Luvu Brands (LUVU) investor relations material

Executive summary

• Net sales for the quarter ended December 31, 2025, were $6.9 million, down 4.2% year-over-year, amid weak consumer spending and retail headwinds.

• Gross margin compressed to 26% from 28% year-over-year, attributed to higher freight and tariff costs.

• The company reported a net loss of $765,000 for the quarter, compared to net income of $192,000 in the prior year, primarily due to a one-time $813,000 deferred tax liability from a new operating lease.

• Adjusted EBITDA for the quarter was $145,000, down from $399,000 in the prior year, but cash generation stayed positive.

• Operating income remained positive at $184,000, reflecting cost management despite market challenges.

Financial highlights

• Six-month revenue declined 1.7% year-over-year to $12.72 million.

• Six-month net loss widened to $897,000 from $18,000, driven by deferred tax and higher interest expense.

• Adjusted EBITDA for six months was $227,000, down from $395,000 in the prior year.

• Cash and cash equivalents at quarter-end were $1.09 million, up 47.8% from $0.73 million at June 30, 2025.

• Total assets increased to $11.14 million, mainly from new operating lease assets.

Outlook and guidance

• Management expects continued sales fluctuations due to competition, seasonality, and raw material cost volatility.

• Strategic focus on operational efficiency, high-margin product development, and omnichannel growth.

• Management aims to improve gross margins, enhance EBITDA, and position for long-term growth as market conditions stabilize.

• Tariff exposure is being managed by sourcing from lower-tariff countries, but indirect cost increases may require future price adjustments.