Kaspien Holdings Inc. Reports Fiscal Second Quarter 2022 Results

Management Commentary

"In response to the decline in operating results in Fiscal 2021, we implemented several strategic initiatives to create operational efficiencies while focusing diligently on inventory and cash management. Our team continues to be focused on scalable, efficient growth and improving the unit economic of our business as we enter the holiday season." said Kaspien interim CEO Brock Kowalchuk

Fiscal Second Quarter 2022 Financial Results
Results compare 2022 fiscal second quarter ended July 30, 2022 to 2021 fiscal second quarter ended July 31, 2021 unless otherwise indicated.

Thirteen Weeks Ended

Change

 (amounts in
thousands)

July 30, 2022

July 31, 2021

$

%

Merchandise margin

$

14,121

$

15,936

$

(1,815)

-11.4 %

% of net revenue

41.6 %

45.7 %

-4.1 %

Fulfillment fees

(4,655)

(5,393)

738

-13.7 %

Warehousing and freight

(2,739)

(1,708)

(1,031)

60.4 %

Gross profit

$

6,727

$

8,835

$

(2,108)

-23.9 %

% of net revenue

19.8 %

25.3 %

Fiscal First Half 2022 Financial Results
Results compare six months ended July 30, 2022 to six months ended July 31, 2021 unless otherwise indicated.

Twenty-Six Weeks Ended

July 30,

July 31,

(amounts in thousands)

2022

2021

Merchandise margin

$

28,167

$

34,656

% of net revenue

42.9 %

45.9 %

Fulfillment fees

(9,222)

(11,843)

Warehousing and freight

(5,366)

(4,182)

Gross profit

$

13,579

$

18,631

% of net revenue

20.7 %

24.7 %

About Kaspien
Kaspien Holdings Inc. (f/k/a Trans World Entertainment Corporation) (NASDAQ: KSPN) is a leading e-commerce marketplace growth platform, offering an expanding suite of software and services to help brands grow on Amazon, Walmart, Target, eBay, and other online marketplaces. Founded in 1972 as a brick-and-mortar retailer and rebranded as Kaspien in 2020, the Company has spent the last decade building and utilizing proprietary technologies for brand protection, marketing optimization, and fulfillment efficiency to generate rapid revenue growth for its partners. Through innovative strategies and best-in-class technologies, Kaspien has earned the trust of many leading brands, including 3M, Strider Bikes, and ZippyPaws. For more information, visit kaspien.com.

Non-GAAP Financial Measures
Adjusted EBITDA is defined as net loss, adjusted to exclude: (i) income tax expense; (ii) Other (income) loss; (iii) interest expense; and (iv) depreciation expense. Our method of calculating adjusted EBITDA may differ from other issuers and accordingly, this measure may not be comparable to measures used by other issuers. We use adjusted EBITDA to evaluate our own operating performance and as an integral part of our planning process. We present adjusted EBITDA as a supplemental measure because we believe such a measure is useful to investors as a reasonable indicator of operating performance. We believe this measure is a financial metric used by many investors to compare companies. This measure is not a recognized measure of financial performance under GAAP in the United States and should not be considered as a substitute for operating earnings (losses), net earnings (loss) from continuing operations or cash flows from operating activities, as determined in accordance with GAAP.

Thirteen Weeks Ended

Twenty-Six Weeks Ended

July 30,

July 31,

July 30,

July 31,

(amounts in thousands)

2022

2021

2022

2021

Net loss

$ (4,416)

$ 82

$ (8,846)

$ (1,335)

Income tax expense (benefit)

43

46

43

46

Other (income) loss

-

(1,963)

-

(1,963)

Interest expense

901

461

1,663

1,015

Loss from operations

(3,472)

(1,375)

(7,140)

(2,237)

Depreciation expense

300

621

594

1,224

Adjusted EBITDA

$ (3,172)

$ (754)

$ (6,546)

$ (1,013)

About Key Performance Indicators
Gross Merchandise Value ("GMV") is the total value of merchandise sold over a given time period through a customer-to-customer exchange site. For Kaspien, it is the measurement of merchandise value sold across all channels and partners within the Kaspien platform.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements in this communication are forward-looking statements. The statements contained herein that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties.

We have used the words "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", and similar terms and phrases, including references to assumptions, in this document to identify forward-looking statements. These forward-looking statements are made based on management's expectations and beliefs concerning future events and are subject to uncertainties and factors that could cause actual results to differ materially from the results expressed in the statements. The following factors are among those that may cause actual results to differ materially from the Company's forward-looking statements: risk of disruption of current plans and operations of Kaspien and the potential difficulties in customer, supplier and employee retention; the outcome of any legal proceedings that may be instituted against the Company; the Company's level of debt and related restrictions and limitations, unexpected costs, charges, expenses, or liabilities; the Company's ability to operate as a going-concern; deteriorating economic conditions and macroeconomic factors; the impact of the COVID-19 pandemic; and other risks described in the Company's filings with the SEC, such as its Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.

