Lulu’s Fashion Lounge withdraws 2023 guidance

Crystal Landsem, CEO of Lulus, said: “We started seeing signs of stabilizing consumer trends early in the second quarter and observed sequential monthly improvement in our year-over-year net revenue comparisons as the quarter progressed. However, topline demand fell short of our expectations and return rates increased more than anticipated as the quarter progressed, which drove a year-over-year net revenue decline in the second quarter in line with what we observed in the first quarter. Adjusted EBITDA also declined more than our expectations primarily due to lower topline demand and higher returns. On a positive note, we expect to realize sequential and year-over-year improvement in our per order shipping costs driven by actions taken to optimize our shipping network. We expect the shipping cost improvements along with higher anticipated merchandise margins, to drive meaningful sequential Gross Margin rate improvement from the first quarter to the second quarter and a Gross Margin rate consistent with pre-pandemic levels. As we expect continued choppiness in consumer demand, macroeconomic uncertainties and elevated return rates, we are withdrawing our full year 2023 guidance. We will provide an update on our revised fiscal 2023 outlook on our upcoming earnings call to allow additional time to observe business trends through early August. Lastly, while we are disappointed with our second quarter results, we remain focused on adapting to changing customer behaviors, closely managing inventory and discretionary expenses, and continuing to drive brand awareness. Our balance sheet remains strong, reflected by continued sequential reduction in Net Debt and an increase in net cash generated by operating activities from the first quarter 2023 to the second quarter 2023. We have also made some exciting progress on our distribution channel expansion and look forward to updating everyone on our upcoming earnings call.”