Over 70% Year-Over-Year Growth in Revenue,
15 Store Openings and Continued Expansion of e-Commerce
Revenue
MONTREAL, Aug. 14, 2017 /CNW/ - LXRandCo, Inc.
("LXRandCo" or the "Company") (TSX: LXR, LXR.WT), a
rapidly growing, international omni-channel retailer of branded
vintage luxury handbags and accessories, today announced financial
results for the second quarter ended June
30, 2017.
"Our 73% year-over-year growth in net revenue for the second
quarter is the direct result of the continued successful execution
of our international omni-channel strategy," said Fred Mannella, Chief Executive Officer. "We
opened 15 stores, expanding our retail network to 61 stores at the
end of the quarter, and remain on track to meeting our stated
target of 122 by year end. At the same time, we meaningfully
grew the proportion of e-Commerce revenue. Moving forward, we
remain focused on new store openings with both existing and new
retailer partners in North America
and overseas, and driving continued expansion of our fast-growing
e-commerce business, while providing an exceptional consumer
experience across all of our channels."
"Our growth this quarter is indicative of the strong interest in
the luxury vintage space, and our continued international expansion
reaffirms the global appeal for our product offering," added
Joe Mimran, Director and chair of
the Company's International Business Development Committee.
Unless otherwise indicated, all amounts are expressed in
Canadian dollars. Certain metrics, including those expressed on an
adjusted basis, are non-IFRS measures. See "Non-IFRS Measures"
further below. For a reconciliation of non-IFRS measures to their
most directly comparable measure calculated in accordance with
IFRS, see "Select Consolidated Financial Information" further
below.
Highlights for the Second Quarter ended June 30, 2017
(all comparable
figures are for the second quarter ended June 30, 2016)
- Net revenue increased 73% to $7.2
million from $4.1 million.
- Opened 15 stores, offset by one closure, expanding the retail
network to 61 stores.
- E-Commerce revenue increased to 6.2% of net revenue from
4.3%.
- Gross profit increased 60% to $2.0
million from $1.3 million.
- Adjusted EBITDA (a non-IFRS measure) was $(0.6) million, compared to $(0.2) million.
- Adjusted Net Loss (a non-IFRS measure) was $0.9 million, compared to $0.5 million.
- The number of employees increased to 223.
Discussion of Second Quarter Results
The following provides an overview of LXRandCo's financial
results during the three-month period ended June 30, 2017 compared to the three-month period
ended June 30, 2016.
Net Revenue
Net revenue increased by 73% to $7.2
million in the three-month period ended June 30, 2017 from $4.1
million in the three-month period ended June 30, 2016. E-Commerce revenue as a percentage
of net revenue was 6.2% in the three-month period ended
June 30, 2017 compared to 4.3% in the
three-month period ended June 30,
2016.
The increase in net revenue was primarily attributable to the
increase in sales from LXRandCo operating 39 more stores by the end
of the three-month period ended June 30,
2017 compared to the number of stores at the end of the
three-month period ended June 30,
2016. LXRandCo's retail network consisted of 61 stores as at
June 30, 2017 compared to a retail
network of 22 stores as at June 30,
2016. Store openings in the three-month period ended
June 30, 2017 consisted of 15 Retail
Stores, and there was one Retail Store closure. The increase in net
revenue was also due to an increase in wholesale revenue from fewer
clients, and an increase in e-Commerce revenue which was primarily
attributable to a more favourable customer experience as a result
of certain initiatives such as the Company's new web portal which
was released in mid-March 2017 and
the ongoing benefit of increased marketing activity undertaken in
the first quarter of 2017.
Gross Profit
Gross profit increased by 60% to $2.0
million in the three-month period ended June 30, 2017 from $1.3
million in the three-month period ended June 30, 2016. The change was primarily
attributable to the increase in net revenue.
Gross profit margin was 28.4% of net revenue in the three-month
period ended June 30, 2017, compared
to 30.8% of net revenue in the three-month period ended
June 30, 2016. The decrease in gross
profit margin was primarily due to the implementation of an
enhanced commission structure for retail employees at store level,
investments in branding, changes in product mix related to the sale
of lower margin products, increased freight costs associated with
international expansion and e-Commerce activity, the impact of
a weaker US dollar against the Canadian dollar in 2017 as compared
to the same period in 2016, and promotion activities undertaken in
the quarter.
Net Loss
Net loss was $16.4 million in the
three-month period ended June 30,
2017, compared to a net loss of $0.2
million in the three-month period ended June 30, 2016. The increase in net loss was
driven by factors related to the acquisition of LXR Produits de
Luxe International Inc. ("LXR International") (the "LXR
Acquisition"), in particular, the impact of a non-cash charge of
excess of fair value over net assets acquired, and non-recurring
acquisition costs.
