Toronto, Ontario, Aug. 28, 2023 (GLOBE NEWSWIRE) -- MiniLuxe Holding Corp. (TSXV: MNLX) today announced its financial results for the 13 weeks ended July 2, 2023 (“Q2 2023”) and the 26 weeks ended July 2, 2023 (“H1 2023”). The fiscal year of MiniLuxe is a 52-week reporting cycle ending on the Sunday closest to December 31, which periodically necessitates a fiscal year of 53 weeks. FY2022 consisted of a 53-week period while all other fiscal years referred to in this release consist of 52-week periods. All quarters referred to in this release consist of 13-week periods. Unless otherwise specified, all amounts are reported in U.S. dollars.

MiniLuxe is pleased to announce continued double-digit growth in year-over-year (“YOY”) revenue as the team continues to drive the business towards cashflow positive operations. Entering 2023, MiniLuxe built a strategy in its first full post-Covid year to leverage its core studio business (fleet of company-owned MiniLuxe locations) and its continued positive contribution while identifying and testing opportunities for diversification of revenue across new growth channels.

Strength in the core studio base business
Similar to previous periods, MiniLuxe continued its trend of double-digit growth in Q2 2023 as total company revenue increased 16% over Q2 2022 to $6.4M (all figures in US dollars). The continued growth reflects well vs. pre-pandemic (2019) comparatives as revenue increased 23% on a same-studio basis vs. Q2 2019. Q2 2023 gross profit increased 9% over Q2 2022 to $2.7M. As in past periods, the majority of this growth came organically from the studio base business as did the gross profit. The Company views gross profit dollar growth as a key indicator of MiniLuxe’s positive trajectory towards long-term profitability. Key drivers of revenue growth and gross profit growth in the core studio base came from positive momentum on the demand side (new customer and loyal customer growth) and supply side (talent ecosystem growth to deliver service demand).

• New and loyal customer growth: MiniLuxe continues to see robust growth in new customer count across the studios with an average new customer rate of ~15%. MiniLuxe’s loyal customer base remains robust and growing, with ~10,000 studio clients that average over 10 visits per year, a 7% increase year-over-year. The top 30 percent of these loyal clients visit MiniLuxe more than 20 times per year and have an average annual spend of ~$2000.
  
  
• Growth in attracting talent: On the supply side, MiniLuxe’s current and future success comes from the continued growth, development, and scaling of the MiniLuxe Talent Ecosystem. Beauty professionals who are part of MiniLuxe’s Talent Ecosystem are part of a Career Path Program – from Apprentice, Junior Designer, Studio Designer to Artistic and Expert Designer Levels. Total beauty professionals across MiniLuxe’s Talent Ecosystem ended Q2 2023 18% higher than year-end and 27% higher than Q2 2022.  The MiniLuxe studio fleet total staffed hours grew at double-digit rates vs. Q2 2022 with a focus of staffing on peak (high traffic) days, leading to similar growth rates in fleet appointment hours.
  
  

Continued progress but greater selectivity in other new growth channels
While new growth channels demonstrated continued progress, results were more mixed in terms of the ability to have near-term term impact on profitability. Outside of the studio base of business for MiniLuxe, new growth channels include its Anywhere off-premise services as well as MiniLuxe product revenue through e-commerce and wholesale channels. Given foreseeable macro-economic headwinds, the MiniLuxe Board and Management hold the view of prioritizing quality of revenue over quantity of revenue and are in the process of realigning resources to more selectively pull-back and / or double down in each of these growth channels.

MiniLuxe Anywhere Refocus: As previously shared, MiniLuxe has been exploring strategies to introduce and offer off-premise services to the self-care marketplace, referred to as MiniLuxe Anywhere. Throughout the past eighteen months, the Company has tested and explored multiple formats and opportunities, from development of a platform for on-demand mobile services, to 1:1 home and office visits, to corporate/events services offerings. While MiniLuxe Anywhere exhibited some good positive initial results in its test markets, the Company has narrowed its focus to “Store-in-Store” channel opportunities and selective events which have been more profitable and scalable versus delivering in individual homes and offices. Density of service delivery (i.e., where MiniLuxe has more locations and more talent) will be an important factor on future decisions regarding priority markets.

MiniLuxe Product Opportunities: Given industry-wide changes in paid social media, MiniLuxe took a conservative marketing spend approach to best generate marketing efficiency and positive e-commerce DTC (direct-to-consumer) growth. While the base of e-commerce remains modest, Q2 2023 e-commerce orders grew 63% from Q2 2022 and new customer counts increased 64% year-over-year with positive marketing-efficiency (i.e., positive return on spend) give management confidence of product potential. Hero SKUs – those products that have the highest sales velocity – remain in the categories of self-care products for hand and foot-care and seasonal polish colors.

Updates on M&A and Paintbox Integration
M&A remains an important part of MiniLuxe’s longer term growth plans. The MiniLuxe management team continues to assess opportunities for accretive growth via acquisitions. The current macro-economic environment offers with it more reasonable multiples for targets for service or product revenue acquisition candidates.

