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• Net Revenue: $64.2 million, a decrease of 17% year-over-year.

• Gross Margin: 40.3%, down 200 basis points from the prior year.

• Net Loss: $8 million, compared to $5.7 million in the same period last year.

• Adjusted EBITDA Loss: $4.7 million, compared to a $2.7 million loss in Q1 2024.

• Adjusted EBITDA Margin: Negative 7.3% versus negative 3.4% in the prior year period.

• Net Cash Provided by Operating Activities: $8.3 million, a $1.4 million improvement year-over-year.

• Free Cash Flow: $7.8 million, reflecting a $1.8 million increase year-over-year.

• Net Debt: $1.5 million at the end of Q1, a $7.2 million reduction from the end of Q4 2024.

• Inventory Balance: $39.7 million, a 4% decrease year-over-year.

• Return Rates: Improved by 170 basis points, marking the third consecutive quarter of improvement.

• Product Margins: Increased 100 basis points versus the prior year period.

• Operating Expenses: Declined 12% year-over-year, with fixed costs down 16%.

• Selling and Marketing Expenses: $15.9 million, down about $1.8 million year-over-year.

• General and Administrative Expenses: Decreased $3.1 million to $18 million in Q1, a 15% decline year-over-year.

• Interest Expense: $577,000 versus $383,000 in Q1 2024.

• Diluted Loss Per Share: $0.19 compared to $0.15 in Q1 2024.

• Warning! GuruFocus has detected 6 Warning Signs with LVLU.

Release Date: May 14, 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) saw strong sales momentum in occasion dresses, particularly in the bridesmaid category, contributing to healthy year-over-year net sales growth.

• The company exceeded expectations for cash flow and net debt reduction in the first quarter, strengthening its financial foundation.

• Product margins increased sequentially for the second consecutive quarter, with a 100 basis point improvement compared to the prior year.

• Return rates improved by 170 basis points, marking the third consecutive quarter of improvement, indicating successful enhancements in fit and quality.

• Wholesale revenue experienced triple-digit year-over-year growth, driven by strong partnerships with major partners and specialty retail momentum.

Negative Points

• The shoes and separate businesses continued to underperform, contributing significantly to the year-over-year decline in net sales.

• Profitability was pressured by the consolidation of distribution centers and related onetime costs, impacting the first quarter results.

• Net revenue decreased by 17% year-over-year, driven by a decrease in total orders placed and average order value.

• Gross margin for the quarter was down 200 basis points compared to the prior year, affected by lower efficiency in shipping costs.

• The company withdrew its previously issued fiscal year 2025 guidance for net revenue and adjusted EBITDA due to uncertainty related to international trade policy and tariffs.