Adjusted Net Loss
Adjusted Net Loss was $0.9 million
in the three-month period ended June 30,
2017, compared to an Adjusted Net Loss of $0.5 million in the three-month period ended
June 30, 2016. This increase was
primarily a result of a decrease in gross profit margin and higher
SG&A expenses resulting from the rapid expansion of LXRandCo's
retail network.
Adjusted EBITDA
Adjusted EBITDA was $(0.6) million
in the three-month period ended June 30,
2017, compared to $(0.2)
million in the three-month period ended June 30, 2016.
Change of Auditor
In connection with the LXR Acquisition, the auditor of LXR
International, Ernst & Young LLP, has been appointed the
auditor of the Company and PricewaterhouseCoopers LLP has ceased to
be the auditor of the Company.
Consolidated Financial Statements and Management's Discussion
and Analysis
The Company's unaudited interim condensed consolidated financial
statements for the three-month and six-month periods ended
June 30, 2017 and Management's
Discussion and Analysis ("MD&A") thereon are available on the
Company's web site at
http://investors.lxrco.com/quarterly-financials and under the
Company's profile on SEDAR at www.sedar.com.
Conference Call
A conference call to discuss second quarter results is scheduled
for tomorrow, August 15, 2017 at
8:30 a.m. EST. The dial-in number to
use for the conference call is +1-647-427-7450, with Conference ID
65973172. The toll free number is +1-888-231-8191.
A replay will be available shortly after the conclusion of the
call and will remain available until September 15, 2017. To access the replay, please
dial 1-416-849-0833 or toll free 1-855-859-2056 and use passcode
65973172.
About LXRandCo
LXRandCo is a rapidly growing, international omni-channel
retailer of branded vintage luxury handbags and accessories.
LXRandCo sources and authenticates high quality pre-owned products
and sells them through: a retail network of stores located in major
department stores in Canada,
the United States and Europe; wholesale operations primarily in
the United States; and its own
e-Commerce website, www.lxrco.com. LXRandCo offers pre-owned
products from iconic brands such as Hermès, Louis Vuitton, Gucci and Chanel, among others,
at attractive prices and seeks to appeal to the aspirational
lifestyle needs of women of all ages. As at June 30, 2017, LXRandCo's retail network
consisted of 61 stores with nine located in Canada, 38 in the
United States, 10 in the Germany and four in Belgium. LXRandCo has offices in Montréal,
Québec, and Tokyo, Japan.
Non-IFRS Measures
This press release makes reference to certain non-IFRS measures.
EBITDA, Adjusted EBITDA and Adjusted Net Loss are not measures
recognized under international financial reporting standards
("IFRS") and do not have a standardized meaning prescribed by IFRS.
They are therefore unlikely to be comparable to similar measures
presented by other companies. These measures should also not be
considered in isolation nor used as a substitute for measures of
performance prepared in accordance with IFRS. The Company believes
that these non-IFRS financial measures provide meaningful
supplemental information regarding the Company's underlying
performance and may be useful to investors because they allow for
greater transparency with respect to key metrics used by the
Company in its financial and operational decision making,
normalized for non-recurring events. LXRandCO also believes that
providing such information to securities analysts, investors and
other interested parties who frequently use non-IFRS measures in
the evaluation of issuers will allow them to better compare its
performance against others in the retailing industry. Please see
the Company's MD&A for a detailed description of these measures
and a reconciliation of the measures to the nearest IFRS
measures.
Caution Regarding Forward-Looking Statements
Certain statements in this press release are prospective in
nature and constitute forward-looking information and/or
forward-looking statements within the meaning of applicable
securities laws (collectively, "forward-looking
statements"). Forward-looking statements include, but are not
limited to, statements concerning the financial results and
condition of the Company, expectations regarding market trends,
overall market growth rates and the Company's growth rates, future
objectives and strategies to achieve those objectives, including,
without limitation, store openings, store productivity, margin
improvements and e-Commerce penetration as well as other statements
with respect to management's beliefs, plans, estimates and
intentions, and similar statements concerning anticipated future
events, results, outlook, circumstances, performance or
expectations that are not historical facts.
Forward-looking statements generally, but not always, can be
identified by the use of forward-looking terminology such as
"outlook", "objective", "may", "could", "would", "will", "expect",
"intend", "estimate", "forecasts", "project", "seek", "anticipate",
"believes", "should", "plans" or "continue", or similar expressions
suggesting future outcomes or events and the negative of any of
these terms.
