Sequential Improvement of 180bps in Quarterly Net Revenue Comps from Q1 2024 to Q2 2024 Gross Margin Rate of 45.5%, up 80bps from Second Quarter 2023 Provides Third Quarter 2024 Financial Outlook CHICO, Calif., Aug. 14, 2024 (GLOBE NEWSWIRE) -- Lulu's Fashion Lounge Holdings, Inc. ("Lulus" or the "Company") (NASDAQ:LVLU) today reported financial results for the second quarter ended June 30, 2024. Crystal Landsem, CEO of Lulus, said: "Our second quarter results were in line with the expectations laid out in our preliminary results, reflecting persisting headwinds that carried through the first half of the year from lower sales comps driven by lower markdown sales due to less markdown inventory, overall higher return rates resulting from a slower transition to our new return policy, and softer sales within our casual business. As our product assortment evolution progressed, quarterly net revenue comps improved sequentially by 180 basis points in the period. We saw continued double digit growth comps in our special occasion and bridesmaids business, reinforcing our position as a key destination for event apparel. Our new and novelty products continued to drive positive revenue comps and our reorder pipeline continues to further close the gap in sales compared to last year. In addition, gross margin improved in the second quarter, and inventory levels declined by 19% from Q2 2023, surpassing the year-over-year net revenue decline and reinforcing the agility of our data-driven buying model. We are confident that our ongoing strategic initiatives in brand awareness and customer engagement will drive growth and enhance our customer base, while cost reductions implemented in the third quarter of 2024 will support improved profitability." Second Quarter 2024 Highlights: Net revenue of $92.0 million, a decrease of 13% compared to $106.1 million in the same period last year, driven by a 14% decrease in Total Orders Placed with higher return rates, partially offset by higher Average Order Value ("AOV"). Markdown sales were down approximately 32% compared to the same period last year, contributing to the overall net revenue decline and Gross Margin improvement. Active Customers of 2.7 million, a decrease of 13% compared to 3.1 million in the same period last year. AOV of $143, an increase of 6% compared to $135 in the same period last year. Gross profit decreased 12% and Gross Margin increased 80 basis points to 45.5%, in each case compared to the same period last year. Net loss of $10.8 million, compared to a net loss of $2.6 million in the same period last year. This includes a $5.4 million non-cash expense related to the establishment of a valuation allowance on our deferred tax assets. Adjusted EBITDA* of ($0.2) million, compared to $4.2 million in the same period last year.  Net cash provided by operating activities of $3.7 million, compared to $4.6 million in the same period last year. Free Cash Flow* of $3.0 million, compared to $4.0 million in the same period last year. Total debt decreased by $6.0 million and $8.0 million during the thirteen and twenty-six weeks ended June 30, 2024, respectively. Net Cash* increased by $2.3 million and $7.3 million during the thirteen and twenty-six weeks ended June 30, 2024, respectively.   Thirteen Weeks Ended   June 30, 2024   July 2, 2023   YoY Change   (In thousands, except percentages) Net revenue $ 91,966     $ 106,122     (13 )% Gross profit $ 41,883     $ 47,396     (12 )% Gross Margin*   45.5 %     44.7 %   80 bps   Net loss $ (10,796 )   $ (2,597 )   316 % Adjusted EBITDA* $ (207 )   $ 4,219     NM   Diluted loss per share $ (0.26 )   $ (0.07 )   271 % Active Customers*   2,670       3,080     (13 )% Net cash provided by operating activities $ 3,690     $ 4,646     (21 )% Free Cash Flow* $ 3,026     $ 3,963     (24 )% NM – not meaningful* Note: This is a non-GAAP financial measure. See "Use of Non-GAAP Financial Measures and Other Operating Metrics" section below for definitions of these metrics. Tiffany Smith, CFO of Lulus, said: "Our revised outlook reflects our expectations that the challenging macro environment and related consumer pressures will persist through the remainder of the year. Given these ongoing headwinds and the prolonged macro uncertainty, we are withdrawing the previously issued full-year net revenue and Adjusted EBITDA outlook. We are committed to delivering against our strategic initiatives and cost reduction measures to best position us for future growth, and we are encouraged by improving sales trends in our business. Despite the potential impact of current economic headwinds on the timeline, confidence remains high in achieving our long-term sales and profitability targets." Updated Financial Outlook: Third quarter 2024 net revenue is expected to be between approximately $75 million and $79 million, compared to $83.1 million in the same period last year, reflecting continued sequential improvement in our quarterly net revenue comps. The full year 2024 capital expenditure plan has been reduced to approximately $3.5 million, a reduction of $1.5 million to $2.5 million relative to our previous estimate. The cost reduction measures are expected to contribute to an approximate 10-15% reduction in operating expenses for the second half of 2024 compared to the first half, to better align with the anticipated slower sales recovery. Forecasting future results or trends is inherently difficult for any business, and actual results or trends may differ materially from those forecasted. Lulus' outlook is based on current indications for its business. Lulus' outlook factors in our current best estimates for anticipated headwinds, including those related to the level of demand, spending and returns by our customers, macroeconomic uncertainties, inflation, supply chain pressures, and shipping costs and the intended impact of cost-reduction measures. Given the volatile nature of current consumer demand and potential for further impacts to consumer behavior due to macroeconomic factors, including continued inflation, higher interest rates, the presidential election, as well as other world events, wars, and domestic and international conflicts that affect overall consumer confidence and the predictability of consumer purchasing behavior, Lulus' financial outlook is subject to change. LULU'S FASHION LOUNGE HOLDINGS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS(Unaudited)(In thousands, except share and per share data)     Thirteen Weeks Ended   Twenty-Six Weeks Ended   June 30,      July 2,      June 30,      July 2,   2024   2023   2024   2023 Net revenue $ 91,966     $ 106,122     $ 169,225     $ 197,098   Cost of revenue   50,083       58,726       94,696       111,741   Gross profit   41,883       47,396       74,529       85,357   Selling and marketing expenses   24,914       24,670       42,607       44,159   General and administrative expenses   21,436       24,396       42,547       48,744   Loss from operations   (4,467 )     (1,670 )     (10,625 )     (7,546 ) Interest expense   (270 )     (426 )     (653 )     (949 ) Other income, net   272       373       498       446   Loss before provision for income taxes   (4,465 )     (1,723 )     (10,780 )     (8,049 ) Income tax provision   (6,331 )     (874 )     (5,752 )     (166 ) Net loss and comprehensive loss $ (10,796 )   $ (2,597 )   $ (16,532 )   $ (8,215 )                         Basic loss per share $ (0.26 )   $ (0.07 )   $ (0.40 )   $ (0.21 ) Diluted loss per share $ (0.26 )   $ (0.07 )   $ (0.40 )   $ (0.21 ) Basic weighted-average shares outstanding   41,356,780       39,680,908       41,188,150       39,457,607   Diluted weighted-average shares outstanding   41,356,780       39,680,908       41,188,150       39,457,607                                   LULU'S FASHION LOUNGE HOLDINGS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)(In thousands, except share and per share data)       June 30,     December 31,