Luvu Brands (LUVU) Q1 2025 earnings summary

Executive summary

• Net sales for Q1 FY2025 were $5.76M, down 6% or 4% year-over-year, with declines in Liberator and Avana product lines and lower adult wholesale sales, partially offset by a slight increase in Jaxx sales.

• Gross margin remained steady at 26% or improved to 26.3%, but gross profit decreased to $1.52M from $1.58M year-over-year.

• Net loss widened to $211K from $126K in the prior year quarter, with EPS flat at $0.00 per share.

• Adjusted EBITDA was negative $3K, compared to positive $63K in the prior year quarter.

• Management highlighted proactive digital advertising and influencer engagement to drive future growth.

Financial highlights

• Operating expenses increased to 28% of net sales ($1.64M), up from 26% ($1.61M) year-over-year.

• Interest expense decreased to $89K from $96K due to lower notes payable.

• Cash and cash equivalents at quarter-end were $1.07M, up 4% sequentially but down from $1.13M a year ago.

• Net cash provided by operating activities was $132K, down from $171K year-over-year.

• Inventory decreased by $283K during the quarter, or 8% sequentially to $3.0M.

Outlook and guidance

• Management expects continued quarterly fluctuations due to seasonality, competition, and raw material costs.

• Focus remains on expanding online third-party drop ship business and launching new product collections to drive growth in 2025.

• The adult store market is projected to grow at an 8.2% CAGR through 2030, with expectations to outperform the market.