Forward-looking statements reflect management's current beliefs,
expectations and assumptions and are based on information currently
available to management, which includes assumptions about continued
revenues based on historical past performance, management's
historical experience, perception of trends and current business
conditions, expected future developments and other factors which
management considers appropriate. With respect to the
forward-looking statements included in this press release,
management has made certain assumptions with respect to, among
other things, the Company's ability to meet its future objectives
and strategies, the Company's ability to achieve its future
projects and plans and that such projects and plans will proceed as
anticipated, the expected growth of the Company's e-Commerce
revenue, the expected number and timing of store openings in
North America and internationally,
entering into new and/or expanded retail partnerships in
North America and internationally,
the Company's ability to source products, the Company's competitive
position in the vintage luxury industry, and beliefs and intentions
regarding the ownership of material trademarks and domain names
used in connection with the marketing, distribution and sale of the
Company's products as well as assumptions concerning general
economic and market growth rates, currency exchange and interest
rates and competitive intensity.
Readers are cautioned not to place undue reliance on
forward-looking statements, as there can be no assurance that the
future circumstances, outcomes or results anticipated or implied by
such forward-looking statements will occur or that plans,
intentions or expectations upon which the forward-looking
statements are based will occur. By their nature, forward-looking
statements involve known and unknown risks and uncertainties and
other factors that could cause actual results to differ materially
from those contemplated by such statements. Factors that could
cause such differences include, but are not limited to, those
factors described under the heading "Risk Factors" in Gibraltar Growth Corporation's final
non-offering long form prospectus dated May
12, 2017 and as described from time to time in the reports
and disclosure documents filed by the Company with the Canadian
securities regulatory agencies and commissions. Such list of risk
factors is not exhaustive of the factors that may impact the
forward-looking statements. These and other factors should be
considered carefully and readers should not place undue reliance on
the forward-looking statements in this press release. As a result
of the foregoing and other factors, there can be no assurance that
actual results will be consistent with these forward-looking
statements.
All forward-looking statements included in and incorporated into
this press release are qualified by these cautionary statements.
Unless otherwise indicated, the forward-looking statements
contained herein are made as of the date of this press release, and
except as required by applicable law, the Company does not
undertake any obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
Readers are cautioned that the actual results achieved will vary
from the information provided herein and that such variations may
be material. Consequently, there are no representations by LXRandCo
that actual results achieved will be the same in whole or in part
as those set out in the forward-looking statements.
Selected Consolidated Financial Information
The following table summarizes LXRandCo's recent results for the
periods indicated:
|
For the
Three-Months Ended June
30,
|
|
For the Six-Months
Ended June
30,
|
Consolidated
statements of loss and comprehensive loss:
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Net
revenue
|
$7,174,723
|
|
$4,136,951
|
|
$13,320,685
|
|
$7,981,827
|
|
Cost of
sales
|
5,136,572
|
|
2,861,279
|
|
9,478,026
|
|
5,455,033
|
Gross
profit
|
2,038,151
|
|
1,275,672
|
|
3,842,659
|
|
2,526,794
|
|
Selling, general and
administrative expenses
|
2,810,809
|
|
1,513,460
|
|
4,955,794
|
|
2,727,904
|
|
Amortization and
depreciation expenses
|
73,395
|
|
57,149
|
|
156,387
|
|
129,684
|
Results from
operating activities
|
(846,053)
|
|
(294,937)
|
|
(1,269,522)
|
|
(330,794)
|
|
Finance
costs
|
308,222
|
|
233,746
|
|
666,793
