VANCOUVER, April 9, 2018 /CNW/ - RYU Apparel Inc.
(TSXV: RYU) ("RYU" or the "Company"), creators
of urban athletic apparel, is pleased to report its financial
results for its second full year of operations since relaunching
the brand in November 2015.
Revenue for the year ended December 31,
2017 was $3,019,586, 121%
higher than revenue of $1,367,043
during the year ended December 31,
2016. After completing its second year of operations, the
RYU team is encouraged with its sales record to date and a 46%
gross profit for the year.
In Canadian
dollars
|
Three months
ended
December
31,
|
Year
ended
December
31,
|
2017
|
2016
|
2017
|
2016
|
Revenue
|
$1,166,126
|
$474,844
|
$3,019,586
|
$1,367,043
|
Gross
profit
|
$529,472
|
$214,336
|
$1,382,293
|
$627,866
|
Gross profit
%
|
45%
|
45%
|
46%
|
46%
|
Fourth quarter 2017 results included additional revenue from the
Company's new retail store locations in Park Royal South in West Vancouver, Queen St. West in Toronto, and Metrotown in Burnaby. The Metrotown location in
Burnaby was only open for one
month within the quarter.
The fourth quarter of 2017 is RYU's ninth consecutive quarter of
increasing gross profit.
"We are pleased with this quarter and yearly results and the
steady progress we are making in our strategic plan," said
Marcello Leone, CEO. "Moving
forward, RYU remains focused and we have a solid road map in place
to position the brand for success. As creators of Urban Athletic
Apparel, we are the leader in this new category that evolved from
Athleisure."
During the year ended December 31,
2017, the Company achieved the following milestones:
- RYU met its retail store expansion target of five open stores
by the end of 2017. The Company currently has five stores in
operation and three 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 opened its first enclosed mall location
at Metrotown in Burnaby on
November 28, 2017.
- 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 were
deployed in the fourth quarter of 2017 and will continue into the
third quarter of 2018.
- E-commerce revenue grew 125% against 2016. RYU achieved 17% of
total revenue from e-commerce in 2017 and it is focused on a clear
roadmap to achieve a 65:35 "bricks (65%) and clicks (35%)" business
model by the year 2021.
- The fourth quarter of 2017 marked the first full quarter that
ryu.com offered international shipping since partnering with
Global-E to provide the service. With a target go-live in the third
quarter of 2018, a new ryu.com will launch with improved
performance, speed and integration as RYU continues to progress
towards an omni-channel experience for customers.
- 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 Lewis Steel 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 the third quarter
of 2018.
The Company is also pleased to provide the following 2018
updates:
- RYU's expansion plan is on target to have eight stores by the
end of 2018 and to achieve +100% year over year growth in retail
revenue. Subsequent to year end the Company secured the leases to
its second and third USA store
locations in the state of California. This expansion gives RYU exposure
in New York City and Los Angeles, the most important urban centers
of both coasts of the USA. The
three stores have targeted openings in the second and third
quarters of 2018.
- RYU continues to enhance its capital structure in 2018:
-
- On January 19, 2018 the Company
closed a non-brokered private placement financing of $5,651,945;
- On February 19, 2018, the Company
closed a non-brokered private placement financing of $3,997,808; and
- Year to date, a total of 52,560,615 warrants have been
exercised for proceeds of $10,156,352. The Company is pleased to report
that 84% of the $0.20 warrants
subject to the acceleration of their expiry dates, as announced on
February 20, 2018, were exercised by
March 29, 2018.
Fourth quarter summary:
- Fourth quarter revenue of $1,166,126 compared with $474,844 in the same period in fiscal 2016.
Revenue increased by 146% as it included sales from five versus two
retail stores and growth in e-commerce sales. RYU's fifth retail
store location at Metrotown in Burnaby was only open for one month within the
quarter.
- The fourth quarter of 2017 marks
RYU's ninth consecutive quarter of increasing gross profit. Fourth
quarter gross profit of $529,472
compared with $214,336 in the same
period in fiscal 2016, an increase of 147%. Gross profit percentage
of 45% was achieved in the fourth quarter of 2017, in line with
2016.
- Fourth quarter expenses of $3,082,668 compared with $2,008,768 in the same period in fiscal 2016. The
increase of 53% is primarily due to the expansion of our retail
operations from two to five stores.
- Fourth quarter comprehensive loss was $2,553,196 compared with $1,781,197 in the same period in fiscal 2016. The
$771,999 (43%) increase is due to
variances in gross profit net of higher occupancy costs and
depreciation from running five retail stores versus two as well as
additional manpower needs.
- The Company closed non-brokered private placements on
December 4th and
December 22nd raising
gross proceeds of $1,784,810 and
$563,227 respectively.
Annual summary:
- Revenue of $3,019,586 compared
with $1,367,043 in fiscal 2016.
