Executive Summary

Revenue declined 17% year over year to $64.2M with diluted GAAP EPS of ($0.19); management withdrew FY25 net revenue and Adjusted EBITDA guidance citing tariff and macro uncertainty, while guiding to positive Adjusted EBITDA in Q2 2025 .
Liquidity improved: operating cash flow rose to $8.3M, free cash flow to $7.8M, and net debt fell to $1.5M; gross margin expanded sequentially to 40.3% from 37.9% in Q4 .
Mix was bifurcated: continued strength in occasion/bridesmaid dresses and triple-digit wholesale growth, offset by weakness in casual wear and footwear; distribution center consolidation completed in Q1 .
Versus S&P Global consensus, Q1 missed on revenue and EPS; management attributed pressures to softer demand in non-event categories and elevated shipping costs, partially offset by product margin gains and lower returns . Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

Cash generation and de‑leveraging: operating cash flow improved to $8.3M and free cash flow to $7.8M; net debt reduced to $1.5M as revolver borrowings declined sequentially and further to $7.3M post‑quarter .
Category/mix positives: “sales momentum remained strong in occasion dresses, particularly in our bridesmaid category” with triple‑digit wholesale growth and rising first‑time reorders; return rates improved for a third consecutive quarter (−170 bps YoY) .
Sequential margin progress and cost actions: gross margin increased to 40.3% in Q1 from 37.9% in Q4; OpEx declined 12% YoY (fixed costs −16%) following targeted cost reductions and DC consolidation .

What Went Wrong

Top‑line pressure: net revenue fell 17% YoY to $64.2M, driven by a 17% decline in Total Orders Placed and a 5% decline in AOV (to $136), partially offset by lower return rates; active customers declined 8% YoY to 2.6M .
Non‑event categories and shipping costs weighed on margins: softness in casual wear and footwear persisted; product margin +100 bps YoY was offset by lower shipping efficiency, driving a 200 bps YoY gross margin decline to 40.3% .
Visibility reduced: management withdrew FY25 net revenue and Adjusted EBITDA guidance due to tariff and macro uncertainty, while DC consolidation created near‑term profit pressure in Jan/Feb before improving in March .

Financial Results

Quarterly performance

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($M)	$80.515	$66.147	$64.155
Gross Margin (%)	38.1%	37.9%	40.3%
Net Loss ($M)	($6.879)	($31.875)	($7.998)
Diluted EPS ($)	($0.16)	($0.76)	($0.19)
Adjusted EBITDA ($M)	($3.572)	($3.300)	($4.670)
Cash from Operations ($M)	($5.504)	($2.532)	$8.322
Free Cash Flow ($M)	($6.296)	($2.991)	$7.755

Year-over-year (Q1)

Metric	Q1 2024	Q1 2025
Revenue ($M)	$77.259	$64.155
Gross Margin (%)	42.3%	40.3%
Net Loss ($M)	($5.736)	($7.998)
Diluted EPS ($)	($0.15)	($0.19)
Adjusted EBITDA ($M)	($2.659)	($4.670)
Cash from Operations ($M)	$6.947	$8.322
Free Cash Flow ($M)	$5.988	$7.755
YoY Revenue Change		−17%

KPIs

KPI	Q1 2024	Q1 2025
Average Order Value ($)	$143	$136
Active Customers (M)	2.77	2.55
Return Rate (YoY change)	—	−170 bps

Versus S&P Global Consensus (Q1 2025)

Metric	Estimate	Actual	# Estimates
Revenue ($M)	$69.53*	$64.155	1*
Primary EPS ($, split-adjusted)	($1.50)*	($2.85)*	1*

Notes: S&P Global “Primary EPS” appears adjusted for the company’s 1‑for‑15 reverse split announced June 26, 2025; company‑reported Q1 diluted GAAP EPS was ($0.19) pre‑split . Values retrieved from S&P Global.*

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Revenue	FY 2025	$280–$310M (3/27/25)	Withdrawn (5/14/25)	Lowered/Withdrawn
Adjusted EBITDA	FY 2025	$0–$6M (3/27/25)	Withdrawn (5/14/25)	Lowered/Withdrawn
Capital Expenditures	FY 2025	$2.5–$3.0M	Maintained	Maintained
Adjusted EBITDA	Q2 2025	—	Positive expected	New
Net Debt	Q1 2025	$3–$4M expected	$1.5M actual	Better than guided

