On August 7, 2024, Solo Brands Inc (DTC, Financial) released its 8-K filing detailing the financial results for the second quarter ended June 30, 2024. Solo Brands Inc is a Direct-To-Consumer (DTC) platform that operates four premium outdoor lifestyle brands: Solo Stove, Oru, ISLE, TerraFlame, IcyBreeze, and Chubbies apparel.
Performance Overview
Solo Brands Inc (DTC, Financial) reported net sales of $131.6 million for Q2 2024, a slight increase of 0.5% compared to $130.9 million in Q2 2023. This figure slightly exceeded the analyst estimate of $128.53 million. However, the company reported a net loss of $4.0 million, a significant decline from the net income of $11.5 million in the same period last year. The net loss per Class A common stock was $0.05, down from $0.12 in Q2 2023.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Sales | $131.6 million | $130.9 million |
| Net Income (Loss) | $(4.0) million | $11.5 million |
| Net Income (Loss) per Class A Common Stock | $(0.05) | $0.12 |
| Adjusted Net Income | $6.0 million | $17.9 million |
| Adjusted EBITDA | $15.5 million | $24.9 million |
Challenges and Strategic Initiatives
Despite the slight increase in net sales, Solo Brands Inc (DTC, Financial) faced several challenges. The company experienced a decline in direct-to-consumer revenues, which fell to $98.8 million, down 0.9% from $99.7 million in Q2 2023. However, retail revenues increased by 4.8% to $32.8 million, up from $31.3 million in the same period last year.
Gross profit decreased marginally to $82.6 million, primarily due to inventory fair value write-ups from 2023 acquisitions. Selling, general, and administrative expenses rose by 11.5% to $70.8 million, driven by increased marketing and distribution expenses, as well as higher employee-related costs.
Financial Achievements and Outlook
Solo Brands Inc (DTC, Financial) managed to reduce its inventory to $100.8 million as of June 30, 2024, down from $111.6 million at the end of 2023, reflecting prudent inventory management. However, the company’s net cash provided by operating activities turned negative, amounting to $(2.8) million for the first six months of 2024, compared to $51.8 million in the same period last year.
Looking ahead, Solo Brands Inc (DTC, Financial) has lowered its full-year 2024 guidance, expecting total revenue to be between $470 million and $490 million, down from the previous estimate of $499.77 million. Adjusted EBITDA margin is projected to be between 9% and 10%.
"We are pleased with our second quarter results and were encouraged to see strong retail sales and sequential improvement in our direct-to-consumer business," said Chris Metz, Chief Executive Officer of Solo Brands. "However, the near-term environment remains quite challenging and quarter to date, we are experiencing softer demand trends in our business as consumers are being more selective with their spending."
Conclusion
While Solo Brands Inc (DTC, Financial) managed to slightly exceed revenue estimates for Q2 2024, the company faces significant challenges in the current consumer environment. The decline in direct-to-consumer revenues and increased operating expenses have impacted profitability. The lowered full-year guidance reflects the cautious outlook amid uncertain macroeconomic conditions. Investors will be keenly watching how the company navigates these challenges and executes its long-term strategic plan.
Explore the complete 8-K earnings release (here) from Solo Brands Inc for further details.