Revenue increased by 121% as it included sales from five stores
versus two retail stores and growth in e-commerce sales. The Park
Royal location in West Vancouver
opened March 2017, the Queen
St. West location in Toronto opened September 2017, and the Metrotown location in
Burnaby opened November 2017.
- 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 dedicated significant resources to produce
innovative new products, 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 second quarter of 2018.
- Gross profit of $1,382,293
compared with $627,866 in fiscal
2016, an increase of 120%. Gross profit percentage of 46% in the
year ended December 31, 2017 was in
line with the comparative 2016 year.
- Expenses of $10,590,853 compared
with $7,976,992 in fiscal 2016. The
increase of 33% is due to the increase in retail operations from
two to five stores, investment in additional manpower, and the
development of our 2017 marketing strategy.
- Comprehensive loss was $9,200,856
compared with $5,621,662 in fiscal
2016. The loss was 64% higher due to the 2016 recovery of the
warrant derivative of $1,518,541, a
non-cash item, and the $208,923 gain
on settlement of debt for two transactions that took place in 2016.
Without these outliers, comprehensive loss during the year ended
December 31, 2017 and 2016 would have
been $9,208,560 and $7,349,126 respectively. The $1,859,434 (25%) increase is mostly due to the
higher manpower and occupancy costs attached to running five versus
two 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, a short form prospectus offering, raising gross
proceeds of $3,737,500 on
July 25, 2017, a non-brokered private
placement, raising gross proceeds of $1,784,810 on December 4,
2017, and a non-brokered private placement, raising gross
proceeds of $563,227 on December 22, 2017.
For convenience, copies of the Company's annual consolidated
statements of financial position, comprehensive loss and cash flows
for the years 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 annual consolidated 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 engineered for the
fitness, performance and lifestyle of athletically minded men and
women. Innovatively designed without compromise and tailored 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 eight stores open by the end of 2018 and
to achieve +100% year over year growth in retail revenue; (ii) the
intention to open its New York and
California locations during the
second and third quarters of 2018; (iii) that high priority tasks
with netamorphosis started to deploy in the fourth quarter of 2017
to accelerate and expand e-commerce revenue and performance and
will continue into the third quarter of 2018; (iv) the Company is
focused on a clear roadmap to achieve a 65:35 "bricks and clicks"
business model by the year 2021; (v) that a new ryu.com will launch
with improved performance, speed and integration in the third
quarter of 2018, and (vi) 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.
CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
(Expressed in Canadian
dollars)
As at
|
|
|
|
|
|
|
|
|
|
December
31,
2017
|
December
31,
2016
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
Cash
|
|
$
466,809
|
$
767,263
|
|
Accounts
receivable
|
|
169,439
|
82,297
|
|
Inventory
|
|
2,359,681
|
1,067,560
|
|
Prepaid expenses and
deposits
|
|
978,151
|
263,912
|
|
|
3,974,080
|
2,181,032
|
|
|
|
|
Non-current
|
|
|
|
|
Deposits
|
|
398,292
|
172,521
|
|
Property and
equipment
|
|
2,546,729
|
1,439,500
|
|
Intangible
assets
|
|
32,432
|
6,549
|
|
|
$
6,951,533
|
$
3,799,602
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
Accounts
payable
|
|
$
1,178,126
|
$
745,894
|
|
Accrued
liabilities
|
|
384,355
|
169,404
|
|
Current portion of
finance lease
|
|
14,068
|
14,779
|
|
Deferred
revenue
|
|
121,750
|
64,732
|
|
|
1,698,299
|
994,809
|
|
|
|
|
Non-current
|
|
|
|
|
Finance
lease
|
|
45,070
|
63,296
|
|
Derivative
liability
|
|
-
|
7,703
|
|
|
1,743,369
|
1,065,808
|
|
|
|
|
Equity
|
|
|
|
|
Share
capital
|
|
53,008,315
|
42,230,355
|
|
Share subscriptions
received in advance
|
|
355,000
|
-
|
|
Equity
reserve
|
|
7,469,620
|
6,927,354
|
|
Deficit
|
|
(55,691,865)
|
(46,491,009)
|
|
Accumulated other
comprehensive income
|
|
67,094
|
67,094
|
|
|
5,208,164
|
2,733,794
|
|
|
$
6,951,533
|
$
3,799,602
|
RYU APPAREL INC.
