Focused Corporate Strategy Simplifies
Operations Emphasis into High-Value Opportunities within Retail and
Agency Verticals; Long-Term Plan to Generate Revenue Growth and
Enhanced Profitability
SPOKANE,
Wash., April 29, 2022 /PRNewswire/
-- Kaspien Holdings Inc. (Nasdaq: KSPN)
("Kaspien" or the "Company"), a leading e-commerce
marketplace growth platform, today reported financial results for
the fiscal fourth quarter and full year ended January 29, 2022.
Recent Operational Highlights
- Introduced updated corporate strategy designed to generate
sustained revenue growth and profitability. In recent months,
Kaspien has begun implementing a long-term plan designed to realign
organizational focus to the following key areas: simplified
reporting structure through its Retail and Agency businesses, more
deliberate engagement with higher value partners and industry
verticals, and implementing greater operational rigor to drive
enhanced profitability metrics.
- Promoted CFO Brock Kowalchuk
to Interim CEO, effective March 11,
2022. Kowalchuk joined Kaspien in 2018 after several years
at Goldman Sachs, where he held roles of increasing responsibility.
Kowalchuk, along with the rest of Kaspien's senior leadership team,
will be actively involved in implementing the Company's new
strategic plan over the coming months.
- Received multiple industry recognitions and awards,
including the following titles:
-
- Addition to the Russell Microcap Index
- MarTech Breakthrough Awards 'Marketing Automation Innovation'
Award
- 'Best Places to Work Inland Northwest'
- 'Washington's 100 Best Places
to Work'
- Silver at the '11th Annual Best in Biz Awards'
Management Commentary
"Over the last year and in recent months, the e-commerce
landscape has dramatically shifted several times. As a team that
services hundreds of businesses operating in this environment,
we've also updated our focus to better serve our partners in
today's market while still embracing our heritage and leaning into
what we do best," said Kaspien Interim CEO Brock Kowalchuk. "Kaspien remains focused on
accelerating the growth of brands on today's leading online
marketplaces, and we believe we can best achieve that goal through
an increased focus on our retail and agency businesses, where we've
historically had the most success. We will also be refining our
go-to-market actions to attract larger customers in select
verticals to drive more consistent revenue growth. In recognition
of the challenging supply chain and global economic environment, in
the near term we'll be concentrating our efforts on increased
operational rigor and risk mitigation processes. Our aim over the
long term is to improve working capital and operating margins to
ultimately drive profitability for our business. Our plan will
require a combination of vision, pragmatism, and humanity. As of
today, I believe we have the team and resources to make our vision
a reality."
Fiscal Fourth Quarter 2021 Financial Results
Results compare 2021 fiscal fourth quarter ended January 29, 2022 to 2020 fiscal fourth quarter
ended January 30, 2021 unless
otherwise indicated.
- Net revenue decreased 20.9% to $36.0
million from $45.5 million in
the comparable year-ago period. The decrease in net revenue was
primarily attributable to ongoing supply challenges in the
Company's Fulfillment by Amazon ("FBA") US segment.
- Gross profit decreased 45% to $6.1
million, or 17.0% of net revenue, from $11.2 million, or 24.6% of net revenue, in the
comparable year-ago period. The decrease in gross profit was
primarily attributable to the write-down of obsolete inventory and
lower merchandise margin.
- Selling, General & Administrative ("SG&A") expenses
increased 8.0% to $11.5 million or
31.9% of net revenue from $10.7
million or 23.4% of net revenue in the comparable year-ago
period. The increase in SG&A expenses was primarily
attributable to increased wages and marketing expenses.
- Loss from operations was $5.4
million, compared to an income from operations of
$0.6 million in the comparable
year-ago period. The increase in operating loss was the result of
the decline in sales and lower gross margin.
- Net loss was $5.8 million, or
$2.33 per diluted share, compared to
a net loss of $0.1 million, or
$0.08 per diluted share, in the
comparable year-ago period.
- Adjusted EBITDA loss (a non-GAAP metric reconciled below) was
$5.1 million compared to an adjusted
EBITDA of $1.1 million in the
comparable year-ago period.
- As of January 29, 2022, the
Company had $1.2 million in cash,
compared to $1.8 million as of
January 30, 2021.
- Inventory at quarter end was $29.3
million, compared to $24.5
million as of January 30,
2021.
