Reports First Quarter Fiscal 2025 Net Sales of $5.76 million, Net Loss of $211,000

ATLANTA, GA / ACCESSWIRE / November 14, 2024 / Luvu Brands, Inc. (OTCQB:LUVU), a designer, manufacturer, and marketer of a portfolio of consumer lifestyle brands, announced today its financial and operational results for the first quarter of fiscal 2025 ending September 30, 2024.

For the three months ended September 30, 2024, highlights include:

• Net revenue decreased by 4% to $5.76 million versus the prior year.

• Gross margin remained flat at 26% from a year ago.

• Net loss of $211,000, or $0.00 per basic and diluted share.

• Adjusted EBITDA was a loss of $3,000, down from a profit of $63,000 a year ago.

• Inventory at September 30, 2024, was $3.0 million, an 8% decrease from June 30, 2024.

• As of September 30, 2024, the Company had $1.07 million in cash and cash equivalents, up 4% from June 30, 2024.

Louis Friedman, Chairman and Chief Executive Officer, commented on the results, "Despite the challenging economic environment, we remain committed to strengthening our market position and enhancing operational efficiencies. The first quarter results reflect the external pressures on consumer sentiment and the absence of significant marketing events from the previous year. However, our proactive measures, including increased digital advertising and influencer engagement, have set the foundation for future growth. According to Market Survey Lab, the Adult Store Market is projected to grow at a CAGR of 8.2% from 2024 to 2030. We are well positioned to exceed that growth rate."

Three Month Operating Results:

• Net revenue in Q1 FY2025 decreased 4% to $5.76 million compared to $6.13 million in the prior year. The year-over-year decrease is primarily attributable to lower sales from our adult wholesale customers. Additionally, a large contract order from the prior year was not repeated this year.

• Gross profit in Q1 FY2025 totaled $1.52 million compared to $1.58 million in the prior year, while the gross margin improved to 26.3% in Q1 FY2025 versus 25.8% a year ago. The decrease in gross profit is primarily due to the decline in units sold through our wholesale channels, and the improvement in gross margin is mainly due to lower freight and raw material costs compared to a year ago.

• Operating costs, excluding sales and marketing in Q1 FY2025, were $884,000, or 15% of net revenue, compared to $819,000, or 13% of net revenue in the prior year. The increase was primarily attributable to increases in personnel expenses and professional fees.

• Sales and marketing expenses in Q1 FY2025 totaled $645,000, or 11% of net revenue, compared to $695,000, or 11% of net revenue, in the prior year. This decrease resulted from eliminating unprofitable pay-per-click spending and reduced graphic design needs due to fewer new product launches compared to the prior year.

• Net loss in Q1 FY2025 was $211,000 compared to a net loss of $126,000 in the prior year.

• Adjusted EBITDA was a loss of $3,000, down from a profit of $63,000 a year ago.

Friedman added, "As we focus on reinvigorating our products and brands, we are encouraged by the strong consumer response to our recent influencer success. This makes us confident that our fresh, updated product collections coming to market over the next year will build on that success. We believe the combination of elevated product, good storytelling, and superior customer experience will position the business to return to top-line growth in 2025 and enable us to build long-term shareholder value."

Additional Information:

Please see www.luvubrands.com for updated events, press, and new product releases. If you wish to speak to us directly, please email chris.knauf@luvubrands.com with your preferred day and time.

Forward-Looking Statements

Certain matters discussed in this press release may be forward-looking statements. Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; acceptance of the Company's products in the market; the Company's success in obtaining new customers; the Company's success in product development; the Company's ability to execute its business model and strategic plans; the Company's success in integrating acquired entities and assets, and all the risks and related information described from time to time in the Company's filings with the Securities and Exchange Commission ("SEC"), including the financial statements and related information contained in the Company's Annual Report on Form 10-K and interim Quarterly Reports on Form 10-Q. Examples of forward-looking statements in this release include statements related to new products, anticipated revenue, and profitability. The Company assumes no obligation to update the cautionary information in this release.

*Use of Non-GAAP Measures - Adjusted EBITDA

Luvu Brands management evaluates and makes operating decisions using various financial metrics. In addition to the Company's GAAP results, management also considers the non-GAAP measure of Adjusted EBITDA. While Adjusted EBITDA is not a measure of performance in accordance with GAAP, management believes that this non-GAAP measure provides useful information about the Company's operating results. The table below provides a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure.

As used herein, Adjusted EBITDA income represents net income (loss) before interest income, interest expense, income taxes, depreciation, amortization, and stock-based compensation expense.

About Luvu Brands

Luvu Brands, Inc. designs, manufactures and markets a portfolio of consumer lifestyle brands through the Company's websites, online mass/drug merchants, and specialty retail stores worldwide. Brands include Liberator®, a brand category of iconic products for enhancing sensuality and intimacy; Avana®, yoga, inclined sleep therapy, and orthopedic pillow products; and Jaxx®, a diverse range of casual fashion daybeds, sofas, and beanbags made from virgin and re-purposed polyurethane foam. Many of our products are offered flat-packed and vacuum-compressed to save on shipping and reduce our carbon footprint. The Company is headquartered in Atlanta, Georgia, in a 140,000-square-foot vertically integrated manufacturing facility that employs over 190 people. Bringing sewn products manufacturing back to the USA and creating innovative consumer brands are core to the Company's operating principles. The Company's brand sites include www.liberator.com, www.jaxxbeanbags.com, www.avanacomfort.com, plus other global e-commerce sites. For more information about Luvu Brands, please visit www.luvubrands.com.

Company Contact:

Luvu Brands, Inc.
Chris Knauf
Chief Financial Officer
770-246-6426
Chris.knauf@LuvuBrands.com

Q1 FY2025 Results

Consolidated Statements of Operations