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Naked Losses Up 30.9%, While Sales Slide 14.8%

(Filed Under Financial and General Interest News). Naked’s losses surged 30.9%, to $32.0 million (NZD $49.2 million) in they year ended January 31, 2019, up from $24.5 million (NZD $37.6 million) the previous year.

Meanwhile, sales dropped 14.8% at New Zealand-based Naked Brand Group Limited, falling to $72.8 million (NZD $111.9 million) from $85.4 million (NZD $131.4 million) in the year ended January 31, 2018. (All currency conversions from New Zealand dollars to U.S. dollars are based on current data in this article).

Significantly, the company revealed that its overall internet business, of which Frederick’s of Hollywood is a prominent part, shrank slightly last year, despite a recent prediction of dramatic growth during 2018.

The firm also reported it had recently hired a new CFO, David Anderson.

“Our fiscal 2019 was impacted by several items which we do not believe will be recurring, such as stock supply issues related to our liquidity prior to us strengthening our balance sheet, one-time costs related to the U.S. listing process and Bendon’s merger with Naked,” declared new CEO Anna Johnson seeking to explain the results for the year ended January 31, 2019.

“Fiscal 2019 was a year of foundation building, setting the stage for continued revenue growth in fiscal 2020 and beyond,” she added. “We have notably strengthened our balance sheet while expanding our eCommerce initiatives and laying the groundwork for a more robust presence in highly trafficked retail stores, whether that be our corporate stores or those of our partners, such as CVS or Costco.”

“After conducting a thorough global strategic review, we completed our global operational transformation with an intent to drastically reduce operating expenses, exited unprofitable channels and consolidated our eCommerce presence and logistics supply chains. As a result, we have emerged a much leaner organization - I anticipate cost savings from these efforts to reach $6.5 million annually. We will leverage our iconic suite of globally recognized brands to resume our growth trajectory in FY2020 and beyond, primarily driven by our robust direct to consumer business as well as key wholesale accounts. Based on current trends, I believe we are well positioned to reach cash flow break even in the second half of fiscal 2020.”

Prior to their merger, both Bendon (previously a large, private New Zealand company) and Naked (a small, public U.S. firm) both had reported a string of annual losses. Bendon, in the fiscal year ended June 30, 2016, lost about $13.5 million (NZD $20.7 million) on sales of about $98.2 million (NZD $151.0 million). And in the year ended June 30, 2015 lost $8.6 million (NZD $13.2 million) on sales of about $90.3 million (NZD $138.8 million).

Naked, as a separate company before the merger, suffered continuing losses, including $10,798,503 on sales of $1,842,065 in its fiscal year ended January 31, 2017 and a loss of $19,063,399 on sales of $1,389,414 the year before that.

Despite the earlier prediction of rapidly expanding internet sales, a chart in the Naked SEC filing indicated that it’s eCommerce business, of which its Frederick’s of Hollywood is a big part, shrank slightly over the past year. In the twelve months ended January 31, 2019 “e-commerce” for the entire company was about $20.8 million at todays exchange rates (NZD $32.1 million), compared to about $20.9 million (NZD $32.2 million) the year before.

In a press release just last November Naked had stated, “management expects the Frederick’s of Hollywood e-commerce business to generate $25.0 million in revenue for the fiscal year ended January 31, 2019, achieving double digit sales growth compared to the fiscal year ended January 31, 2018 and representing a positive contribution to the company’s overall performance.”

But E-commerce is not a profit center for the company. It noted in the SEC filing that “For the 12-months ended January 31, 2019 the e-commerce EBITDA [earnings before interest, tax, depreciation and amortization] was a loss of $0.2m [about $130,000 U.S.] compared with a loss of $0.3m for the 12-months ended January 31, 2018. The loss for this period was impacted by the reduction in gross margin between the 12-month period to January 31, 2019 and 12-month period to January 31, 2018.”

A separate chart in the SEC filing showed a dramatic slide in Naked’s business in the U.S. in recent years. For the fiscal year ended June 30, 2016 combined wholesale sales in this country were about $12.3 million (NZD $18.9 million). For the year ended January 31, 2017 they were about $10.2 million (NZD $15.7 million). By the fiscal year ended January 31, 2018 they had dropped to $4.2 million (NZD $6.4 million). And in the fiscal year ended January 31, 2019 they fell even further to $3.8 million (NZD $5.8 million). The company did not explain the reasons for the declines in this country.

Naked’s new CFO Anderson previously worked as head of finance at Goodman Fielder, a consumer goods company in New Zealand, and as CFO and COO for apparel brand Icebreaker. — NM

more Financial and General Interest News >>

Published 06-17-2019 by Nick Monjo

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