Luvu Brands Inc. (OTCMKTS:LUVU) shares jumped 4% on Monday after the consumer lifestyle brands designer, developer and marketer announced its fiscal Q1 2022 financial results.
Trading Data
On Monday, LUVU stock went up 4% to $0.2215 with more than 139k shares, compared to its average volume of 126k shares. The stock has moved within a range of $0.2060 – 0.2392 after opening trade at $0.21.
Earnings Review
The company reported a 16% net sales increase in Q1 2022 from $5.4 million to $6.2 million. Total gross profit remained unchanged YoY at $1.5 million, but gross profit as a fraction of net sales was down from 28% to 24%. Net income during the quarter was $227,000 or $0.00 per share relative to a net income of $329,000 a year ago.
CEO Louis Friedman said that in Q1, the company’s margins were impacted negatively by the increase in the cost of raw materials, high freight costs, and labor shortages compared to a year ago. However, Friedman said that the company continues to increase its wholesale and retail selling prices and has also outsourced extra production to Mexico. Equally, the company has invested in more automation to lower its costs. Therefore, in the coming weeks, investors should watch LUVU.
Key Quote
Louis Friedman, Chairman and Chief Executive Officer, commented, “During the first quarter, our margins were negatively impacted by raw material cost increases, labor shortages and higher freight costs compared to last year. We continue to increase our retail and wholesale selling prices, we have outsourced additional manufacturing to Mexico and invested heavily in additional automation to lower our costs. Although some raw material costs have begun to come down, I anticipate continued margin pressure for the next three to six months. Despite global supply chain disruptions, we are well stocked for the upcoming holiday season and I expect sales growth to be consistent with the most recent quarter.”
Technical Data
LUVU stock is trading below the 20-Day and 50-Day Moving averages of $0.24 and $0.32 respectively. However, the stock is trading above 200-Day moving average of $0.25. The stock is down 30% in the past month.
