• Net Sales: $575 million for fiscal 2024, a 5.2% increase over the prior year.
• US Net Sales Growth: 17% increase, highlighting strong performance in the largest market.
• Gross Margin: Improved by 200 basis points to 57% for the year.
• Adjusted EBITDA: $23.3 million, a 69% year-over-year growth.
• Fourth Quarter Net Sales: $159 million, a 6.8% increase year-over-year.
• Fourth Quarter Gross Margin: 55.9%, up 460 basis points from the previous year.
• Fourth Quarter Adjusted EBITDA: $6.2 million, with a margin increase of 300 basis points to 3.9%.
• Active Customer Base: 4.07 million, a 9.4% increase year-over-year.
• Average Order Value: $78 in the fourth quarter, a 2.6% increase year-over-year.
• Cash and Cash Equivalents: $24.2 million at the end of the fourth quarter.
• Debt: $111.7 million at year-end.
• Inventory: $95.8 million, a 5% increase compared to the previous year.
• 2025 Sales Outlook: $600 million to $610 million, representing 4% to 6% growth.
• 2025 Adjusted EBITDA Outlook: $27.5 million to $29.5 million, an 18% to 27% growth.
• Capital Expenditures for 2025: $12 million to $14 million, primarily for opening seven new stores.

• Warning! GuruFocus has detected 5 Warning Signs with AKA.

Release Date: March 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• a.k.a. Brands Holding Corp (NYSE:AKA) achieved a significant milestone by stabilizing the business and returning to growth, with net sales of $575 million, a 5.2% increase over the prior year.
• The company saw impressive 17% net sales growth in the US, its largest market, highlighting the strength of its brands.
• a.k.a. Brands expanded its omnichannel initiative, opening five Princess Polly stores and enhancing wholesale partnerships with retailers like Nordstrom.
• The company improved its gross margin by 200 basis points to 57% due to stronger full-price sales and high-quality merchandise.
• Adjusted EBITDA grew significantly by 69% year over year, reaching $23.3 million, demonstrating strong financial performance and strategic execution.

Negative Points

• Sales in Australia and New Zealand declined by 9.6% in the fourth quarter compared to the previous year, indicating regional challenges.
• Net sales in the rest of the world region declined by 13.5% year over year, showing weakness outside the US market.
• Marketing expenses increased to $22.3 million, up from $17.3 million in the fourth quarter of 2023, impacting overall profitability.
• General and administrative expenses rose to $24.9 million due to increased incentive compensation and non-routine legal matters.
• The company faces an approximate $10 million FX headwind in its 2025 net sales outlook, which could impact financial performance.

Q & A Highlights

Q: Can you comment on the expected double-digit growth in the US for 2025 and what gives you confidence in a rebound outside the US? A: Ciaran Long, CEO: The US showed strong growth of 22% in Q4, and we see improving trends in Australia. The test and repeat model for Culture King's own brands is performing well, with Leiter showing over 100% growth in Q4. We've added new leadership in Australia to drive further growth.

Q: How are you managing the potential impact of tariffs in the US, and can you take price without affecting volume or customer growth? A: Ciaran Long, CEO: Our guidance includes the impact of tariffs, and we're working with vendors to mitigate these. Our test and repeat model allows us to adjust pricing effectively, and we believe our strong brand positioning supports this strategy.

Q: Can you provide insights into the flat gross margin guidance for 2025 and the impact of increasing wholesale penetration? A: Kevin Grant, CFO: We expect gross margin to remain flat, considering known tariffs and mitigation actions. The first half will benefit from lapping prior promotional actions, and while wholesale will impact margins, it won't be significant this year.

Q: What are your thoughts on the wholesale channel and the mix of business, especially with the expansion of Princess Polly stores? A: Ciaran Long, CEO: We're pleased with the progress in wholesale, particularly with Nordstrom. While we remain predominantly online, there's significant opportunity in wholesale and physical stores to enhance brand presence and reach new customers.

Q: What are the plans for Culture Kings in the US, and what performance metrics are you looking for before expanding stores? A: Ciaran Long, CEO: Culture Kings is performing well in the US, both online and in the Vegas store. We're exploring new store locations and will incorporate key elements from the Vegas store. We aim to open a new location this year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.