Kaspien Holdings Inc. Reports Fiscal Second Quarter 2023 Results

SPOKANE, Wash., Sept. 12, 2023

Management Commentary

"The second quarter built on the progress achieved in the first quarter with improved gross profit margins and lower operating expenses driving a $2.5 million improvement in operating income." said Kaspien CEO Brock Kowalchuk. "We continue to focus on operational rigor and improving our balance sheet. I'm proud of the hard work and results our team has delivered for our business and brand partners."

Fiscal Second Quarter 2023 Financial Results
Results compare 2023 fiscal second quarter ended July 29, 2023 to 2022 fiscal second quarter ended July  30, 2022 unless otherwise indicated.

• Net revenue was $33.1 million for the thirteen weeks ended July 29, 2023 a 2.3% decrease from the comparable prior year period. The decrease in net revenue was primarily attributable to a decrease in subscription revenue due to the sale of the Company's agency business. Revenue from the Company's Fulfillment by Amazon ("FBA") US segment increased 0.4% as compared to the prior year period.
• Gross profit was $7.3 million for the thirteen weeks ended July 29, 2023, as compared to $6.7 million for the comparable prior year period. The increase in gross profit was primarily attributable to a reduction in fulfillment fees and warehousing and freight expenses. Gross profit as a percentage of net revenue was 22.1% as compared to 19.8% for the thirteen weeks ended July 31, 2022. Merchandise margin for the thirteen-week period ending July 29, 2023 was 39.7% as compared to 41.6% for the comparable prior year period.

		Thirteen Weeks Ended ARIVA.DE Börsen-Geflüster Kurse Kaspien Holdings 0,0061 $ -35,5%
			July 29,			July 30,
(amounts in thousands)			2023			2022
Merchandise margin		$	13,162		$	14,121
% of net revenue			39.7 %			41.6 %
Fulfillment fees			(3,945)			(4,654)
Warehousing and freight			(1,899)			(2,738)
Gross profit		$	7,318		$	6,729
% of net revenue			22.1 %			19.8 %

• Selling, General and Administrative expenses ("SG&A") decreased 19.1% to $8.3 million or 24.9% of net revenue from $10.2 million or 30.1% of net revenue in the comparable year-ago period. The decrease in SG&A expenses was primarily attributable to a $1.6 million decrease in general and administrative expenses.
• Loss from operations was $0.9 million, compared to a loss from operations of $3.5 million in the comparable year-ago period. The decrease in operating loss was the result of the increase in gross profit and reductions in SG&A.
• Other income for the thirteen-week period ended July 29, 2023 was $0.8 million and represented proceeds from an insurance claim.
• Net loss was $1.2 million, or $0.23 per diluted share, compared to a net loss of $4.4 million, or $1.69 per diluted share, in the comparable year-ago period.
• Adjusted EBITDA loss (a non-GAAP metric reconciled below) was $0.8 million compared to an adjusted EBITDA loss of $3.2 million in the comparable year-ago period.
• As of July 29, 2023, the Company had $0.3 million in cash and cash equivalents, compared to $1.1 million as of January 28, 2023 and $1.3 million as of July 30, 2022.
• Inventory at quarter end was $26.1 million, compared to $29.4 million as of July 30, 2022.
• As of July 29, 2023, the Company had borrowings of $8.8 million under its credit facility and had $3.4 million available for borrowing.

Fiscal First Half 2023 Financial Results
Results compare six months ended July 29, 2023 to six months ended July 30, 2022 unless otherwise indicated.

• Net revenue increased 0.6% to $66.1 million from $65.7 million in the comparable year-ago period. This increase in net revenue was driven by a 3.5% increase in net revenue for the Company's FBA US segment.
• Gross profit was $14.8 million or 22.4% of net revenue, compared to $13.6 million or 20.7% of net revenue over the comparable year-ago period. The increase in gross profit was primarily attributable to an increase in net revenue and a decrease in fulfillment fees and warehousing and freight expenses. The table below summarizes the year-over-year comparison of gross margin:

• SG&A expenses decreased 18.1% to $17.0 million or 25.7% of net revenue from $20.7 million or 31.5% of net revenue in the comparable year-ago period. The decrease in SG&A expenses was primarily attributable to a $3.4 million decrease in general and administrative expenses.
• Loss from operations totaled $2.2 million compared to a loss from operations of $7.1 million in the comparable year-ago period.
• Net loss was $3.3 million or $0.67 per diluted share, compared to a net loss of $8.8 million or $3.47 per diluted share in the comparable year-ago period.
• Adjusted EBITDA loss (a non-GAAP metric reconciled below) was $1.8 million, compared to a loss of $6.5 million in the comparable year-ago period.
• Cash used in operations for the twenty-six weeks ended July 29, 2023 was $0.8 million as compared to $5.9 million for the comparable prior year period.

Kaspien plans to file its quarterly Form 10-Q today, September 12, 2023, in accordance with SEC filing deadlines.

About Kaspien
Kaspien Holdings Inc. (f/k/a Trans World Entertainment Corporation) (NASDAQ: KSPN) is a leading, global e-commerce accelerator that deploys AI-driven software and end-to-end services to optimize and grow brands on Amazon, Walmart, Target, eBay, and other online marketplaces. Rebranded as Kaspien in 2020, the Company has spent more than a decade developing a marketplace growth platform of proprietary technologies that maximize supply chain resilience, optimize marketing, strengthen brand control, and provide predictive analytics. Serving a variety of brands, distributors, agencies and FBA aggregators, Kaspien accelerates growth by tailoring an extensive suite of seller services to its partners' dynamic e-commerce needs. Kaspien's mastery of the e-commerce space and commitment to rapid innovation has earned the trust of many leading brands. 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; (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 Loss from operations, net loss or cash used in operating activities, as determined in accordance with GAAP.

	Thirteen Weeks Ended			Twenty-Six Weeks Ended
	July 29,	July 30,		July 29,	July 30,
(amounts in thousands)	2023	2022		2023	2022
Net loss	$ (1,161)	$ (4,416)		$ (3,312)	$ (8,846)
Income tax expense	51	43		51	43
Other income	(777)	-		(777)	-
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