|
|
401,141
|
|
Debt extinguishment
costs
|
612,939
|
|
-
|
|
612,939
|
|
-
|
|
Foreign exchange loss
(gain)
|
(72,355)
|
|
6,593
|
|
(3,275)
|
|
(53,848)
|
|
Convertible
redeemable preferred share dividends
|
-
|
|
-
|
|
61,308
|
|
-
|
|
Non-recurring gain on
loss of control of a subsidiary
|
-
|
|
(363,948)
|
|
-
|
|
(363,948)
|
|
Non-recurring gain
from a step combination
|
-
|
|
-
|
|
(2,070,422)
|
|
-
|
|
Excess of fair value
over net assets acquired
|
14,089,742
|
|
-
|
|
14,089,742
|
|
-
|
|
Non-recurring
acquisition costs
|
774,785
|
|
-
|
|
774,785
|
|
-
|
|
Gain on expiration of
warrants
|
-
|
|
-
|
|
(3,195,459)
|
|
-
|
Loss before income
taxes
|
(16,559,386)
|
|
(171,328)
|
|
(12,205,933)
|
|
(314,139)
|
Income tax
expense
|
|
|
|
|
|
|
|
|
Current
|
85,876
|
|
(186,084)
|
|
86,996
|
|
14,054
|
|
Deferred
|
(197,531)
|
|
186,236
|
|
(197,531)
|
|
-
|
|
(111,655)
|
|
152
|
|
(110,535)
|
|
14,054
|
Net loss for the
period
|
(16,447,731)
|
|
(171,480)
|
|
(12,095,398)
|
|
(328,193)
|
Other
comprehensive income (loss)
|
|
|
|
|
|
|
|
|
Cumulative
translation adjustment
|
127,987
|
|
34,842
|
|
32,263
|
|
69,122
|
Comprehensive loss
for the period
|
(16,319,744)
|
|
(136,638)
|
|
(12,063,135)
|
|
(259,071)
|
The following table provides a reconciliation of net loss to
EBITDA and Adjusted EBITDA for the periods indicated:
|
For the
Three-Months Ended
June
30,
|
|
For the Six-Months
Ended
June
30,
|
Reconciliation
of net loss to EBITDA and Adjusted EBITDA:
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Net
loss
|
$(16,447,731)
|
|
$(171,480)
|
|
$(12,095,398)
|
|
$(328,193)
|
Amortization and
depreciation expense
|
73,395
|
|
57,149
|
|
156,387
|
|
129,684
|
Finance
Costs
|
308,222
|
|
233,746
|
|
666,793
|
|
401,141
|
Income tax
expense
|
(111,655)
|
|
152
|
|
(110,535)
|
|
14,054
|
EBITDA
|
(16,177,769)
|
|
119,567
|
|
(11,382,753)
|
|
216,686
|
Adjustments to
EBITDA:
|
|
|
|
|
|
|
|
|
Debt extinguishment
costs
|
612,939
|
|
-
|
|
612,939
|
|
-
|
|
Foreign exchange loss
(gain)
|
(72,355)
|
|
6,593
|
|
(3,275)
|
|
(53,848)
|
|
Convertible
redeemable preferred share dividends
|
-
|
|
-
|
|
61,308
|
|
-
|
|
Non-recurring gain on
loss of control of a subsidiary
|
-
|
|
(363,948)
|
|
-
|
|
(363,948)
|
|
Non-recurring gain
from a step combination
|
-
|
|
-
|
|
(2,070,422)
|
|
-
|
|
Excess of fair value
over net assets acquired
|
14,089,742
|
|
-
|
|
14,089,742
|
|
-
|
|
Non-recurring
acquisition costs
|
774,785
|
|
-
|
|
774,785
|
|
-
|
|
Gain on expiration of
warrants
|
-
|
|
-
|
|
(3,195,459)
|
|
-
|
|
Stock-based
compensation expense
|
185,731
|
|
-
|
|
236,626
|
|
-
|
Adjusted
EBITDA
|
(586,927)
|
|
(237,788)
|
|
(876,509)
|
|
(201,110)
|
The following table provides a reconciliation of net loss to
Adjusted Net Loss for the periods indicated:
|
For the
Three-Months Ended
June 30,
|
|
For the Six-Months
Ended
June
30,
|
Reconciliation
of net loss to Adjusted Net Loss:
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Net
loss
|
$(16,447,731)
|
|
$(171,480)
|
|
$(12,095,398)
|
|
$(328,193)
|
Adjustments to net
loss:
|
|
|
|
|
|
|
|
|
Debt extinguishment
costs
|
612,939
|
|
-
|
|
612,939
|
|
-
|
|
Foreign exchange loss
(gain)
|
(72,355)
|
|
6,593
|
|
(3,275)
|
|
(53,848)
|
|
Convertible
redeemable preferred share dividends
|
-
|
|
-
|
|
61,308
|
|
-
|
|
Non-recurring gain on
loss of control of a subsidiary
|
-
|
|
(363,948)
|
|
-
|
|
(363,948)
|
|
Non-recurring gain
from a step combination
|
-
|
|
-
|
|
(2,070,422)
|
|
-
|
|
Excess of fair value
over net assets acquired
|
14,089,742
|
|
-
|
|
14,089,742
|
|
-
|
|
Non-recurring
acquisition costs
|
774,785
|
|
-
|
|
774,785
|
|
-
|
|
Gain on expiration of
warrants
|
-
|
|
-
|
|
(3,195,459)
|
|
-
|
|
Stock-based
compensation expense
|
185,731
|
|
-
|
|
236,626
|
|
-
|
Adjusted Net
Loss
|
(856,889)
|
|
(528,835)
|
|
(1,589,154)
|
|
(745,989)
|
The following table provides selected retail network data for
the periods indicated:
|
For the
Three-Months Ended
June 30,
|
|
For the Six-Months
Ended
June
30,
|
Selected retail
network data:
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Number of stores,
beginning of period
|
47
|
|
18
|
|
46
|
|
15
|
|
Store
openings
|
15
|
|
4
|
|
18
|
|
7
|
|
Store
closures
|
1
|
|
-
|
|
3
|
|
-
|
Number of stores, end
of period
|
61
|
|
22
|
|
61
|
|
22
|
SOURCE LXRandCo, Inc.