A.K.A. Brands - the US parent company to Australian-born labels Culture Kings, Princess Polly and Petal & Pup - has recorded a net sales drop of 10.7 per cent in 2023 to US$546.3 million (AU$825.71 million).
This is despite Culture Kings recording double-digit growth in net sales in the US market for the full year, according to A.K.A. Brands.
The overall decrease in net sales across all four of its brands, which also includes Mnml, was mostly driven by an 8% decrease in the number of orders processed in 2023 compared to 2022, which drove a decrease in net sales of $49.7 million. There was also a decrease in average order value of 2%, from $82 in 2022 to $80 in 2023, which drove a decrease in net sales of $15.8 million.
The decrease in the number of orders and average order value were primarily due to adverse macroeconomic conditions in Australia and New Zealand, A.K.A Brands reported. On a constant currency basis, net sales and average order value for 2023 would have decreased 9% and 1%, respectively, as compared to 2022.
Despite the yearly drop, A.K.A Brands’ balance sheet improved in the second half, according to CFO and interim CEO Ciaran Long.
For the fourth quarter of 2023, net sales decreased by just 0.1 per cent to $148.9 million (AU$225.05 million). In the US, net sales had increased 11.6% compared to the fourth quarter of 2022.
“I’m pleased that we delivered net sales growth in the US in the fourth quarter of 2023, which marks the second consecutive quarter of growth in our largest market,” Long said.
“I’m proud of the teams’ strong execution across regions, which enabled us to reduce our year-end inventory by 28% compared to last year. Additionally, we continued to manage the business prudently and strengthened our balance sheet - we paid off more than $50 million of debt this year, effectively reducing our debt by 35% in fiscal 2023.”
Princess Polly opened its first store in the second half of 2023, with three to four more stores to be opened in the second half of 2024, including signed leases for stores in Boston and San Diego.
Petal & Pup launched on Nordstrom’s website in the first quarter of 2024, adding to the brand’s marketplace inclusions on Macy’s and Target’s websites.
Meanwhile, Mnml remains a top-selling brand at Culture Kings’ store in the US.
“As we look ahead, we will continue to deepen our relationships with customers by delivering fashion newness, launching new categories and leveraging innovative technologies,” Long said.
“Additionally, based on the success of our omnichannel tests in 2023, we are expanding our omnichannel initiatives in 2024 with the opening of three to four Princess Polly stores and new marketplace and wholesale opportunities to attract new customers and expand our total addressable market.
“Lastly, we remain committed to streamlining our operations to deliver long-term profitable growth.”