MiniLuxe’s planned growth initiatives for its Paintbox brand, which was acquired in Fall 2022, continue with further activities taken over the past several months. As a reminder, Paintbox, based in New York City and founded in 2014, has been re-defining the nail-care industry through its proprietary nail art designs. The two principal areas of focus for Paintbox are exploring “store-in-store” growth opportunities – which have included a test of the format in MiniLuxe’s Boston South End studio. The footprint of less than 200 square feet presents the opportunity for a capital-light model to scale in the future – with the largest opportunity being national channel partners.

• Asset-light store-in-store opportunities: The Company also launched a test for a second Paintbox “store-in-store” concept in collaboration with a New York fashion house that explores a model where a MiniLuxe or Paintbox outpost can serve as a traffic-generating amenity in exchange for in-kind “rent” and various revenue share models.
  
  
• Ready-to-Wear Nail rollout: MiniLuxe and Paintbox will also partner during New York Fashion Week (NYFW) this September. Some of the iconic fashion brands that the brands will partner with include 3.1 Phillip Lim and Tory Burch, where Paintbox will launch and feature a new product offering with “Ready-to-Wear Nail Art.” This latest Paintbox innovation represents the brand’s reinvention of press-on nails - curated in design and with some of the highest quality fit and finish qualities in the industry. To provide some perspective, press-on nails market sales exceeded wet polish sales industry wide in 2023.
  
  

“While the macro-economic environment still presents challenges, the core studio and its services remain strong, and we need to continue to compound the cash contribution from that base business while making the right bets on products, partnerships and M&A. We’ve seen a greater number of inbound opportunities that give us confidence on the strength of our brand in the industry, but most exciting this quarter has been the strong growth of both new customers and our most loyal customers,” said Tony Tjan, Executive Chairman and Co-founder of MiniLuxe.

Go-forward focus
With 3+ million services completed to date, a growing talent ecosystem of empowered beauty professionals, and expanded offerings across our product channels, MiniLuxe is well-positioned to continue building its market presence and creating long-term shareholder value.

In closing, MiniLuxe’s Board and Executive Team are focused on delivering a plan to achieve long-term cashflow generative operations through execution of three key pillars:

(1) Continued compounding of studio economics, particularly studio contribution, across the core base fleet business,
(2) Realignment of MiniLuxe’s infrastructure and cost base to focus on key priorities and achieve material fixed cost leverage in the near term, and
(3) Identifying and executing on a focused set of growth investments that have breakout growth potential.

As previously mentioned and subsequent to the end of Q2 2023, MiniLuxe completed an initial reconfiguration of its overhead, which should yield fixed cost leverage benefits in H2 2023. In addition to these actions, MiniLuxe is in the process of assessing and executing on further revenue and cost initiatives with the goal of providing a faster path to cashflow positive operations. The Company looks forward to sharing further updates throughout the remainder of the year.

Q2 2023 Financial Highlights ($USD)

• Total revenue of $6.4M, a YoY increase of 16%
• Gross profit of $2.7M, a 9% increase from prior year
• Full Company Adjusted EBITDA¹ of ($2.2M) compared to ($2.4M) for Q2 2022; decreased loss attributable to lower SG&A and initial commencement of fixed cost leverage
• Fleet Adjusted EBITDA¹ in line with prior year ($0.5M)

H1 2023 Financial Highlights ($USD)

• Total revenue of $11.6M, a YoY increase of 17%
• Gross profit of $4.9M, a 12% increase from prior year
• Full Company Adjusted EBITDA¹ of ($4.8M) compared to ($4.7M) for H1 2022; slightly lower EBITDA than prior year attributable to lag in SG&A related cost adjustments
• Fleet Adjusted EBITDA¹ in line with prior year ($0.6M)

Other Items of Note

• During Q2 2023, the Company completed construction and commenced operations in a new studio location in West Central Florida, at the Water Street Development in downtown Tampa Bay, FL. The grand opening of the studio occurred on May 11, 2023, as MiniLuxe celebrated its 21^st studio location opening, the first since the pandemic.
• During H1 2023, the Company signed a lease to open a new studio in Dedham, Massachusetts at the Legacy Place Development. The lessor has not yet made the studio available for use.

Q2 and H1 2023 Results

Selected Financial Measures

MiniLuxe notes a change in accounting policy to more accurately reflect revenue generated from talent and product revenue streams to more align with how management analyzes the Company. The change has been retrospectively applied and does not have any effect on revenue recognition principles utilized or total overall revenue recognized.

Results of Operations

The following table outlines the consolidated statements of loss and comprehensive loss for the fiscal quarters ended July 2, 2023, and June 26, 2022:

Cash Flows

The following table presents cash and cash equivalents as at July 2, 2023 and June 26, 2022:

Non-IFRS Measures and Reconciliation of Non-IFRS Measures

This press release references certain non-IFRS measures used by management. These measures are not recognized under International Financial Reporting Standards (“IFRS”), do not have a standardized meaning prescribed by IFRS, and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. The non-IFRS measures referred to in this press release are “Adjusted EBITDA” and “Fleet Adjusted EBITDA”.

