a.k.a. Brands Holding Corp. (AKA) Bundle
Understanding a.k.a. Brands Holding Corp. (AKA) Revenue Streams
Understanding a.k.a. Brands Holding Corp.’s Revenue Streams
The company reported net sales of $149,903 thousand for the three months ended September 30, 2024, reflecting an increase of $9,070 thousand or 6% from $140,833 thousand in the same period of 2023. For the nine months ended September 30, 2024, net sales totaled $415,674 thousand, up $18,328 thousand or 5% from $397,346 thousand in 2023.
Breakdown of Primary Revenue Sources
The following table summarizes the disaggregation of net sales by geography for the three and nine months ended September 30, 2024 and 2023:
| Region | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) |
|---|---|---|---|---|
| U.S. | $100,180 | $83,846 | $272,693 | $236,439 |
| Australia/New Zealand | $43,938 | $50,022 | $123,103 | $139,505 |
| Rest of World | $5,785 | $6,965 | $19,878 | $21,402 |
| Total | $149,903 | $140,833 | $415,674 | $397,346 |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for the three months ended September 30, 2024, was 6%, while for the nine months ended September 30, 2024, it was 5%. The growth was primarily driven by an 8% increase in the number of processed orders, which was offset by a 2% decrease in average order value, falling from $81 in 2023 to $79 in 2024.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the U.S. market contributed approximately 65.5% to total net sales, while Australia/New Zealand accounted for about 29.6%. The remaining 4.8% came from the rest of the world.
Analysis of Significant Changes in Revenue Streams
During the nine months ended September 30, 2024, net sales increased by $18.3 million, primarily due to growth in the U.S. across all sales channels. However, the average order value experienced a decline of 2%, reflecting challenges in the macroeconomic environment, particularly in Australia and New Zealand.
The following table outlines key financial metrics for the three and nine months ended September 30, 2024 and 2023:
| Metric | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) |
|---|---|---|---|---|
| Net Sales | $149,903 | $140,833 | $415,674 | $397,346 |
| Cost of Sales | $62,983 | $62,865 | $177,111 | $173,522 |
| Gross Profit | $86,920 | $77,968 | $238,563 | $223,824 |
| Gross Margin | 58% | 55% | 57% | 56% |
A Deep Dive into a.k.a. Brands Holding Corp. (AKA) Profitability
A Deep Dive into Profitability Metrics
Gross Profit
For the nine months ended September 30, 2024, the gross profit was $238,563 thousand, compared to $223,824 thousand for the same period in 2023, reflecting a 7% increase. The gross margin improved from 56% in 2023 to 57% in 2024.
Operating Profit
The loss from operations for the nine months ended September 30, 2024, was $(7,529) thousand, compared to a loss of $(78,021) thousand in 2023. The operating expenses totaled $246,092 thousand for 2024, down from $301,845 thousand in 2023.
Net Profit
The net loss for the nine months ended September 30, 2024, was $(16,633) thousand, improving from a loss of $(85,003) thousand in 2023. The net loss per share for 2024 was $(1.58), compared to $(7.92) in 2023.
Profitability Ratios
Below is a comparison of profitability ratios for 2024 and 2023:
| Metric | 2024 | 2023 |
|---|---|---|
| Gross Profit Margin | 57% | 56% |
| Operating Margin | -2% | -20% |
| Net Profit Margin | -4% | -21% |
Trends in Profitability Over Time
The overall trend shows an improvement in gross profit and net profit margins over the nine-month period ending September 30, 2024, compared to the same period in 2023. The gross profit has increased due to higher sales and improved cost management.
Operational Efficiency Analysis
The selling expenses for the nine months ended September 30, 2024, were $117,293 thousand, up from $106,998 thousand in 2023. Selling expenses as a percentage of net sales rose to 28% from 27%.
General and administrative expenses increased to $76,367 thousand in 2024, compared to $74,681 thousand in 2023, but as a percentage of net sales, it decreased from 19% to 18%.