- As of January 29, 2022, the
Company had $10.0 million in
borrowings under its credit facility and had $2.1 million available for borrowing. On
March 2, 2022, the Company entered
into an Amendment to its Subordinated Loan and Security Agreement
with Alimco RE Ltd pursuant to which Alimco made an additional
$5.0 million secured term loan with a
scheduled maturity date of March 31,
2024, which is the same maturity date as the existing loans
under the Subordinated Loan Agreement.
Fiscal Year 2021 Financial Results
Results compare the fiscal year ended January 29, 2022 to the fiscal year ended
January 30, 2021 unless otherwise
indicated.
- Net revenue decreased 9% to $143.7
million from $158.3 million in
the comparable year-ago period. This decrease in net revenue was
driven by a decrease in retail revenue, slightly offset by an
increase in subscriptions and other revenue.
- Gross profit decreased 17% to $32.8
million, or 22.8% of net revenue, compared to $39.4 million, or 24.9% of net revenue, over the
comparable year-ago period. The decrease in gross profit was driven
by a decrease in merchandise margin and an increase in warehousing
and freight expenses. The table below summarizes the year-over-year
comparison of gross margin:
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
(amounts in thousands)
|
|
|
January 29, 2022
|
|
|
January 30, 2021
|
|
|
$
|
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merchandise
margin
|
|
|
$
|
64,410
|
|
$
|
|
73,448
|
|
|
|
$(9,038)
|
|
|
|
(11.0)
|
%
|
|
% of net
revenue
|
|
|
|
44.8%
|
|
|
|
46.4
|
%
|
|
|
(1.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fulfillment
fees
|
|
|
|
(21,655)
|
|
|
|
(26,046)
|
|
|
|
4,391
|
|
|
|
16.9
|
%
|
|
Warehousing and
freight
|
|
|
|
(9,982)
|
|
|
|
(7,986)
|
|
|
|
(1,996)
|
|
|
|
(24.9)
|
%
|
|
Gross profit
|
|
|
$
|
32,773
|
|
$
|
|
39,416
|
|
|
|
(6,643)
|
|
|
|
(16.9)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of net revenue
|
|
|
|
22.8%
|
|
|
|
24.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- SG&A expenses decreased 6% to $42.4
million or 29.5% of net revenue from $45.1 million or 28.5% of net revenue in the
comparable year-ago period. The decrease in SG&A expenses was
due to a $2.3 million decrease in
selling expenses related to the decline in net revenue and a
$389,000 decline in general and
administrative expenses.
- Loss from operations totaled $9.6
million, an improvement from $5.7
million in the comparable year-ago period. The improvement
in operating results was the result of the reduction in SG&A
expenses.
- Net loss was $8.0 million, or
$3.28 per diluted share, compared to
a loss of $3.9 million, or
$2.10 per diluted share, in the
comparable year-ago period. The increase in net loss was driven by
the decline in sales and merchandise margin and a $3.5 million income tax benefit recorded in the
prior year period that was not recognized in the current year
period.
- Adjusted EBITDA loss (a non-GAAP metric reconciled below) was
$7.2 million, compared to an adjusted
EBITDA loss of $3.6 million in the
comparable year-ago period.
- Cash used in operations was $14.5
million, compared to $13.4
million in the comparable year-ago period.
Key Performance Indicators (KPIs)
In recognition of the Company's updated corporate strategy,
management is revising the KPI metrics Kaspien publicly discloses
to better align with the focus of its business going forward.
Unless otherwise specified, KPI data has been recorded as of fiscal
fourth quarter and full year end (January
29, 2022).
- Fiscal fourth quarter 2021 GMV increased 8.0% to $79.8 million, compared to $73.9 million in the comparable year-ago period.
Subscription GMV increased 56% to $42.0
million (53% of total GMV), compared to $26.9 million (36% of total GMV) in the
comparable year-ago period.
Kaspien plans to file its annual Form 10-K today, April 29, 2022, in accordance with SEC filing
deadlines.
About Kaspien
Kaspien Holdings Inc. (f/k/a Trans World Entertainment
Corporation) (NASDAQ: KSPN) is a leading, global e-commerce
accelerator that deploys AI-driven software and end-to-end services
to optimize and grow brands on Amazon, Walmart, Target, eBay, and
other online marketplaces. Rebranded as Kaspien in 2020, the
Company has spent more than a decade developing a marketplace
growth platform of proprietary technologies that maximize supply
chain resilience, optimize marketing, strengthen brand control, and
provide predictive analytics. Serving a variety of brands,
distributors, agencies and FBA aggregators, Kaspien accelerates
growth by tailoring an extensive suite of seller services to its
partners' dynamic e-commerce needs. The Company has a long track
record of success, having served over 4,000 brands in 20 countries.
