Name: Lulu's Fashion Lounge Holdings, Inc. Q2 2025 Earnings Call
Start: 2025-08-13T21:00:00.000Z

Executive Summary

Q2 2025 delivered positive adjusted EBITDA ($0.5M, 0.6%) despite an 11% revenue decline to $81.5M; gross margin expanded sequentially to 45.3% while remaining ~flat YoY .
Mix strength in special occasion/bridesmaid dresses offset continued softness in casualwear and footwear; product margins improved ~170 bps YoY and return rates improved 114 bps, the fourth straight quarter of improvement .
Cost actions lowered OpEx materially (S&M down ~$2.9M to $22.0M; G&A down ~$3.9M to $17.6M), helping narrow net loss to $3.0M from $10.8M YoY .
Guidance: management expects positive adjusted EBITDA in Q3 2025; FY25 capex now ~$2.5M (low end of prior range); active negotiation of a new asset-based revolver and short extension of current facility to Aug 22, 2025 .
Stock catalysts: execution on refinancing, sustained margin gains (direct sourcing, pricing), and visible category momentum in events dressings versus normalization in casual/footwear .

What Went Well and What Went Wrong

Special occasion and bridesmaids delivered “our strongest Q2 performance ever,” reinforcing Lulus’ position as a destination for event dressing .
Product margins improved for the third consecutive quarter (~170 bps YoY); gross margin expanded sequentially to 45.3% with better pricing and mix, and return rates improved 114 bps for the fourth straight quarter .
Cost discipline: S&M fell to $22.0M and G&A to $17.6M, supporting a return to positive adjusted EBITDA and a reduced net loss; “we are well positioned to continue investing in our brand… and drive product margin gains” .

Revenue declined 11% YoY to $81.5M driven by a 16% drop in Total Orders Placed; softness in casualwear and footwear continued to weigh on top-line .
Gross margin was down 20 bps YoY to 45.3% due to outbound and returns logistics cost pressures (rate increases, fuel surcharges), despite product margin gains .
Interest expense rose to $0.856M (vs $0.270M YoY) due to revolver amendments; net cash used in operations (-$1.4M) and free cash flow (-$1.9M) deteriorated YoY given timing in payables .

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$92.0	$64.2	$81.5
Diluted EPS ($USD)	$(3.92)	$(2.86)*	$(1.08)
Gross Margin (%)	45.5%	40.3%	45.3%
Adjusted EBITDA ($USD Millions)	$(0.2)	$(4.7)	$0.5
Adjusted EBITDA Margin (%)	(0.2)%	(7.3)%	0.6%
Net Loss ($USD Millions)	$(10.8)	$(8.0)	$(3.0)
Selling & Marketing ($USD Millions)	$24.9	$15.9	$22.0
General & Administrative ($USD Millions)	$21.4	$18.0	$17.6

*Values retrieved from S&P Global.

Notes

Sequential improvements: gross margin rose from 40.3% (Q1) to 45.3% (Q2), and adjusted EBITDA turned positive .
YoY: revenue (-11%), gross margin (-20 bps), adjusted EBITDA improved to positive, net loss narrowed materially .

KPI	Q2 2024	Q1 2025	Q2 2025
Average Order Value ($)	$143	$136	$145
Active Customers (Millions)	2.67	2.55	2.46
Total Orders Placed YoY Change (%)	N/A	(17)%	(16)%
Return Rate YoY Change (bps)	N/A	+170 bps improvement	+114 bps improvement
Gross Profit ($USD Millions)	$41.9	$25.8	$36.9

Metric	Period	Previous Guidance	Current Guidance	Change
Net Revenue	FY 2025	$280–$310M	Withdrawn	Withdrawn
Adjusted EBITDA	FY 2025	$0–$6M	Withdrawn	Withdrawn
Adjusted EBITDA	Q3 2025	N/A	Expect positive	Initiated
Capital Expenditures	FY 2025	$2.5–$3.0M	~$2.5M	Lowered to low end
Revolving Credit Facility	Aug 2025	N/A	Forbearance & maturity extended to Aug 22, 2025; negotiating new ABL	Extension/Refinancing Update

Topic	Previous Mentions (Q-2: Q4 2024; Q-1: Q1 2025)	Current Period (Q2 2025)	Trend
AI/Technology enablement	Product videos, AI merchandising tests; app/user growth	Expanded AI-driven site merchandising and personalized AI-curated selections	Strengthening
Supply chain/tariffs/macro	Diversifying sourcing; managing tariffs via pricing/vendor collaboration	Accelerating direct-from-factory sourcing; reducing China dependence; tariff mitigation; negotiating new ABL	Active risk management
Product performance (mix)	Dresses up despite seasonal Q4; casual weak	Strong bridesmaids/special occasion; casual & footwear soft	Divergent (strength in events; weakness in casual)
Return rates	Inflection improvement after 8 quarters	Fourth consecutive YoY improvement (+114 bps)	Improving
Wholesale	Partnerships expanded (e.g., Dillard’s)	“Three new major partners” and boutique growth; strong 2025 outlook	Accelerating
Brand/marketing	Major campaigns; out-of-home; influencer engagement	Record brand equity again; high-impact collaborations; social engagement growth	Improving

“We delivered our strongest Q2 performance ever in special occasion… bridesmaids categories seeing robust year over year net sales growth” .
“Product margins improved… ~170 basis points compared to the prior year… Gross margin… 45.3%… Return rates improved 114 basis points” .
“We continue to expect to double our direct sourcing sales mix by year end… reduce dependence on any single region where possible, including China” .
“We expanded our usage of AI driven site merchandising… individualized, personalized AI curated product selections” .
“Net revenue was approximately $81.5M… Adjusted EBITDA was ~$0.5M… Selling & marketing $22.0M… G&A $17.6M… Interest expense $0.856M” .
“Expect positive Adjusted EBITDA in the third quarter… full year capex approximately $2.5M” .

No Q&A session occurred; the call concluded without analyst questions .
Guidance clarifications were provided in prepared remarks: Q3 adjusted EBITDA expected positive; capex low end; refinancing negotiations ongoing .

S&P Global Wall Street consensus for Q2 2025 EPS and revenue was unavailable; no consensus metrics or number of estimates were returned for Q2 2025. Values retrieved from S&P Global.
Without consensus, we cannot classify Q2 as a beat/miss versus estimates; investors should focus on sequential margin improvements and positive adjusted EBITDA as near-term estimate drivers .

Mix-led resilience: Event dressing (special occasion, bridesmaids) remains a growth driver; casual/footwear continues to lag, suggesting focus on curated, dressy assortments to sustain margin gains .
Margins improving: Sequential gross margin expansion (40.3%→45.3%) and product margin gains, alongside lower return rates, support earnings quality into H2’25 .
Cost discipline durable: OpEx reductions (S&M and G&A) materially narrowed net loss; continued leaner cost structure underpins positive adjusted EBITDA trajectory in Q3 .
Liquidity/refinancing watch: Active ABL negotiations and short extension of current facility to Aug 22 are key catalysts; interest costs increased with facility amendments .
Sourcing strategy: Direct-from-factory and supply chain diversification (lower China reliance) are margin levers and tariff mitigants for H2’25 and 2026 .
Wholesale channel momentum: New major partners and boutique growth broaden reach, diversify demand, and support category positioning .
Brand equity tailwind: Record brand equity and engagement from influencer campaigns and social/content strategy bolster traffic, reactivation, and AOV [$145] .