A.K.A. Brands’ Earnings Call Highlights Growth and Challenges

A.K.A. Brands Holding Corp. ((AKA)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call for A.K.A. Brands Holding Corp. highlighted a generally positive sentiment, driven by strong performance in the U.S. market and overall revenue growth. The company has seen a notable increase in its active customer base and improved gross margins. However, there are challenges, such as sales declines in Australia, New Zealand, and other regions, alongside rising marketing and general and administrative expenses. The company is optimistic about its future, with plans to expand its physical and wholesale presence to support continued growth.

Strong Revenue Growth

A.K.A. Brands reported impressive net sales of $575 million for 2024, marking a 5.2% increase over the previous year. The U.S. market was a significant contributor, with net sales growing by 17%, underscoring the company’s successful strategies in this region.

Active Customer Base Expansion

The company’s active customer base expanded by 9%, surpassing four million customers. This growth reflects the effectiveness of A.K.A. Brands’ customer acquisition and retention strategies, which have been pivotal in maintaining a robust customer base.

Adjusted EBITDA Growth

A.K.A. Brands achieved a remarkable 69% year-over-year growth in adjusted EBITDA, reaching $23.3 million. This growth highlights the company’s operational efficiency and ability to enhance profitability.

Gross Margin Improvement

The company reported a 200 basis point improvement in gross margin, reaching 57%. This was driven by stronger full-price sales, indicating effective pricing strategies and product demand.

Successful Store Expansion

A.K.A. Brands opened five new Princess Polly stores and plans to open seven more in 2025, including a new location in New York City. This expansion is part of the company’s strategy to increase its physical retail footprint and reach more customers.

Expansion in Wholesale Partnerships

Princess Polly and Petal and Pup are set to launch new styles across Nordstrom stores nationwide, following a successful pilot. This expansion in wholesale partnerships is expected to enhance brand visibility and drive sales.

Sales Decline in Australia and New Zealand

Net sales in Australia and New Zealand saw a decline of 9.6% in Q4 2024 compared to the previous year. This decline poses a challenge that the company aims to address in the coming fiscal year.

Rest of World Sales Decline

Sales in the rest of the world region decreased by 13.5% year over year, highlighting the need for strategic adjustments to improve performance in these markets.

Increased Marketing and G&A Expenses

Marketing expenses rose to $22.3 million, accounting for 14% of net sales, up from 11.6%. General and administrative expenses also increased to 15.7% of net sales, from 15% the previous year. These rising costs are areas of concern that the company is monitoring closely.

Forward-Looking Guidance

For fiscal 2025, A.K.A. Brands provided robust guidance, projecting net sales between $600 million and $610 million, reflecting a 5% growth at the midpoint. Adjusted EBITDA is expected to range from $27.5 million to $29.5 million. The U.S. market is anticipated to continue its double-digit growth, with improvements expected in Australia and New Zealand. The company plans to open seven new Princess Polly stores and expand wholesale partnerships, aiming to boost brand awareness and profitability.

In conclusion, the earnings call for A.K.A. Brands Holding Corp. painted a picture of a company on the rise, with strong performance in the U.S. market and promising growth prospects. Despite challenges in certain regions and rising expenses, the company’s strategic expansions and forward-looking guidance suggest a positive outlook for the future.