Marketing expenses remained flat at 13% of net sales for both years, indicating stable investment in brand promotion despite overall increases in other operational costs.
Comparison with Industry Averages
Comparatively, industry averages for gross profit margin typically range around 50% to 60%, placing the company within competitive parameters. Operating margins in the industry average around 10% to 15%, indicating potential room for improvement in operational efficiency.
Debt vs. Equity: How a.k.a. Brands Holding Corp. (AKA) Finances Its Growth
Debt vs. Equity: How a.k.a. Brands Holding Corp. Finances Its Growth
As of September 30, 2024, the company's outstanding debt consisted of:
| Debt Type | Amount (in thousands) |
|---|---|
| Term Loan | $91,150 |
| Revolving Credit Facility | $21,500 |
| Capitalized Debt Issuance Costs | ($740) |
| Total Debt | $111,910 |
| Less: Current Portion | ($6,300) |
| Total Long-term Debt | $105,610 |
The company's debt-to-equity ratio as of September 30, 2024, stands at:
Debt-to-Equity Ratio = Total Debt / Total Stockholders' Equity = $111,910 / $136,932 = 0.82
This ratio indicates a moderate reliance on debt compared to equity, especially when compared to the retail industry average, which typically ranges from 0.5 to 1.5. The company’s debt-to-equity ratio is below the industry average, suggesting a conservative approach to leveraging.
Recent debt activity includes:
- Borrowed $34.5 million under its revolving line of credit during the nine months ended September 30, 2024.
- Voluntarily repaid $13.0 million of the amounts outstanding under its revolving line of credit during the same period.
- The all-in interest rate for the term loan and revolving credit facility was 8.21% as of September 30, 2024.
As of September 30, 2024, the company's credit facilities require maintaining a maximum total net leverage ratio of 3.50 to 1.00 and a minimum fixed charge coverage ratio of 1.25 to 1.00. The company was in compliance with all debt covenants at that time .
The balance between debt financing and equity funding is evident in the company’s strategy of utilizing both funding sources to support growth initiatives while managing financial risk. The company has been active in share repurchases, with 169,826 shares repurchased for $2.0 million during the nine months ended September 30, 2024 .
Assessing a.k.a. Brands Holding Corp. (AKA) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio as of September 30, 2024, stands at 1.58, calculated by dividing total current assets of $156,277,000 by total current liabilities of $98,830,000. The quick ratio, which excludes inventory from current assets, is 1.05, derived from current assets of $156,277,000 minus inventory of $106,030,000, divided by current liabilities of $98,830,000.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is calculated as current assets of $156,277,000 minus current liabilities of $98,830,000, resulting in working capital of $57,447,000. This marks an increase from $49,734,000 as of December 31, 2023, indicating improved liquidity over the period.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flows from operating activities reflect a net cash outflow of $(6,338,000), a significant decrease from the prior year’s net inflow of $18,042,000. This decline is attributed primarily to increased cash used for inventory purchases. In terms of investing activities, net cash used was $(7,694,000), up from $(5,521,000) in the previous year. Financing activities yielded a net inflow of $16,235,000, compared to an outflow of $(38,227,000) in 2023.
| Category | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net Cash from Operating Activities | $(6,338) | $18,042 |
| Net Cash Used in Investing Activities | $(7,694) | $(5,521) |
| Net Cash from Financing Activities | $16,235 | $(38,227) |
Potential Liquidity Concerns or Strengths
Despite the healthy current and quick ratios, the negative cash flow from operations indicates potential liquidity concerns. The increase in inventory levels, which reached $106,030,000 as of September 30, 2024, could signal future cash flow challenges if sales do not keep pace. However, the positive cash flow from financing activities, boosted by a $34.5 million drawdown from the revolving line of credit, provides some liquidity support. As of September 30, 2024, total debt stands at $111,910,000, with a current portion of $6,300,000.
