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Naked Cuts Debt, Delays Financial Reporting

(Filed Under Financial and General Interest News). Naked Brand Group Limited postponed reporting its financial results for the first half of fiscal 2020 (the six months ended July 31, 2019), saying it expects to present them “in the fourth quarter of 2019 in conjunction with a business update conference call.”

In mid June the company released last year’s annual results (the fiscal year ended January 31, 2019), showing a loss of about $32.0 million (NZD $49.2 million), up from a loss of $24.5 million (NZD $37.6 million) the previous year.

Instead of revealing its financial results the company listed “key first half fiscal 2020 operational and subsequent highlights,” which included the previously announced exploration “to divest one or more of the brands in its portfolio” and the reduction of “trade payables to creditors by 51% year to date.” Also listed was the increase of “inventory levels by 25% to meet demand of brand portfolio channels” and the appointment of “David Adams as chief financial officer.”

It should be noted that in mid-June the company had announced the appointment of a different CFO: David Anderson. According to his Linkedin profile he is no longer at Naked.

In recent months Naked has sold shares to raise working capital and exchanged its shares for debt. Meanwhile the price of the company’s publicly traded stock has drifted steadily downward. A year ago (September 24, 2018) Naked’s share price closed at $2.68. On September 20, 2019 the shares closed at $.04.

Among the other recent events listed by Naked included a “global strategic review” that resulted in a “plan to realize an anticipated $6.5 million in annual cost savings,” and the exit of “unprofitable channels in the UK, EU and select Australian and New Zealand independent channels, inclusive of all related distribution and support infrastructure.” It added that “Naked will continue to service select EU and UK accounts due to strong brand strength in the region.”

Also noted was the downsizing of its offices in Sydney, Hong Kong and the U.S., and the initiation of “targeted new marketing campaigns with a focus on empowerment and acceptance of ‘EVERY BODY’, coupled with driving awareness on the health benefits of the correct support and bra fit of the women’s ever-changing body.”

Naked emphasized that it had fortified its “balance sheet through multiple financing and debt restructuring transactions, including: $3.9 million strategic financing and $5.4 million debt restructuring transaction in March 2019 with investors and key manufacturing partners.” Also listed was a “$1.5 million strategic investment from TokenPay Swiss AG, a company that invests in firms which incorporate blockchain technology products and services,” and the raising, in July and August, of “$3.6 million in new capital while canceling $6.5 million in trade payables due to certain of the Company’s suppliers.”

Naked’s recently named CEO Anna Johnson stated, “The first half of fiscal 2020 was highlighted by the implementation of our new strategic direction, as the lean, direct-to-consumer future we envisioned for the company becomes a reality. We are now focusing on ensuring that the business is structured to support the impending growth of our incredibly exciting direct-to-consumer channels. Due to our recent financing initiatives, which cleared a significant amount of supplier payables while providing us with additional cash to stock the channel and we now have sufficient inventory in place to supply our growing customer demand through the Christmas holiday enabling a resumption of revenue growth.”

“Financially, our restructuring efforts are proceeding as planned and cost savings are being realized as expected. Through a continuation of these efforts and further structure changes, we now expect to deliver a total forecasted SG&A savings of over $12.8 million through to FY21. We envision Naked as a lean, direct-to-consumer organization and are making significant efforts to realize this goal,” continued Johnson.

“Regarding our in-store initiatives, we have revamped our go-to-market strategy and media plan and expect to invest in our marketing spend with a positive ROI. Looking forward, the next planned phase is company-wide training, store layout changes and marketing efforts which are expected to return customer conversion to the 30-40% range with an increasingly large basket size as Naked has seen historically a major driver of the expected growth in our direct-to-consumer channel.”

She concluded, “We are well positioned to accomplish our goal of cash flow break even in the second half of fiscal 2020 and I look forward to continued operational execution and long-term shareholder value creation.” — NM

more Financial and General Interest News >>

Published 09-22-2019 by Nick Monjo

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