
1,439,500
|
|
Intangible
assets
|
|
342
|
6,549
|
|
|
$
|
6,017,591
|
$
|
3,799,602
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
Accounts
payable
|
|
$
|
541,535
|
$
|
745,894
|
|
Accrued
liabilities
|
|
277,714
|
169,404
|
|
Current portion of
finance lease
|
|
13,930
|
14,779
|
|
Deferred
revenue
|
|
75,832
|
64,732
|
|
|
909,011
|
994,809
|
|
|
|
|
Non-current
|
|
|
|
|
Finance
lease
|
|
48,360
|
63,296
|
|
Derivative
liability
|
|
-
|
7,703
|
|
|
957,371
|
1,065,808
|
|
|
|
|
Equity
|
|
|
|
|
Share
capital
|
|
50,711,949
|
42,230,355
|
|
Equity
reserve
|
|
7,419,847
|
6,927,354
|
|
Deficit
|
|
(53,138,670)
|
(46,491,009)
|
|
Accumulated other
comprehensive income
|
|
67,094
|
67,094
|
|
|
5,060,220
|
2,733,794
|
|
|
$
|
6,017,591
|
$
|
3,799,602
|
RYU APPAREL
INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS -
UNAUDITED
(Expressed in Canadian dollars)
|
|
|
|
|
|
|
|
Three months
ended
September
30
|
|
Nine months
ended
September
30
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
745,226
|
|
$
|
331,700
|
|
$
|
1,853,460
|
|
$
|
892,199
|
Cost of
sales
|
|
406,437
|
|
|
192,348
|
|
|
1,000,639
|
|
|
478,669
|
Gross
profit
|
|
338,789
|
|
|
139,352
|
|
|
852,821
|
|
|
413,530
|
|
|
45%
|
|
|
42%
|
|
|
46%
|
|
|
46%
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
117,709
|
|
|
65,972
|
|
|
308,318
|
|
|
184,618
|
|
Foreign exchange loss
(gain)
|
|
(9,167)
|
|
|
37,333
|
|
|
24,347
|
|
|
(93,636)
|
|
Interest and bank
charges
|
|
20,859
|
|
|
38,293
|
|
|
57,176
|
|
|
145,506
|
|
Investor
relations
|
|
36,970
|
|
|
16,077
|
|
|
172,081
|
|
|
657,215
|
|
Office and
general
|
|
720,079
|
|
|
297,232
|
|
|
1,756,584
|
|
|
774,836
|
|
Product
creation
|
|
121,354
|
|
|
139,119
|
|
|
437,138
|
|
|
323,598
|
|
Professional
fees
|
|
164,178
|
|
|
158,005
|
|
|
352,182
|
|
|
991,450
|
|
Salaries and
benefits
|
|
1,030,507
|
|
|
638,951
|
|
|
2,691,296
|
|
|
2,032,972
|
|
Selling and
marketing
|
|
396,156
|
|
|
245,657
|
|
|
1,255,778
|
|
|
608,705
|
|
Share-based
payments
|
|
35,686
|
|
|
114,002
|
|
|
291,454
|
|
|
267,076
|
|
Travel and
entertainment
|
|
71,582
|
|
|
40,991
|
|
|
161,831
|
|
|
75,884
|
|
|
2,705,913
|
|
|
1,791,632
|
|
|
7,508,185
|
|
|
5,968,224
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
items
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on settlement of
debt
|
|
-
|
|
|
-
|
|
|
-
|
|
|
214,620
|
|
Recovery of
warrant
derivative liability
|
|
-
|
|
|
232,105
|
|
|
7,703
|
|
|
1,499,609
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss
|
$
|
(2,367,124)
|
|
$
|
(1,420,175)
|
|
$
|
(6,647,661)
|
|
$
|
(3,840,465)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share -
Basic and diluted
|
$
|
(0.01)
|
|
$
|
(0.01)
|
|
$
|
(0.03)
|
|
$
|
(0.04)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of
|
|
|
|
|
|
|
|
|
|
|
|
common shares
outstanding -
|
|
|
|
|
|
|
|
|
|
|
|
basic and
diluted
|
|
241,662,635
|
|
|
107,514,076
|
|
|
202,393,879
|
|
|
95,424,718
|
RYU APPAREL
INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS -
UNAUDITED
(Expressed in Canadian dollars)
For the nine months ended September 30
|
|
|
|
|
2017
|
2016
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
Net loss
|
$
|
(6,647,661)
|
$
|
(3,840,465)
|
|
Items not affecting
cash:
|
|
|
Depreciation
|
|
308,318
|
|
184,618
|
|
|
Share-based
payments
|
|
291,454
|
|
267,076
|
|
|
Foreign
exchange
|
|
-
|
|
(76,228)
|
|
|
Accrued
interest
|
|
-
|
|
95,698
|
|
|
Gain on settlement of
debt
|
|
-
|
|
214,620
|
|
|
Recovery of warrant
derivative liability
|
|
(7,703)
|
|
(1,499,609)
|
|
|
|
Changes in
non-cash working capital
|
|
|
Accounts
receivable
|
|
(16,086)
|
|
132,927
|
|
|
Inventory
|
|
(789,818)
|
|
62,298
|
|
|
Prepaid expenses and
deposits
|
|
(697,017)
|
|
(174,948)
|
|
|
Accounts payable and
accrued liabilities
|
|
(14,158)
|
|
89,396
|
|
|
Deferred
revenue
|
|
11,100
|
|
18,950
|
|
|
|
|
|
|
|
Net cash flows used
in operating activities
|
|
(7,561,572)
|
|
(4,525,667)
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
Property and
equipment
|
|
(1,140,493)
|
|
(218,161)
|
|
|
|
|
|
|
|
|
Net cash flows used
in investing activities
|
|
(1,140,493)
|
|
(218,161)
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
Issuance of common
shares
|
|
9,724,782
|
|
4,787,686
|
|
|
Cash share issuance
costs
|
|
(1,086,430)
|
|
(173,960)
|
|
|
Short-term loans
received
|
|
154,000
|
|
1,009,050
|
|
|
Repayment of
short-term loans
|
|
(154,000)
|
|
(1,257,676)
|
|
|
Share subscriptions
received in advance
|
|
-
|
|
508,022
|
|
|
Exercise of
warrants
|
|
8,800
|
|
-
|
|
|
Finance
lease
|
|
(10,768)
|
|
(11,896)
|
|
|
|
|
|
|
|
|
Net cash flows
provided by financing activities
|
|
8,636,384
|
|
4,861,226
|
|
|
|
|
|
|
Change in
cash
|
|
(65,681)
|
|
117,398
|
|
|
|
|
|
Cash –
beginning
|
|
767,263
|
|
104,518
|
|
|
|
|
|
Cash –
end
|
$
|
701,582
|
$
|
221,916
|
|
Cash paid for
interest
|
$
|
999
|
$
|
64,176
|
Supplemental cash
flow disclosure – non cash transactions
|
|
Additions of property
and equipment included in accounts payable
|
$
|
112,410
|
$
|
117,040
|
|
Reversal of prior
year property and equipment included in accounts payable
|
$
|
(163,838)
|
$
|
-
|
|
Common shares issued
for settlement of accounts payable
|
$
|
-
|
$
|
748,310
|
|
Common shares issued
for services
|
$
|
35,481
|
$
|
140,600
|
|
Finders' warrants
issued for share issuance cost
|
$
|
201,039
|
$
|
26,335
|
SOURCE RYU Apparel Inc.