Luvu Brands, Inc.

For fiscal Q3 2024, net sales decreased 14% to $5.9 million from $6.9 million a year ago. Liberator sales fell 23% to $3.4 million, Jaxx sales rose 16% to $1.4 million, and Avana sales increased 5% to $686,000. Gross profit was $1.6 million, down 7%, while gross margin improved to 28% from 26%; nine-month gross margin was 27% versus 26% in the prior-year period. Adjusted EBITDA for the 9 months ended March 31, 2024 was $448,000 versus $2.04 million in the prior period, and working capital was $1.7 million at March 31, 2024 versus $1.793 million at June 30, 2023. Net inventory declined 17% to $3,468,000 from $4,202,000. Management did not provide formal next-quarter or full-year financial guidance, but said it is targeting a return to top-line growth and aiming to get revenue back to at least $30 million to $35 million in the short term.

Louis Friedman framed the quarter as difficult, citing a weaker overall pleasure-products retail market and increased competition from China-based knock-offs on e-tailers and Amazon. He said the company is responding with more targeted advertising, new product development, international expansion discussions, and a planned new intimacy brand aimed at mainstream retailers like drug, department, and specialty stores. His tone was confident and forward-looking, emphasizing that domestic manufacturing, innovation, and brand diversification should help the company return to growth and profitability.

Christopher Knauf focused on the mix of the quarter and the balance-sheet discipline. He highlighted Q3 gross profit of $1.6 million, gross margin of 28%, and nine-month adjusted EBITDA of $448,000, while noting that the EBITDA decline reflected lower sales and higher sales and marketing spend. He also pointed to improving inventory management, with net inventory down 17% to $3,468,000, and working capital down modestly to $1.7 million. He said the company is also evaluating investor-relations marketing support and a roadshow-style effort to increase awareness.

An investor first asked how Luvu plans to increase shareholder value and get the story out. Management said it is updating the website and deck, reaching out to investment funds and other parties, and considering investor-relations marketing support, while aiming to rebuild revenue to $30 million-$35 million. On business drivers, management said Liberator is still about 60% of the company, but Jaxx has a wider market opportunity and stronger margins, while Liberator’s recent comps were distorted by COVID and a nonrecurring Netflix bump. Questions about retail distribution led management to explain that Liberator is still limited in mainstream channels, so it is developing a separate brand with different graphics and price points for stores like Target, Sephora, and Bloomingdale’s.