Kaspien's mastery of the e-commerce space and commitment to rapid
innovation has earned the trust of many leading brands. For more
information, visit kaspien.com.
Non-GAAP Financial Measures
Adjusted EBITDA is defined as net loss, adjusted to exclude:
(i) income tax expense; (ii) Other (income) loss; (iii) interest
expense; and (iv) depreciation expense. Our method of calculating
adjusted EBITDA may differ from other issuers and accordingly, this
measure may not be comparable to measures used by other issuers. We
use adjusted EBITDA to evaluate our own operating performance and
as an integral part of our planning process. We present adjusted
EBITDA as a supplemental measure because we believe such a measure
is useful to investors as a reasonable indicator of operating
performance. We believe this measure is a financial metric used by
many investors to compare companies. This measure is not a
recognized measure of financial performance under GAAP in
the United States and should not
be considered as a substitute for operating earnings (losses), net
earnings (loss) from continuing operations or cash flows from
operating activities, as determined in accordance with
GAAP.
|
Thirteen Weeks Ended
|
|
Fifty-two Weeks Ended
|
|
January 29,
|
January 30,
|
|
January 29,
|
January 30,
|
(amounts in
thousands)
|
2022
|
2021
|
|
2022
|
2021
|
|
|
|
|
|
|
Net loss
|
$
(5,811)
|
$ (139)
|
|
$
(8,031)
|
$
(3,892)
|
Income tax expense
(benefit)
|
(18)
|
4
|
|
27
|
(3,542)
|
Other income
(loss)
|
49
|
-
|
|
(3,481)
|
-
|
Interest
expense
|
412
|
693
|
|
1,867
|
1,709
|
Loss from
operations
|
(5,368)
|
558
|
|
(9,618)
|
(5,725)
|
Depreciation
expense
|
299
|
586
|
|
2,468
|
2,139
|
EBITDA
|
$
(5,069)
|
$ 1,144
|
|
$
(7,150)
|
$
(3,586)
|
|
|
|
|
|
|
|
About Key Performance Indicators
Gross Merchandise Value ("GMV") is the total value of
merchandise sold over a given time period through a
customer-to-customer exchange site. For Kaspien, it is the
measurement of merchandise value sold across all channels and
partners within the Kaspien platform.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Certain statements in this communication are forward-looking
statements. The statements contained herein that are not statements
of historical fact may include forward-looking statements that
involve a number of risks and uncertainties.
We have used the words "anticipate", "believe", "could",
"estimate", "expect", "intend", "may", "plan", "predict",
"project", and similar terms and phrases, including references to
assumptions, in this document to identify forward-looking
statements. These forward-looking statements are made based on
management's expectations and beliefs concerning future events and
are subject to uncertainties and factors that could cause actual
results to differ materially from the results expressed in the
statements. The following factors are among those that may cause
actual results to differ materially from the Company's
forward-looking statements: risk of disruption of current
plans and operations of Kaspien and the potential difficulties in
customer, supplier and employee retention; the outcome of any legal
proceedings that may be instituted against the Company; the
Company's level of debt and related restrictions and limitations,
unexpected costs, charges, expenses, or liabilities; the Company's
ability to operate as a going-concern; deteriorating economic
conditions and macroeconomic factors; the impact of the COVID-19
pandemic; and other risks described in the Company's filings with
the SEC, such as its Quarterly Reports on Form 10-Q and Annual
Reports on Form 10-K.
The reader should keep in mind that any forward-looking
statement made by us in this document, or elsewhere, pertains only
as of the date on which we make it. New risks and uncertainties
come up from time-to-time and it's impossible for us to predict
these events or how they may affect us. In light of these risks and
uncertainties, you should keep in mind that any forward-looking
statements made in this document or elsewhere might not
occur.
