Retail Insight Network

Daily Newsletter

11 August 2023

Daily Newsletter

AKA Brands’ sales dropped 14.2% in Q2 FY23

The company expects net sales between $555m and $565m for the full year of 2023.

Fashion brands accelerator AKA Brands has reported total net sales of $136.0m in the second quarter (Q2) of fiscal year (FY) 2023, down 14.2% from $158.5m in the same quarter of FY22.

Sales in the US dropped 2.8% compared to Q2 FY22 but grew 12.3% on a two-year stack.

The company attributed the decrease in sales to the decline in the number of orders and average order value during the quarter.

During the quarter ending 30 June, AKA Brands registered a net loss of $5.0m compared to a net loss of $4.2m a year ago.

It recorded a loss per share of $0.04 in Q2 FY23 against a loss of $0.03 per share in Q2 FY22.

The company’s adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) were $5.6m, representing 4.1% of net sales over the quarter.

AKA Brand interim chief executive officer and chief financial officer Ciaran Long said: “We continue to execute against our strategic initiatives and have made significant improvements in our operating efficiencies, which enabled us to deliver on our adjusted EBITDA and cash flow expectations for the second quarter.

“I’m also pleased that we continued to strengthen our balance sheet by way of strategically reducing inventories, which were down 16% since the end of fiscal 2022 and we paid down $12.5m of debt in the quarter.

“The US performance was in line with our expectations, registering $80m of net sales in the second quarter and delivering 12% growth on a two-year basis. Despite the inline performance in the US, hour overall net sales were dampened by continued macro pressures and consumer challenges in Australia.”

For the full year of 2023, the company expects net sales between $555m and $565m and adjusted EBITDA between $21m and $25m.

Q3 net sales are estimated to be in the range of $138m to $143m.

APAC duty-free market expected to grow fastest, fueled by rising income levels and international travelers

Per latest GlobalData estimates, the global duty-free market retailing market was valued at $49 billion in 2022, its highest level ever as it bounced back from the pandemic impact, and is expected to grow at a CAGR of more than 28% during the period 2020-2026, driven by government initiatives, rising passenger numbers, major global events (for instance global sporting tournaments) and the renewed popularity of cruise trips. Infrastructure investments will also play an important role, particularly airport expansion and space refurbishment, and investments in arrivals duty-free formats. That said, growth will be held in check in the years ahead by the permanent erosion of disposable income from the heightened cost of living impacting demand for air travel. The duty-free market in the APAC region showed strong growth in 2022, as traveler numbers surged in response to the lifting of travel restrictions. To cater for rising demand in the region, many airports in the APAC area are expanding and modernizing, giving duty-free stores greater space that will allow them to attract more customers. The future of APAC duty-free retail is also being shaped by the adoption of technology. The rise in online shopping, mobile payments, and digital marketing are giving businesses new ways to connect with customers and improve the shopping experience.