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS
(Expressed in Canadian
dollars)
For the years ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Revenue
|
$
|
3,019,586
|
$
|
1,367,043
|
Cost of
sales
|
|
1,637,293
|
|
739,177
|
Gross
Profit
|
|
1,382,293
|
|
627,866
|
|
|
46%
|
|
46%
|
Expenses
|
|
|
|
|
|
Depreciation
|
|
455,136
|
|
245,794
|
|
Foreign exchange loss
(gain)
|
|
43,873
|
|
(57,246)
|
|
Interest and bank
charges
|
|
84,774
|
|
144,419
|
|
Investor
relations
|
|
278,475
|
|
629,771
|
|
Office and
general
|
|
2,480,301
|
|
1,174,206
|
|
Product
creation
|
|
508,490
|
|
553,855
|
|
Professional
fees
|
|
560,545
|
|
1,020,293
|
|
Salaries and
benefits
|
|
3,813,468
|
|
2,778,121
|
|
Selling and
marketing
|
|
1,806,097
|
|
1,032,523
|
|
Share-based
payments
|
|
331,513
|
|
333,341
|
|
Travel and
entertainment
|
|
228,180
|
|
121,915
|
|
|
10,590,852
|
|
7,976,992
|
|
|
|
|
|
Other
items
|
|
|
|
|
|
Gain on settlement of
debt
|
|
-
|
|
208,923
|
|
Recovery of warrant
derivative liability
|
|
7,703
|
|
1,518,541
|
|
|
|
|
|
Comprehensive
loss
|
$
|
(9,200,856)
|
$
|
(5,621,662)
|
|
|
|
|
|
Loss per share -
Basic and diluted
|
$
|
(0.04)
|
$
|
(0.05)
|
|
|
|
|
|
Weighted average
number of common shares
outstanding - basic and diluted
|
|
217,230,136
|
|
106,507,976
|
RYU APPAREL INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Expressed in Canadian dollars)
For the
years ended December 31,
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
2016
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(9,200,856)
|
|
$
|
(5,621,662)
|
|
Items not affecting
cash:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
455,136
|
|
|
245,794
|
|
|
Share-based
payments
|
|
|
331,513
|
|
|
333,341
|
|
|
Foreign
exchange
|
|
|
-
|
|
|
(76,230)
|
|
|
Accrued
interest
|
|
|
1,347
|
|
|
108,581
|
|
|
Gain on settlement of
debt
|
|
|
-
|
|
|
(208,923)
|
|
|
Recovery of warrant
derivative liability
|
|
|
(7,703)
|
|
|
(1,518,541)
|
|
Changes in non-cash
working capital
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(87,142)
|
|
|
223,555
|
|
|
Inventory
|
|
|
(1,292,120)
|
|
|
14,888
|
|
|
Prepaid expenses and
deposits
|
|
|
(940,010)
|
|
|
(297,821)
|
|
|
Accounts payable and
accrued liabilities
|
|
|
582,585
|
|
|
119,414
|
|
|
Deferred
revenue
|
|
|
57,018
|
|
|
41,014
|
|
|
Interest
paid
|
|
|
-
|
|
|
(128,742)
|
|
|
|
|
|
|
|
|
Net cash flows used
in operating activities
|
|
|
(10,130,232)
|
|
|
(6,765,332)
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
|
Property and
equipment
|
|
|
(1,448,187)
|
|
|
(551,621)
|
|
|
Intangible
assets
|
|
|
(15,973)
|
|
|
-
|
|
|
|
|
|
|
|
|
Net cash flows used
in investing activities
|
|
|
(1,464,160)
|
|
|
(551,621)
|
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
|
Issuance of common
shares
|
|
|
12,072,819
|
|
|
10,001,552
|
|
|
Share issuance
costs
|
|
|
(1,128,387)
|
|
|
(721,981)
|
|
|
Share subscriptions
received in advance
|
|
|
355,000
|
|
|
-
|
|
|
Short-term loans
received
|
|
|
154,000
|
|
|
1,009,050
|
|
|
Repayment of
short-term loans and interest
|
|
|
(154,000)
|
|
|
(2,297,000)
|
|
|
Exercise of
warrants
|
|
|
8,800
|
|
|
-
|
|
|
Finance
lease
|
|
|
(14,294)
|
|
|
(11,923)
|
|
|
|
|
|
|
|
|
Net cash flows
provided by financing activities
|
|
|
11,293,938
|
|
|
7,979,698
|
|
|
|
|
|
|
|
Change in
cash
|
|
|
(300,454)
|
|
|
662,745
|
Cash –
beginning
|
|
|
767,263
|
|
|
104,518
|
Cash -
end
|
|
$
|
466,809
|
|
$
|
767,263
|
|
|
|
|
|
|
|
Supplemental cash
flow disclosure
|
|
|
|
|
|
|
|
|
Common shares issued
for settlement of accounts payable
|
|
$
|
-
|
|
$
|
578,660
|
|
|
Common shares issued
for settlement of related party advances
|
|
$
|
-
|
|
$
|
739,050
|
|
|
Common shares issued
for services
|
|
$
|
35,481
|
|
$
|
140,600
|
|
|
Finder warrants
issued for share issuance costs
|
|
$
|
210,753
|
|
$
|
80,992
|
|
|
Unpaid intangible
asset additions
|
|
$
|
16,459
|
|
$
|
-
|
|
|
Unpaid property and
equipment additions
|
|
$
|
107,630
|
|
$
|
168,617
|
|
|
|
|
|
|
|
View original
content:http://www.prnewswire.com/news-releases/ryu-apparel-reports-fourth-quarter-and-2017-year-end-results-300626353.html
SOURCE RYU Apparel Inc.