Luvu Brands Announces Financial Results for the Second Quarter of Fiscal 2019

 22% Sequential Net Revenue Growth to $4.8 Million with Net Income of $199,000

Atlanta, Georgia, Feb. 14, 2019 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE -- Luvu Brands, Inc., LUVU, a designer, manufacturer and marketer of a portfolio of consumer lifestyle brands, announced today its financial and operational results for the second quarter ended December 31, 2018.  

Q2 Fiscal 2019 and Subsequent Highlights:

• Net sales of $4.8 million, up 22% sequentially from Q1, and up 3% compared to the same period in fiscal 2018, driven by greater sales of Liberator and Avana branded products.

• Total gross profit of $1.3 million, up 34% sequentially from Q1, and essentially unchanged compared to the same period in fiscal 2018.

• Gross profit as a percentage of net sales increased to 28% from 25% in the first quarter.  Gross profit as a percentage of sales decreased from 29% in the prior year second quarter due to higher labor and raw material costs.

• Operating expenses remained unchanged at $979,000 during the three months ended December 31, 2018 as compared to the first quarter and decreased 9%, or $96,000, from the prior year second quarter.

• Net income increased to $199,000 during the current year second quarter compared to net income of $149,000 in the prior year second quarter.

• Adjusted EBITDA* for the first six months of fiscal 2019 was income of $442,000 compared to income of $341,000 in the first half of fiscal 2018.

Louis Friedman, Chairman and Chief Executive Officer, commented, "During the second quarter, we achieved higher sales across two of our consumer brands; Liberator sales were up 9% to $2.2 million and Avana sales were up 64% to $838,000. Jaxx sales were down 8% during the quarter to $1 million, due to increased competition and the loss of sales through Brookstone.  We expect to see Jaxx sales increase as the weather warms up and our outdoor Jaxx products continue their sales growth momentum from last spring and summer."

Mr. Friedman added, "Despite the increase in sales during the second quarter, the gross profit remained unchanged due to higher labor and raw materials costs. We implemented a price increase of 3% to 5% on Liberator products in the current third quarter which I'm hopeful we'll be able to maintain.  And we're continuing to improve our manufacturing processes to be more efficient. I expect both of these actions to result in year-over-year margin improvements during the remainder of this fiscal year."

Forward-Looking Statements

Certain matters discussed in this press release may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; acceptance of the Company's products in the market; the Company's success in obtaining new customers; the Company's success in product development; the Company's ability to execute its business model and strategic plans; the Company's success in integrating acquired entities and assets, and all the risks and related information described from time to time in the Company's filings with the Securities and Exchange Commission ("SEC"), including the financial statements and related information contained in the Company's Annual Report on Form 10-K and interim Quarterly Reports on Form 10-Q.  Examples of forward-looking statements in this release include statements related to new products, anticipated revenue and profitability.  The Company assumes no obligation to update the cautionary information in this release.

Use of Non-GAAP Measure – *Adjusted EBITDA

Luvu Brands management evaluates and makes operating decisions using various financial metrics. In addition to the Company's GAAP results, management also considers the non-GAAP measure of Adjusted EBITDA. While Adjusted EBITDA is not a measure of performance in accordance with GAAP, management believes that this non-GAAP measure provides useful information about the Company's operating results.  The table below provides a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure.

As used herein, Adjusted EBITDA income represents net income (loss) before interest income, interest expense, income taxes, depreciation, amortization, and stock-based compensation expense.

Reconciliation of net income (loss) to Adjusted EBITDA income for the six months ended December 31, 2018 and 2017:

About Luvu Brands

Luvu Brands, Inc. designs, manufactures and markets a portfolio of consumer lifestyle brands through the Company's websites, online mass / drug merchants and specialty retail stores worldwide. Brands include: Liberator^®, a brand category of iconic products for enhancing sensuality and intimacy; Avana^®, inclined bed therapy products, assistive in relieving medical conditions associated with acid reflux, surgery recovery and chronic pain; and Jaxx^®, a diverse range of casual fashion daybeds, sofas and beanbags made from virgin and re-purposed polyurethane foam. Many of our products are offered flat-packed and vacuum compressed to save on shipping and reduce our carbon footprint. The Company is headquartered in Atlanta, Georgia in a 140,000 square foot vertically-integrated manufacturing facility that employs over 160 people. Bringing sewn products manufacturing back to the USA and creating innovative consumer brands are core to the Company's operating principles. The Company's brand sites include: www.liberator.com, www.jaxxliving.com, www.avanacomfort.com plus other global e-commerce sites. For more information about Luvu Brands, please visit www.luvubrands.com.

Company Contact:

Luvu Brands, Inc.

Ronald Scott

Chief Financial Officer

770-246-6426

ron@LuvuBrands.com