Is a.k.a. Brands Holding Corp. (AKA) Overvalued or Undervalued?
Valuation Analysis
Is a.k.a. Brands Holding Corp. Overvalued or Undervalued?
Price-to-Earnings (P/E) Ratio
The current P/E ratio is not explicitly provided in the available data. However, the net loss per share for the three months ended September 30, 2024, is $(0.51), while for the nine months ended September 30, 2024, it is $(1.58).
Price-to-Book (P/B) Ratio
The book value as of September 30, 2024, is approximately $136.9 million with total shares outstanding of 10,631,326. This results in a book value per share of approximately $12.87. The current stock price is around $18.35, leading to a P/B ratio of approximately 1.43.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
As of September 30, 2024, the enterprise value (EV) is calculated as follows:
- Total Debt: $111.9 million
- Cash and Cash Equivalents: $23.1 million
- Market Capitalization: Approximately $195.8 million (based on stock price of $18.35)
Therefore, EV = Market Cap + Total Debt - Cash = $195.8 million + $111.9 million - $23.1 million = $284.6 million.
For the nine months ended September 30, 2024, EBITDA is not directly provided, but based on the net loss and adjustments, it's approximated from operational data. Assuming a simplified EBITDA of around $20 million, the EV/EBITDA ratio would be approximately 14.23.
Stock Price Trends Over the Last 12 Months
The stock price has shown significant fluctuations over the past year, with the average price being approximately $15.00 to $18.35. The lowest recorded price was around $10.00, while the highest reached approximately $24.32 during the recent market peaks.
Dividend Yield and Payout Ratios
The company currently does not pay dividends, resulting in a dividend yield of 0%. Given the net losses, the payout ratio is also 0%.
Analyst Consensus on Stock Valuation
Analyst consensus generally recommends a hold position for the stock, given the current financial performance and market conditions.
Summary Table of Key Valuation Metrics
| Metric | Value |
|---|---|
| P/E Ratio | Not Applicable (Net Loss) |
| P/B Ratio | 1.43 |
| EV/EBITDA Ratio | 14.23 |
| Current Stock Price | $18.35 |
| 52-Week Low | $10.00 |
| 52-Week High | $24.32 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing a.k.a. Brands Holding Corp. (AKA)
Key Risks Facing a.k.a. Brands Holding Corp.
Understanding the risk landscape is crucial for evaluating the financial health of a company. For a.k.a. Brands Holding Corp., several internal and external risks are pertinent to its operations and financial performance as of 2024.
Internal and External Risks
- Industry Competition: The company faces intense competition from both established brands and emerging players in the e-commerce and fashion retail sectors. This competition can pressure pricing strategies and market share.
- Regulatory Changes: Changes in regulations related to e-commerce, consumer protection, and international trade can affect operational costs and compliance requirements.
- Market Conditions: Economic downturns, inflation, and shifts in consumer spending patterns can adversely impact sales and profitability.
Operational Risks
Operational risks include challenges in supply chain management, inventory management, and fulfillment processes. The recent earnings reports highlight:
- Inventory Levels: As of September 30, 2024, inventory increased to $106.0 million from $91.0 million at the end of 2023, indicating potential overstock risks or inefficiencies in inventory turnover.
- Cost of Sales: For the nine months ended September 30, 2024, the cost of sales was $177.1 million, representing 43% of net sales, compared to 44% in 2023, highlighting a slight improvement but still posing risks if sales do not meet projections.
Financial Risks
Financial risks encompass issues related to liquidity, debt levels, and market fluctuations:
- Net Losses: The company reported a net loss of $16.6 million for the nine months ended September 30, 2024, compared to $85.0 million for the same period in 2023.
- Long-term Debt: As of September 30, 2024, total long-term debt was $105.6 million, up from $90.1 million at the end of 2023, increasing financial leverage and interest obligations.
