Long-Term Corporate Strategy Initiatives
Taking Shape, Driven by Operations Emphasis on High-Value
Opportunities within Retail and Agency Verticals
Renewed Contracts with Major Partners and
$3 Million Annualized Reduced
Operating Expenses Setting Foundation for Future Revenue Growth and
Enhanced Profitability
SPOKANE,
Wash., June 14, 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 first quarter ended
April 30, 2022.
Recent Operational Highlights
- Continued execution of 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:
- Greater operational rigor to drive enhanced profitability
metrics – Reduced cost structures across the business,
resulting in nearly $3 million of
annualized savings to date.
- Our portfolio of Private Label Brands continues to
outperform – Revenues are up 55% vs. the prior year period and
margins have expanded more than 500bps.
- Simplified reporting structure through Retail and Agency
businesses – Streamlined the cadence of communications to
improve focus on operations and execution in these key
segments.
- More deliberate engagement with higher value partners and
industry verticals – Deemphasized spend in noncore areas,
allocated additional investment in client acquisition as well as
retained partnerships with major, existing customers.
- 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,
has been actively involved in implementing the Company's new
strategic plan.
Management Commentary
"In the first quarter, we took
several necessary steps to better align the focus of our
organization for long-term stability," said Kaspien Interim CEO
Brock Kowalchuk. "During the period,
we reconcentrated our efforts on our Retail and Agency partners and
have so far generated expense reductions of $3 million on an annualized basis. In keeping
with our renewed focus on core partners, we have further
rationalized our partner relationships to highlight profitability
and growth potential."
"Externally, against the backdrop of a challenged macroeconomic
environment, we continued to engage with core partners and
successfully renewed contracts with some of our top customers. We
also further leaned into our portfolio of Private Label Brands,
which saw a 55% increase in Net Revenue vs. the first quarter of
2021, and began key supply chain initiatives to help reduce excess
inventory from late last year. While our transition process will
take time, we have seen encouraging signs as our gap against the
prior year has continued to close as the year has progressed. We
are excited to unlock further growth opportunities with our
existing brand partners as we continue driving our working capital
improvements and executing on our updated corporate strategy."
Fiscal First Quarter 2022 Financial Results
Results
compare 2022 fiscal first quarter ended April 30, 2022 to 2021
fiscal first quarter ended May 1,
2021 unless otherwise indicated.
- Net revenue decreased 21.7% to $31.8
million from $40.6 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 30.1% to $6.9
million, or 21.6% of net revenue, from $9.8 million, or 24.1% of net revenue in the
comparable year-ago period. The decrease in gross profit was
primarily attributable to the decrease in net revenue and a
decrease in merchandise margin to 44.2% from 46.7% in the
comparable year-ago period.
|
|
|
Thirteen Weeks
Ended
|
|
|
|
|
Change
|
|
(amounts in
thousands)
|
|
|
April 30,
2022
|
|
|
May 1,
2021
|
|
|
|
|
$
|
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merchandise
margin
|
|
|
$
|
14,046
|
|
|
$
|
18,982
|
|
|
|
|
$
|
(4,936)
|
|
|
|
(26.0)
|
%
|
% of net
revenue
|
|
|
|
44.2
|
%
|
|
|
46.7
|
%
|
|
|
|
|
(2.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fulfillment
fees
|
|
|
|
(4,568)
|
|
|
|
(6,449)
|
|
|
|
|
|
(1,881)
|
|
|
|
(29.2)
|
%
|
Warehousing and
freight
|
|
|
|
(2,627)
|
|
|
|
(2,737)
|
|
|
|
|
|
(110)
|
|
|
|
(4.0)
|
%
|
Gross profit
|
|
|
$
|
6,851
|
|
|
$
|
9,796
|
|
|
|
|
$
|
(2,945)
|
|
|
|
(30.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of net
revenue
|
|
|
|
21.6
|
%
|
|
|
24.1
|
%
|
|
|
|
|
|
|
|
|
|
|
- Selling, General & Administrative ("SG&A") expenses
decreased 1.3% to $10.5 million, or
33.1% of net revenue, from $10.7
million, or 26.2% of net revenue, in the comparable year-ago
period. The decrease in SG&A expenses was primarily
attributable to a decrease in sales expenses related to the sales
decrease, partially offset by increased wages and marketing
expenses and a one-time charge for severance expenses.
- Loss from operations was $3.7
million, compared to a loss from operations of $0.9 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 $4.4 million, or
$1.78 per diluted share, compared to
a net loss of $1.4 million, or
$0.61 per diluted share, in the
comparable year-ago period.
- Adjusted EBITDA loss (a non-GAAP metric reconciled below) was
$3.4 million compared to an adjusted
EBITDA loss of $0.3 million in the
comparable year-ago period.
- As of April 30, 2022, the Company
had $0.8 million in cash and cash
equivalents, compared to $1.2 million
as of January 29, 2022 and
$5.0 million as of May 1, 2021.
- Inventory at quarter end was $32.3
million, compared to $22.6
million as of May 1, 2021. The
increase in inventory was primarily due to an increase in tier 1
partners and excess inventory from the holiday season. The Company
is implementing several initiatives to reduce inventory including
adjusting our pricing strategy, enhancing supply chain management
and renegotiating purchasing terms with our partners.