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
AI/technology enablement	No explicit AI; focus on cost actions and facility consolidation	AI‑driven site merchandising for discovery/personalization; Poshmark integration; robotics‑driven fulfillment	Increasing emphasis on AI and omni‑channel tools
Supply chain & tariffs	Working toward more flexible financing; macro pressures noted	Withdrew FY guide due to tariff/macro uncertainty; pursuing direct sourcing/diversification; H1 buys largely insulate Q2	Risk up, mitigation actions accelerating
Category performance	Event wear strength; casual softness in Q3/Q4	Occasion/bridesmaid momentum; casual and footwear still weak	Continued bifurcation
Returns/fit	Noted return pressure in 2024	Third straight quarter of improved returns (−170 bps YoY); updated flat‑fee return policy	Improving
Wholesale expansion	Expanding strategic wholesale partners (Q1 PRs)	Triple‑digit YoY wholesale growth	Accelerating
Operating model	DC consolidation in late Q4 into Q1	DC consolidation completed; March profitability improved	Execution progressing
Financing/liquidity	Targeting refinancing alternatives	Revolver down to $7.3M post‑quarter; refinancing contemplated	De‑risking balance sheet (still pending)

Management Commentary

“We exceeded our expectations in the first quarter with respect to cash flow generation and net debt reduction.” — CEO Crystal Landsem .
“We also saw sequential monthly improvement in our year-over-year net revenue comparisons… positive sales momentum in occasion dresses, led by our bridesmaid category… offset by continued softness in casual wear and footwear.” — CEO .
“We are withdrawing our previously issued full-year 2025 net revenue and Adjusted EBITDA outlook… We expect positive Adjusted EBITDA in the second quarter 2025.” — CFO Tiffany Smith .
“Product margins increased… +100 bps versus the prior year period. Gross margin also saw a sequential increase to 40.3% in Q1 2025 versus 37.9% in Q4 2024… Return rates improved by 170 basis points.” — CEO .
“We continue to focus on enhancement of product discovery and personalized shopping with AI… increased sell‑through in new product launched… acceleration of sales for newly introduced reorder products.” — President/CIO Mark Vos .

Q&A Highlights

The call did not include a Q&A session; the operator concluded with no questions from participants .
Management reiterated near‑term priorities in prepared remarks: positive Q2 Adjusted EBITDA, liquidity strengthening, tariff mitigation via sourcing diversification and pricing strategies .

Estimates Context

Q1 2025 vs S&P Global consensus: revenue $64.155M vs $69.53M estimate (miss), Primary EPS ($2.85) vs ($1.50) estimate (miss). Company‑reported diluted GAAP EPS was ($0.19) pre‑split; S&P figures reflect split‑adjusted EPS convention tied to the 1‑for‑15 reverse split announced June 26, 2025 . Values retrieved from S&P Global.*
Implications: Consensus may need to move lower on full‑year sales and profitability given guide withdrawal and category softness ex‑event wear; near‑term Q2 Adjusted EBITDA > 0 and liquidity improvements could temper downside to EBITDA expectations .

Key Takeaways for Investors

Mix resilience in event‑driven categories and wholesale strength continues, but casual/footwear drag and shipping inefficiency kept margins and volumes under pressure; watch for curated casual relaunch and sourcing actions to narrow the gap .
Sequential gross margin expansion and materially better cash generation signal operating discipline despite demand headwinds; free cash flow inflection is notable for a small‑cap retailer .
Withdrawal of FY25 revenue/EBITDA guidance elevates uncertainty tied to trade/tariffs; probability of estimate cuts rises until visibility improves, though Q2 positive Adjusted EBITDA guide offers a near‑term support .
Balance sheet risk moderating: Net debt down to $1.5M and revolver reduced to $7.3M post‑quarter; focus now shifts to successful refinancing and execution against cost/sourcing roadmap .
Leading indicators improved: returns down 170 bps YoY, product margin +100 bps YoY, brand equity at all‑time high amid AI‑driven merchandising and OOH/influencer campaigns .
Stock catalysts: confirmation of Q2 positive Adjusted EBITDA, progress on refinancing, evidence of casual/footwear repositioning traction, and sustained wholesale growth; risks include tariff resets and macro softness .

Appendix: Additional context and prior quarters

Q4 2024: Revenue $66.1M; gross margin 37.9%; Adjusted EBITDA ($3.3)M; GAAP EPS ($0.76) including a $28.4M goodwill impairment; FY25 guide initially set at revenue $280–$310M and Adjusted EBITDA $0–$6M (withdrawn on 5/14) .
Q3 2024: Revenue $80.5M; gross margin 38.1%; Adjusted EBITDA ($3.6)M; noted event wear strength and casual softness; focus on alternative financing .
Brand/campaign (Q1): “We Are Lulus” multi‑phase brand push with OOH in Times Square and key college markets to deepen engagement and broaden reach .

Footnotes:
*Values retrieved from S&P Global.

Lulu's Fashion Lounge Holdings, Inc. (LVLU)·Q1 2025 Earnings Summary