Company Contact
Ed Sapienza
Chief Financial Officer
509-202-4261
esapienza@kaspien.com
Investor Relations Contact
Gateway Investor Relations
Matt Glover and Tom Colton
949-574-3860
KSPN@gatewayir.com
-Financial Tables to Follow-
KASPIEN HOLDINGS
INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
|
|
|
Thirteen Weeks Ended
|
|
Fifty-two Weeks Ended
|
|
January 29,
|
January 30,
|
|
January 29,
|
January 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
|
|
|
|
|
|
Net revenue
|
$ 36,033
|
$
45,546
|
|
$
143,713
|
$
158,345
|
|
|
|
|
|
|
Cost of
sales
|
29,896
|
34,334
|
|
110,940
|
118,929
|
Gross profit
|
6,137
|
11,212
|
|
32,773
|
39,416
|
Selling, general and
administrative expenses
|
11,505
|
10,654
|
|
42,391
|
45,141
|
Loss from
operations
|
(5,368)
|
558
|
|
(9,618)
|
(5,725)
|
Interest
expense
|
412
|
693
|
|
1,867
|
1,709
|
Other (income)
loss
|
49
|
-
|
|
(3,481)
|
-
|
Loss before
income tax expense
|
(5,829)
|
(135)
|
|
(8,004)
|
(7,434)
|
Income tax expense
(benefit)
|
(18)
|
4
|
|
27
|
(3,542)
|
Net loss
|
$ (5,811)
|
$
(139)
|
|
$ (8,031)
|
$ (3,892)
|
|
|
|
|
|
|
BASIC AND DILUTED
INCOME PER SHARE:
|
|
|
|
|
|
Basic and diluted loss
per common share
|
$
(2.33)
|
$
(0.08)
|
|
$
(3.28)
|
$
(2.10)
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding –
basic and diluted
|
2,493
|
1,825
|
|
2,448
|
1,849
|
|
|
|
|
|
|
|
KASPIEN HOLDINGS
INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share and share
amounts)
|
|
|
|
January 29,
2022
|
|
|
January 30,
2021
|
|
ASSETS
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,218
|
|
|
$
|
1,809
|
|
Restricted
cash
|
|
|
1,158
|
|
|
|
1,184
|
|
Accounts
receivable
|
|
|
2,335
|
|
|
|
2,718
|
|
Merchandise
inventory
|
|
|
29,277
|
|
|
|
24,515
|
|
Prepaid expenses and
other current assets
|
|
|
649
|
|
|
|
564
|
|
Total current
assets
|
|
|
34,637
|
|
|
|
30,790
|
|
|
|
|
|
|
|
|
|
|
Restricted
cash
|
|
|
2,447
|
|
|
|
3,562
|
|
Fixed assets,
net
|
|
|
2,335
|
|
|
|
2,268
|
|
Operating lease
right-of-use assets
|
|
|
2,144
|
|
|
|
2,742
|
|
Intangible assets,
net
|
|
|
-
|
|
|
|
732
|
|
Cash surrender
value
|
|
|
4,154
|
|
|
|
3,856
|
|
Other assets
|
|
|
965
|
|
|
|
1,342
|
|
TOTAL ASSETS
|
|
$
|
46,682
|
|
|
$
|
45,292
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
6,271
|
|
|
$
|
8,894
|
|
Short-term
borrowings
|
|
|
9,966
|
|
|
|
6,339
|
|
Accrued expenses and
other current liabilities
|
|
|
2,362
|
|
|
|
2,512
|
|
Current portion of
operating lease liabilities
|
|
|
649
|
|
|
|
596
|
|
Current portion of PPP
loan
|
|
|
-
|
|
|
|
1,687
|
|
Total current
liabilities
|
|
|
19,248
|
|
|
|
20,028
|
|
|
|
|
|
|
|
|
|
|
Operating lease
liabilities
|
|
|
1,608
|
|
|
|
2,258
|
|
PPP loan
|
|
|
-
|
|
|
|
330
|
|
Long-term
debt
|
|
|
4,356
|
|
|
|
5,000
|
|
Other long-term
liabilities
|
|
|
14,185
|
|
|
|
16,187
|
|
TOTAL
LIABILITIES
|
|
|
39,397
|
|
|
|
43,803
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Preferred stock ($0.01
par value; 5,000,000 shares authorized; none issued)
|
|
|
-
|
|
|
|
-
|
|
Common stock ($0.01 par
value; 200,000,000 shares authorized; 3,902,985 shares
and 3,336,576 shares issued, respectively)
|
|
|
39
|
|
|
|
33
|
|
Additional paid-in
capital
|
|
|
359,220
|
|
|
|
346,495
|
|
Treasury stock at cost
(1,410,417 shares and 1,410,378 shares, respectively)
|
|
|
(230,170)
|
|
|
|
(230,169)
|
|
Accumulated other
comprehensive loss
|
|
|
(910)
|
|
|
|
(2,007)
|
|
Accumulated
deficit
|
|
|
(120,894)
|
|
|
|
(112,863)
|
|
TOTAL SHAREHOLDERS'
EQUITY
|
|
|
7,285
|
|
|
|
1,489
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
$
|
46,682
|
|
|
$
|
45,292
|
|
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SOURCE Kaspien Holdings Inc.