- As of April 30, 2022, the Company
had borrowings of $10.5 million under
the Credit Facility and had $3.6
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.
Key Performance Indicators (KPIs)
Unless otherwise
specified, KPI data has been recorded as of fiscal first quarter
(April 30, 2022).
- Fiscal first quarter 2022 Gross Merchandise Value ("GMV") was
$69.7 million as compared to
$63.4 million in the comparable
year-ago period. Subscription GMV increased 72.2% to $36.0 million, or 56.7% of total GMV, compared to
$29.0 million, or 33.0% of total GMV,
in the comparable year-ago period.
Kaspien plans to file its quarterly Form 10-Q today,
June 14, 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) interest expense; and (iii) 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 Loss
from operations, net loss or cash used in operating activities, as
determined in accordance with GAAP.
|
Thirteen Weeks
Ended
|
|
April
30,
|
May
1,
|
(amounts in
thousands)
|
2022
|
2021
|
|
|
|
Net
loss
|
$
(4,428)
|
$
(1,416)
|
Income tax expense
(benefit)
|
-
|
-
|
Interest
expense
|
762
|
555
|
Loss from
operations
|
(3,666)
|
(861)
|
Depreciation
expense
|
293
|
603
|
EBITDA
|
$
(3,373)
|
$
(258)
|
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
|
|
April
30,
|
May
1,
|
|
2022
|
2021
|
|
|
|
Net revenue
|
$
31,791
|
$
40,617
|
|
|
|
Cost of
sales
|
24,940
|
30,821
|
Gross profit
|
6,851
|
9,796
|
Selling, general and
administrative expenses
|
10,517
|
10,657
|
Loss from
operations
|
(3,666)
|
(861)
|
Interest
expense
|
762
|
555
|
Loss from operations
before income tax expense
|
(4,428)
|
(1,416)
|
Income tax
expense
|
-
|
-
|
Net loss
|
$
(4,428)
|
$
(1,416)
|
|
|
|
BASIC AND DILUTED
INCOME PER SHARE:
|
|
|
Basic and diluted loss
per common share
|
$
(1.78)
|
$
(0.61)
|
|
|
|
Weighted average number
of common shares outstanding – basic
and diluted
|
2,493
|
2,317
|
KASPIEN HOLDINGS INC. AND
SUBSIDIARIES
|
CONSOLIDATED BALANCE
SHEETS
|
(in thousands,
except per share and share amounts)
|
|
|
April
30,
|
January
29,
|
May
1,
|
|
2022
|
2022
|
2021
|
ASSETS
|
|
|
|
CURRENT
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
828
|
$
1,218
|
$
5,030
|
Restricted
cash
|
1,158
|
1,158
|
1,184
|
Accounts
receivable
|
2,727
|
2,335
|
3,113
|
Merchandise
inventory
|
32,254
|
29,277
|
22,567
|
Prepaid expenses
and other current assets
|
558
|
649
|
592
|
Total current assets
|
37,525
|
34,637
|
32,486
|
|
|
|
|
Restricted
cash
|
2,160
|
2,447
|
3,277
|
Fixed assets,
net
|
2,441
|
2,335
|
2,366
|
Operating lease
right-of-use assets
|
1,990
|
2,144
|
2,595
|
Intangible
assets, net
|
-
|
-
|
475
|
Cash Surrender
Value
|
3,800
|
4,154
|
4,168
|
Other
assets
|
872
|
965
|
1,230
|
TOTAL ASSETS
|
$ 48,788
|
$ 46,682
|
$ 46,597
|
|
|
|
|
LIABILITIES
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
Accounts
payable
|
$
7,664
|
$
6,271
|
$
5,682
|
Short-term
borrowings
|
10,508
|
9,966
|
-
|
Accrued expenses
and other current liabilities
|
2,208
|
2,362
|
2,640
|
Current portion
of operating lease liabilities
|
663
|
649
|
609
|
Current portion
of PPP loan
|
-
|
-
|
2,018
|
Total current liabilities
|
21,043
|
19,248
|
10,949
|
|
|
|
|
Operating lease
liabilities
|
1,439
|
1,608
|
2,101
|
Long-term
debt
|
7,944
|
4,356
|
5,261
|
Other long-term
liabilities
|
13,987
|
14,185
|
15,954
|
TOTAL LIABILITIES
|
44,413
|
39,397
|
34,265
|
|
|
|
|
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
|
|
|
|
3,902,985
and 3,889,169 shares issued, respectively)
|
39
|
39
|
39
|
Additional
paid-in capital
|
360,738
|
359,220
|
358,749
|
Treasury stock at cost (1,410,417, 1,410,417 and 1,410,417 shares,
respectively)
|
(230,170)
|
(230,170)
|
(230,170)
|
Accumulated
other comprehensive loss
|
(910)
|
(910)
|
(2,007)
|
Accumulated
deficit
|
(125,322)
|
(120,894)
|
(114,279)
|
TOTAL SHAREHOLDERS' EQUITY
|
4,375
|
7,285
|
12,332
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ 48,788
|
$ 46,682
|
$ 46,597
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/kaspien-holdings-inc-reports-fiscal-first-quarter-2022-results-301567956.html
SOURCE Kaspien Holdings Inc.