Investing

Let's Look Behind the Curtain as Fashion Maven a.k.a. Brands Rises 14% on Q1 Sales Above the Street

Ben Ward

Published: April 20, 2023 3:56 am

Last Updated: April 20, 2023 11:31 am

Fashion stock a.k.a. Brands (US:AKA) rallied 14.2% higher on Wednesday after announcing that it expects to report net sales of around $120 million for the first quarter of 2023, which surpassed the high end of its previously provided guidance of between $113 million and $116 million. Shares gave up 5.3% of gains in extended trading hours on Wednesday evening.

The rally was all but a blip on the one-year AKA stock price chart, showing the immense selling pressure over the last year. The interim management team will still have a lot to prove before regaining investor confidence as sales are still below their peak in 2022.

The company seems to have curbed what have been growing net losses in the most recent quarter. A table and chart from the Fintel metrics and ratios page for AKA illustrates the top and bottom line performances of the group over the medium term.

In Tuesday’s trading update, the fashion brand accelerator also reported an adjusted EBITDA of approximately $2.0 million to $2.2 million, topping the high end of its previously provided outlook of between $1.5 millionto $1.8 million. The company’s net loss of approximately $9.7 million to $9.6 million was within management’s expectations.

Strong Brands

The strong performance was attributed to the strength of its brands — including Culture Kings and Petal + Pup — and the disciplined execution of its growth strategies with its flexible operating mode. The company plans to release further details during its first quarter results on May 10.

According to a.k.a. Brands’ Interim CEO and CFO Ciaran Long, the company’s solid performance in the first quarter of 2023 exceeded their expectations on both the top line and at the adjusted level. He added that they remain focused on balancing growth and profitability, instilling confidence that their strategies will drive profitable growth.

The close of 2022 posted the worst performance since listing, however with new management at the wheel, only so much can be scrutinized on past performance.

The company also announced that the price of its common stock has fallen below the NYSE’s continued listing standard, which requires the average closing price of a listed company’s common stock to be at least $1.00 per share over a consecutive 30-day trading period. Management intends to fix the deficiency stating that a reverse stock split may be required, if approved by the board.

Lower Target

Bank of America analyst Alice Xiao has a ‘buy’ call on the stock but reduced her target to $2.60 from $3.00 to reflect marginally lower estimates. Xiao highlighted to investors that AKA’s asset-light data-driven model will do well when sales growth recovers after a period of headwinds on discretionary spending.

Fintel’s consensus target price of $2.19 suggests analysts’ think the stock could rally as much as 385% over the next year, recovering almost one quarter of losses since listing.

This article originally appeared on Fintel