A.K.A. BRANDS HOLDING CORP. Q4 FY2024 earnings call

• Ciaran Long is the permanent CEO, and Kevin Grint is the CFO, joining from Walmart and Ernst & Young respectively.
• 2024 achievements: Stabilized business and returned to growth, $575M net sales, 17% US net sales growth, 9% growth in trailing twelve-month active customer base, expanded omnichannel, opened five Princess Polly stores, wholesale tests with Nordstrom, improved gross margin to 57%, and adjusted EBITDA up 69%.
• 2025 priorities: 1. Attract/retain customers via DTC channels with test-repeat merchandising and multi-platform marketing. 2. Expand reach via physical retail (7 new Princess Polly stores in 2025) and wholesale (Princess Polly and Petal and Pup launching across Nordstrom stores). 3. Streamline operations with tech ecosystem leveraging AI for customer personalization and operational excellence.
• Brand updates: Princess Polly opening new stores in NYC and across US, expanding wholesale with Nordstrom; Petal and Pup expanding assortment and partnerships; Culture Kings optimizing operations with test-and-repeat model leading to growth.

For 2024, a.k.a. Brands delivered $575 million in net sales, a 5.2% increase over the prior year. The US market, the largest, saw a 17% net sales growth. The trailing twelve-month active customer base grew 9% to surpass four million customers. Gross margin improved 200 basis points to 57%, and adjusted EBITDA was $23.3 million, a significant 69% year-over-year growth. In the fourth quarter of 2024, net sales increased 6.8% to $159 million, with US net sales up 21.6%, while Australia/New Zealand and rest of world saw declines. Gross margin expanded 460 basis points to 55.9%, and adjusted EBITDA was $6.2 million compared to $1.3 million in the prior year. Princess Polly, the largest brand, saw growth in physical stores and online performance. Petal and Pup expanded partnerships and assortment. Culture Kings optimized operations with a test-and-repeat model leading to growth.

• Full-year 2025 net sales expected to be $600 million to $610 million, representing 5% midpoint growth, driven by double-digit US growth and improving Australia/New Zealand trends (contemplating ~$10M FX headwind). Excluding FX, growth 6%-9%. Adjusted EBITDA expected to be $27.5 million to $29.5 million, 18%-27% growth from 2024.
• Q1 2025 net sales expected to be $121 million to $124 million (4%-6% growth), adjusted EBITDA $1.5 million to $2 million.
• Fiscal 2025 stock-based compensation ~$8M-$10M, depreciation/amortization ~$18M-$20M, interest/other expense ~$10M-$12M, effective tax rate negative 40%, weighted average diluted share count ~10.8M. Capital expenditures ~$12M-$14M for opening Princess Polly stores.

• Tariffs impact: Guidance contemplates tariffs, with sourcing team working to mitigate impact, but tariffs could affect costs and pricing.
• Currency fluctuations: FX headwinds in Australia/New Zealand and rest of world impact international sales.
• Consumer behavior changes: Could affect sales and marketing effectiveness, such as distracted consumer in Q1 2025.

Q: Ryan Meyers asks about US growth and Australia rebound, and potential impact of tariffs on pricing.

A: Ciaran Long responds that US growth is strong, Australia is showing improvement with Culture Kings' test-and-repeat model, and the company is positioned to take price while mitigating tariff impacts through sourcing and test-repeat model.

Q: Ashley Owens asks about gross margin guide and wholesale mix.

A: Kevin Grint says gross margin is forecasted flat to 2024, with shaping due to lapping inventory actions and wholesale impact. Ciaran Long mentions strong progress in wholesale with Princess Polly and Petal and Pup's success with Nordstrom, seeing wholesale as a big opportunity long term.

Q: Eric Beder asks about Culture Kings store expansion and Princess Polly store infrastructure.

A: Ciaran Long states Culture Kings is looking for a US store, with progress in online and Vegas store, and Princess Polly stores are building brand with new customers and halo effect, with team working to maintain quality.

Q: Randy Konik asks about business environment and long-term channel vision.

A: Ciaran Long mentions improvements in Australia and US, strong US growth and customer engagement, and long-term vision to be predominantly DTC but with meaningful opportunities in stores and wholesale, focusing on brand-building in each channel.