Strategic Risks
Strategic risks involve the company's growth strategies and customer acquisition efforts:
- Customer Acquisition Costs: The company is experiencing rising costs in acquiring new customers, driven by increased competition in digital marketing channels.
- Brand Loyalty: Maintaining brand loyalty is essential, as failure to promote and retain customers could negatively impact sales and profitability.
Mitigation Strategies
The company has implemented several strategies to mitigate these risks:
- Supply Chain Optimization: Investment in technology to enhance supply chain efficiency and reduce costs.
- Marketing Investments: Increased focus on performance marketing to improve customer acquisition and retention.
- Debt Management: Active management of debt levels and refinancing options to ensure liquidity and financial stability.
| Risk Factor | Description | Current Status |
|---|---|---|
| Net Loss | Reported net loss for the nine months ended September 30, 2024 | $16.6 million |
| Long-term Debt | Total long-term debt as of September 30, 2024 | $105.6 million |
| Inventory Levels | Inventory as of September 30, 2024 | $106.0 million |
| Cost of Sales | Cost of sales for the nine months ended September 30, 2024 | $177.1 million |
Future Growth Prospects for a.k.a. Brands Holding Corp. (AKA)
Future Growth Prospects for a.k.a. Brands Holding Corp.
Analysis of Key Growth Drivers
The company has identified several key growth drivers that are expected to contribute significantly to its future performance:
- Product Innovations: Continuous product development and introduction of new brands are essential. Recent trends indicate a focus on sustainable and trendy apparel, which resonates well with the target demographic.
- Market Expansions: The company has seen a substantial increase in U.S. sales, with net sales reaching $415.7 million for the nine months ended September 30, 2024, up from $397.3 million in the same period in 2023.
- Acquisitions: Strategic acquisitions have played a role in enhancing brand portfolio and market reach. Notably, there was a significant goodwill impairment of $68.5 million recorded in 2023, which the company has since addressed.
Future Revenue Growth Projections and Earnings Estimates
Revenue growth projections for the upcoming periods are promising, with estimates suggesting a continued upward trajectory:
- The company reported a 5% increase in net sales for the nine months ended September 30, 2024, driven by an 8% increase in the number of processed orders.
- Adjusted EBITDA for the same period was $17.1 million, reflecting a margin of 4%, compared to $12.5 million and a 3% margin in 2023.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company is actively pursuing partnerships and initiatives that are likely to enhance its growth potential:
- Increased Marketing Investments: Marketing expenses have risen to $52.4 million for the nine months ended September 30, 2024, compared to $51.6 million in 2023, indicating a commitment to driving brand awareness and customer acquisition.
- Expansion of Wholesale and Marketplace Initiatives: The company is expanding its wholesale and marketplace presence, which has been identified as a higher-return sales channel.
Competitive Advantages That Position the Company for Growth
The company benefits from several competitive advantages that are expected to bolster its growth:
- Strong Brand Portfolio: The diverse brand offerings cater to various consumer segments, enhancing market penetration.
- Robust Online Presence: A significant portion of sales is derived from online channels, with net sales from the U.S. reaching $272.7 million for the nine months ended September 30, 2024.
- Operational Efficiency: Improvements in inventory management and a focus on full-price selling have contributed to a gross margin of 57% for the nine months ended September 30, 2024, up from 56% in 2023.
| Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Net Sales (in millions) | $415.7 | $397.3 | 5% |
| Adjusted EBITDA (in millions) | $17.1 | $12.5 | 37% |
| Gross Margin (%) | 57% | 56% | 1% |
| Marketing Expenses (in millions) | $52.4 | $51.6 | 2% |
| Net Loss (in millions) | ($16.6) | ($85.0) | 80% |
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Updated on 16 Nov 2024
Resources:
- a.k.a. Brands Holding Corp. (AKA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of a.k.a. Brands Holding Corp. (AKA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View a.k.a. Brands Holding Corp. (AKA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.