• Q4 Net Revenue: $66.1 million, down 12% year over year.
• Full-Year Net Revenue: $315.9 million, down 11% versus 2023.
• Q4 Gross Margin: 37.9%, down 120 basis points year over year.
• Full-Year Gross Margin: 41.2%, down 50 basis points compared to 2023.
• Q4 Net Loss: $31.9 million, including a $28.4 million goodwill impairment charge.
• Adjusted Q4 Net Loss: $3.5 million, excluding goodwill impairment.
• Full-Year Net Loss: $55.3 million, including goodwill impairment.
• Adjusted Full-Year Net Loss: $26.9 million, excluding goodwill impairment.
• Q4 Adjusted EBITDA Loss: $3.3 million, with a margin of negative 5%.
• Full-Year Adjusted EBITDA Loss: $9.7 million, with a margin of negative 3.1%.
• Q4 Interest Expense: $313,000.
• Q4 Diluted Loss Per Share: $0.76; adjusted loss per share $0.08 excluding goodwill impairment.
• Q4 Net Cash Used in Operating Activities: $2.5 million.
• Q4 Free Cash Flow Used: $3 million, improved by $3.7 million year over year.
• Inventory Balance at Quarter End: $34 million, down $1.4 million year over year.
• Q4 Wholesale Revenue Growth: 76% year over year.
• 2025 Net Revenue Guidance: $280 to $310 million, a decrease of 11% to 2% compared to 2024.
• 2025 Adjusted EBITDA Outlook: $0 to $6 million, an increase of $9.7 million to $15.7 million compared to 2024.

• Warning! GuruFocus has detected 3 Warning Signs with LVLU.

Release Date: March 27, 2025

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

Positive Points

• Lulus Fashion Lounge Holdings Inc (NASDAQ:LVLU) achieved positive double-digit sales growth in special occasion, bridesmaids, and bridal categories, reinforcing its leadership in event dressing.
• The company successfully reduced inventory by 4% year over year through calculated markdowns and promotions, maintaining healthy inventory levels.
• Wholesale revenue grew 76% year over year, driven by high double-digit gains among major partners and strong momentum in specialty retail.
• The company made significant progress in diversifying its sourcing out of China, which is expected to mitigate tariff-related pressures.
• Lulus Fashion Lounge Holdings Inc (NASDAQ:LVLU) launched successful brand campaigns and collaborations, driving higher reach, engagement, and media interest.

Negative Points

• Net revenue for Q4 was down 12% year over year, driven by a decrease in total orders placed and a decrease in average order value.
• Gross margin declined 120 basis points for the quarter, impacted by higher markdown sales and increased promotional activity.
• The company reported a net loss of $31.9 million for Q4, worsened by a non-cash $28.4 million goodwill impairment charge.
• Separates and shoe categories continued to weigh on performance, driving the majority of the year-over-year net sales declines.
• Profitability remained under pressure due to elevated markdown activity and the initial one-time costs related to the consolidation of distribution centers.

Q & A Highlights

Q: Can you elaborate on the strategic initiatives that Lulu's is focusing on for 2025? A: Crystal Landsem, CEO, explained that the company is concentrating on three main initiatives: optimizing product assortment to support margin expansion, investing in brand initiatives to enhance customer engagement and differentiation, and advancing technology and analytics to improve decision-making and customer experience. These efforts aim to drive sustainable, profitable growth.

Q: How is Lulu's addressing the impact of tariffs on its business? A: Crystal Landsem, CEO, stated that while tariffs are expected to impact the business in 2025, the company has taken steps to mitigate this by reducing exposure to China and increasing direct sourcing from factories in multiple geographies. This strategy is intended to alleviate tariff pressures and support margin expansion.

Q: What measures has Lulu's taken to improve profitability amid declining sales? A: Tiffany Smith, CFO, highlighted that the company has implemented cost reduction measures, including payroll and capital expenditure cuts, and a smaller Board of Directors. These efforts resulted in a 19% reduction in operating expenses in the second half of 2024 compared to the first half, helping to offset declines in gross profit.

Q: How is Lulu's performing in its wholesale channel, and what are the expectations for 2025? A: Crystal Landsem, CEO, reported that Q4 wholesale revenue grew 76% year over year, driven by strong partnerships with major retailers and new collaborations. The company expects robust wholesale growth to continue through 2025, supported by targeted expansions and strong brand partnerships.

Q: What are the key challenges Lulu's faced in Q4, and how is the company addressing them? A: Crystal Landsem, CEO, noted that the separates and shoe categories underperformed, contributing to year-over-year net sales declines. The company is realigning its assortment strategy to focus on dressier options, which aligns with its core strength in occasion wear, and expects these changes to improve profitability.

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