Adjusted EBITDA

Adjusted EBITDA is used by management as a supplemental measure to review and assess operating performance. Management believes Adjusted EBITDA most accurately reflects the commercial reality of the Company's operations on an ongoing basis by adding back non-cash expenses. Additionally, the rent-related adjustments ensure that studio-related expenses align with revenue generated over the corresponding time periods.

Adjusted EBITDA is calculated by adding back fixed asset depreciation, right-of-use asset depreciation under IFRS 16, asset disposal, and share-based compensation expense to IFRS operating income, then deducting straight-line rent expenses¹ net of lease abatements. IFRS operating income is revenue less cost of sales (gross profit), additionally adjusted for general and administrative expenses, and depreciation and amortization expense.

The Company also uses Fleet Adjusted EBITDA to evaluate its fleet performance. This metric is calculated in a similar manner, starting with Talent revenue and adjusting for non-fleet Talent revenue and cost of sales, further adjusted by fleet SG&A and finally subtracting the same straight line rent expense used in the full company Adjusted EBITDA (as the fleet holds all real estate leases). The Company believes that this metric most closely mirrors how management views the fleet portion of the business.

The following table reconciles Adjusted EBITDA to net loss for the periods indicated:

The following table reconciles Fleet Adjusted EBITDA to net loss for the periods indicated:

About MiniLuxe

MiniLuxe, a Delaware corporation based in Boston, Massachusetts is a digital-first, socially responsible lifestyle brand and talent empowerment platform and marketplace [let’s consider] for the nail and waxing industry. For over a decade, MiniLuxe has been setting industry standards for health, hygiene, high quality services, and fair labor practices in its efforts to transform the nail care and waxing industry. Underlying MiniLuxe’s mission and purpose is to become one of the largest inclusionary educators and employers of diverse self-care professionals across our omni-channel ecosystem and talent empowerment platform.

Today, MiniLuxe derives its revenue streams from nail care and waxing services across an omni-channel ecosystem of on premises with company-owned studios and partnerships and off-premises on-demand services. The company also develops and sells a proprietary retail and e-commerce line of clean nail care and waxing products that are also used in MiniLuxe services. MiniLuxe is driven by a fully integrated digital platform that manages all client bookings, preferences, and payments and provides designers with the ability to manage scheduling and client preferences, track their performance and compensation, and access training content. Since its inception, MiniLuxe has performed nearly 3 million services. www.miniluxe.com

For further information

Anthony Tjan
Executive Chairman, MiniLuxe Holding Corp.
atjan@miniluxe.com

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-looking statements

This press release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking information") concerning the Company and its subsidiaries within the meaning of applicable securities laws. Forward-looking information may relate to the future financial outlook and anticipated events or results of the Company and may include information regarding the Company's financial position, business strategy, growth strategies, acquisition prospects and plans, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding the Company's expectations of future results, performance, achievements, prospects or opportunities or the markets in which the Company operates is forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects", "budgets", "scheduled", "estimates", "outlook", "forecasts", "projects", "prospects", "strategy", "intends", "anticipates", "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", or "will" occur. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events or circumstances.

Many factors could cause the Company's actual results, performance, or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking information, including, without limitation, those listed in the "Risk Factors" section of the Company's filing statement dated November 9, 2021. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance, or achievements could vary materially from those expressed or implied by the forward-looking statements contained in this press release.

Forward-looking information, by its nature, is based on the Company's opinions, estimates and assumptions in light of management's experience and perception of historical trends, current conditions and expected future developments, as well as other factors that the Company currently believes are appropriate and reasonable in the circumstances. Those factors should not be construed as exhaustive. Despite a careful process to prepare and review forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. These factors should be considered carefully, and readers should not place undue reliance on the forward-looking information. Although the Company bases its forward-looking information on assumptions that it believes were reasonable when made, which include, but are not limited to, assumptions with respect to the Company's future growth potential, results of operations, future prospects and opportunities, execution of the Company's business strategy, there being no material variations in the current tax and regulatory environments, future levels of indebtedness and current economic conditions remaining unchanged, the Company cautions readers that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which the Company operates may differ materially from the forward-looking statements contained in this press release. In addition, even if the Company's results of operations, financial condition and liquidity, and the development of the industry in which it operates are consistent with the forward-looking information contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods.

Although the Company has attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to the Company or that the Company presently believes are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information, which speaks only as of the date made (or as of the date they are otherwise stated to be made). Any forward-looking statement that is made in this press release speaks only as of the date of such statement.

¹Straight-line rent expense for a given payment period is calculated by dividing the sum of all payments over the life of the lease (the figure used in the present value calculation of the right-of-use asset) by the number of payment periods (typically months). This number is then annualized by adding the rent expenses calculated for the payment periods that comprise each fiscal year. For leases signed mid-year, the total straight-line rent expense calculation applies the new lease terms only to the payment periods after the signing of the new lease.