The reader should keep in mind that any forward-looking statement made by us in this document, or elsewhere, pertains only as of the date on which we make it. New risks and uncertainties come up from time-to-time and it's impossible for us to predict these events or how they may affect us. In light of these risks and uncertainties, you should keep in mind that any forward-looking statements made in this document or elsewhere might not occur.

Company Contact
Ed Sapienza
Chief Financial Officer
509-202-4261
esapienza@kaspien.com

-Financial Tables to Follow-

 KASPIEN HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

Thirteen Weeks Ended

Twenty-six Weeks Ended

July 30,

 % to Net
Revenue

July 31,

 % to Net
Revenue

July 30,

 % to Net
Revenue

July 31,

 % to Net
Revenue

2022

2021

2022

2021

Net revenue

$ 33,907

$ 34,890

$ 65,697

$ 75,507

Cost of sales

27,178

80.2 %

26,055

74.7 %

52,118

79.3 %

56,876

75.3 %

Gross profit

6,729

19.8 %

8,835

25.3 %

13,579

20.7 %

18,631

24.7 %

Selling, general and administrative expenses

10,201

30.1 %

10,210

29.3 %

20,719

31.5 %

20,868

27.6 %

Loss from operations

(3,472)

-10.2 %

(1,375)

-3.9 %

(7,140)

-10.9 %

(2,237)

-3.0 %

Interest expense

901

2.7 %

461

1.3 %

1,663

2.5 %

1,015

1.3 %

Other (income) expense

-

0.0 %

(1,963)

-5.6 %

-

0.0 %

(1,963)

-2.6 %

Income (loss) before income tax expense

(4,373)

-12.9 %

128

0.4 %

(8,803)

-13.4 %

(1,289)

-1.7 %

Income tax expense

43

0.1 %

46

0.1 %

43

0.1 %

46

0.1 %

Net income (loss)

$ (4,416)

-13.0 %

$ 82

0.2 %

$ (8,846)

-13.5 %

$ (1,335)

-1.8 %

BASIC AND DILUTED INCOME PER SHARE:

Basic income (loss) per common share

$ (1.69)

$ 0.03

$ (3.47)

$ (0.56)

Weighted average number of common shares outstanding – basic

2,613

2,491

2,553

2,404

Diluted income (loss) per common share

$ (1.69)

$ 0.03

$ (3.47)

$ (0.56)

Weighted average number of common shares outstanding – diluted

2,613

2,538

2,553

2,404

 KASPIEN HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share and share amounts)

July 30,

January 29,

July 31,

2022

2022

2021

ASSETS

Unaudited

Unaudited

CURRENT ASSETS

Cash and cash equivalents

$ 1,309

$ 1,218

$ 2,570

Restricted cash

1,158

1,158

1,184

Accounts receivable

2,082

2,335

2,805

Merchandise inventory

29,363

29,277

25,024

Prepaid expenses and other current assets

618

649

1,056

Total current assets

34,530

34,637

32,639

Restricted cash

1,873

2,447

2,992

Fixed assets, net

2,357

2,335

2,301

Operating lease right-of-use assets

1,823

2,144

2,447

Intangible assets, net

-

-

218

Cash Surrender Value

3,768

4,154

4,277

Other assets

777

965

1,157

TOTAL ASSETS

$ 45,128

$ 46,682

$ 46,031

LIABILITIES

CURRENT LIABILITIES

Accounts payable

$ 8,012

$ 6,271

$ 7,599

Short-term borrowings

3,855

9,966

-

Accrued expenses and other current liabilities

1,753

2,362

1,941

Current portion of operating lease liabilites

550

649

622

Total current liabilities

14,170

19,248

10,162

Operating lease liabilities

1,416

1,608

1,942

Long-term debt

8,548

4,356

5,526

Other long-term liabilities

13,788

14,185

15,721

TOTAL LIABILITIES

37,922

39,397

33,351

SHAREHOLDERS' EQUITY

Preferred stock ($0.01 par value; 5,000,000 shares authorized; none issued)

-

-

-

Common stock ($0.01 par value; 200,000,000 shares authorized; 3,911,825,

3,902,985 and 3,902,985 shares issued, respectively)

39

39

39

Additional paid-in capital

263,723

359,220

359,016

Treasury stock at cost (771,514, 1,410,378 and 1,410,378 shares, respectively)

(125,906)

(230,170)

(230,170)

Accumulated other comprehensive loss

(910)

(910)

(2,007)

Accumulated deficit

(129,740)

(120,894)

(114,198)

TOTAL SHAREHOLDERS' EQUITY

7,206

7,285

12,680

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$ 45,128

$ 46,682

$ 46,031

View original content to download multimedia: https://www.prnewswire.com/news-releases/kaspien-holdings-inc-reports-fiscal-second-quarter-2022-results-301623562.html

SOURCE Kaspien Holdings Inc.