• Net Sales: $99.9 million, a 13% year-over-year decline.
• Gross Margin: 60.8%, a 230 basis points increase year-over-year.
• Adjusted EBITDA: $3.6 million, representing a 3.6% adjusted EBITDA margin.
• Total Orders: Approximately flat year-over-year.
• Repeat Orders: Increased by 11% year-over-year.
• Average Order Value (AOV): Declined 12% year-over-year.
• SG&A Expenses: 61.9% of net sales, compared to 56.8% in Q3 2023.
• Adjusted SG&A: 57.3% of net sales, compared to 51.9% in Q3 2023.
• Cash Position: Approximately $153 million, a year-over-year increase of $5.5 million.
• Store Locations: Expanded to 40 showrooms by year-end, including new locations in Boston and New York City.
• Stock Repurchase: Approximately $179,000 spent in Q3, totaling $438,000 to date.
• Inventory Increase: Limited to 3.4% year-over-year.
• Guidance for 2024: Net sales expected to be $410 million to $425 million; adjusted EBITDA guidance raised to $14 million to $16 million.

• Warning! GuruFocus has detected 3 Warning Sign with BRLT.

Release Date: November 07, 2024

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

Positive Points

• Brilliant Earth Group Inc (NASDAQ:BRLT) reported its 13th consecutive quarter of profitability, showcasing consistent financial performance.
• The company achieved a gross margin expansion of 230 basis points year over year, reaching 60.8%, indicating improved operational efficiency.
• Strong sales growth was observed outside of engagement rings, particularly in wedding and anniversary bands and fine jewelry.
• The launch of the Jane Goodall fine jewelry collection was the most successful in the company's history, reflecting effective brand partnerships.
• Brilliant Earth Group Inc (NASDAQ:BRLT) continues to expand its retail footprint, with three new showrooms opening, enhancing its omni-channel presence.

Negative Points

• Net sales for Q3 were $99.9 million, representing a 13% year-over-year decline, indicating challenges in maintaining sales growth.
• The average order value declined by 12% year over year, suggesting a shift towards lower-priced items.
• The engagement ring market remains soft, impacting overall sales performance in this segment.
• SG&A expenses increased as a percentage of net sales, reflecting higher costs associated with new showroom openings and other investments.
• The competitive environment remains intense, with competitors heavily relying on promotions and discounts, posing challenges for maintaining market share.

Q & A Highlights

Q: As you think about the engagement market and normalization, when might it normalize and turn positive in terms of trends? Also, what are the biggest changes in bridal trends now versus prior? A: Beth Gerstein, CEO: We are seeing sequential improvement in engagement ring bookings and overall market trends. While we can't predict exactly when it will fully normalize, we are encouraged by the progress. Our strategic priorities are working, and we are seeing improvement both within and outside of bridal. We remain focused on protecting our brand and not chasing unprofitable growth.

Q: What inning are you in with the optimization engine, and how do you plan to handle a potentially intense promotional environment? A: Jeffrey Kuo, CFO: Our price optimization engine is dynamic and continuously refined with new data. It helps us balance top-line growth and gross margin capture. We are well-positioned to compete effectively and capture demand as it emerges, even in a competitive promotional environment.

Q: How are you preparing for the holiday season given the dynamic environment and fewer shopping days? A: Beth Gerstein, CEO: We have a diversified supply chain and are well-positioned to adapt to any tariff scenarios. Our asset-light model allows us to be agile. With three new showrooms opening, we are better positioned for last-minute shoppers. We will continue to monitor the environment and drive marketing efficiency to capture demand.

Q: Are you seeing a slowdown in new customer acquisition, and how are showroom trends impacting this? A: Beth Gerstein, CEO: The difference in new versus repeat orders is mainly due to softer bridal demand. Showrooms have performed well, and we view the omni-channel purchase process holistically. We are seeing sequential improvement in bookings, including engagement rings, and are well-positioned for the holidays.

Q: Can you elaborate on your marketing strategy and any areas of focus for 2025? A: Beth Gerstein, CEO: We continue to drive marketing efficiency and effectiveness, with social media being a key area. Our strategic priorities remain brand awareness, fine jewelry growth, and showroom expansion. Our recent Jane Goodall collection launch was our most successful ever, and we see continued opportunity in these areas.

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