LAS VEGAS, Nov. 09, 2017 (GLOBE NEWSWIRE) -- Her Imports (OTCQB:HHER), a leading retailer of human hair extensions and related beauty products, today reported its financial results for the three and nine months ended September 30, 2017. The Company generated revenue of $3.7 million and $12.7 million during each period, driven by online sales growth of 121% and 60% year-over-year, respectively.
Barry Hall, Chief Executive Officer of Her Imports, commented, “During the third quarter of 2017, we focused on streamlining our business and placing greater emphasis on eCommerce. Simultaneously, we continued to grow and utilize our SMS subscriber base. By the end of the quarter the Company had over one million opt-in subscribers to receive text messages about our products and promotions. As a result, online revenue increased 121% year-over-year during the third quarter.
Mr. Hall continued, “Every quarter we carefully evaluate the profitability and customer acquisition of each consultation studio. While during the quarter we made a strategic decision to close certain studios, we still plan to add new studios in the future as part of our overall growth plan, albeit at a lower rate than previously announced. Our brick and mortar locations are an excellent way to build long-term customer relationships. However we understand that online we are able to reach the masses. Therefore, we have identified several other alternative marketing strategies, including by way of our ecommerce platform and strategic leveraging of social media buys, that will allow us to communicate with and sell to our customers at a more cost-effective rate. Additionally, we are exploring a distribution strategy for our recently acquired OSIworks line of hair-care products that will include hair salons as well as our Website. This would help us both strengthen our brand, but also enhance our relationship with salon owners who recommend our human hair extension to their clients.”
Financial Results for the Three Months Ended September 30, 2017:
Revenue totaled $3.7 million for the third quarter 2017, as compared to $3.0 million, an increase of 22%, from the third quarter 2016. The year-over-year decrease of 10% in consultation studio revenue was primarily due a de-emphasis of consultation studios. In addition, online sales increased by 110% year-over-year. This is primarily due to the effectiveness of new SMS marketing strategies complemented by the launch of a new eCommerce Website in the second quarter of 2017.
Cost of products sold for the three months ended September 30, 2017 were $2.0 million, an increase of 27% as compared to cost of products sold of $1.6 million for the three months ended September 30, 2016. Gross margin was 46% for the third quarter 2017, as compared with 48% for the third quarter 2016. This is primarily due to sales promotions introduced to grow sales in during a period that has historically experienced seasonally lower sales.
Operating expenses consist of royalty expense, selling expense and general and administrative expense. Total operating expenses for the three months ended September 30, 2017 was $1.6 million, up slightly when compared to the three months ended September 30, 2016. The decrease in royalty expense of $283,839 was because the Company no longer pays royalties on most product sales and was partially offset by an increase in both selling expense and general and administrative expense. Selling expense increased $180,266 or 16.7% for the three months ended September 30, 2017 when compared to the same 2016 period. This increase in selling expense was attributable to an increase in consultation studio operating expenses due to the addition of new locations and was offset by a decrease in advertising and web development expenses.
The above resulted in income from operations of $42,869 for the three months ended September 30, 2017 compared to a loss from operations of $98,936 for the three months ended September 30, 2016.
Net income attributable to company totaled $40,356 during the third quarter of 2017, compared to a net loss of $99,273 for the same period in the prior year. Net loss attributable to common shareholders totaled $62,884, for the third quarter 2017, compared with a net loss of $61,301, for the third quarter 2016. The Company paid $180,000 in preferred stock dividends during the three months ended September 30, 2017.
Financial Results for the Nine Months Ended September 30, 2017:
Revenue totaled $12.7 million for the nine months ended September 30, 2017, compared to $10.6 million, an increase of 19%, from the nine months ended September 30, 2016. Consultation studio revenue decreased 6% year-over-year. At some time during the nine months ended September 30, 2017, there were as many as 36 consultation studios open, compared to 22 consultation studios open for the same period in 2016. Online sales increased by 60% year-over-year, partially offset by a decrease in wholesale sales. All wholesale sales occurred during the first quarter of both 2017 and 2016.
Cost of products sold for the nine months ended September 30, 2017 were $6.9 million, an increase of 23% compared to cost of products sold of $5.6 million for the nine months ended September 30, 2016. Gross margin was 46% for the nine months ended September 30, 2017, as compared with 47% for the nine months ended September 30, 2016. Higher sales were partially offset by higher product costs.
Total operating expenses for the nine months ended September 30, 2017 was $5.0 million, representing a 2.8% or $146,563 decrease from $5.2 million for the nine months ended September 30, 2016. The decrease in royalty expense of $721,097 was because the Company no longer pays royalties on most of its product sales and was partially offset by an increase in both selling expense and general and administrative expense. Selling expense increased $523,050 or 15% for the nine months ended September 30, 2017 when compared to the same 2016 period. This increase in selling expense was attributable to an increase in consultation studio operating expenses due to the addition of new locations and kiosks and was offset by a decrease in advertising expense.
The above resulted in income from operations of $731,640 for the nine months ended September 30, 2017 compared to a loss from operations of $164,931 for the nine months ended September 30, 2016.
Net income attributable to company for the nine months ended September 30, 2017 was $555,351 compared to net loss attributable to company of $165,705 for the nine months ended September 30, 2016. Net income to common shareholders totaled $15,351, for the nine months ended September 30, 2017, compared with net loss of $102,369, for the third quarter 2016. The Company paid $540,000 in preferred stock dividends during the nine months ended September 30, 2017.
Net cash provided by operating activities totaled $581,431 for the first nine months of 2017 as compared to net cash used by operating activities of $254,858 for the same period the prior year.
About Her Imports:
Her Imports sells human hair extensions and related hair-care and beauty products at retail locations throughout the U.S. and on our Website, www.herimports.com. Additionally, by way of our proprietary ecommerce platform and strategic leveraging of social media buys, we convert prospects into customers while developing long-term personal relationships and loyal customers.
Forward Looking Statements:
This report contains forward-looking statements including our growth plan. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include ineffective marketing and competition.
Any forward-looking statement made by us speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Statements in this document contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on many assumptions and estimates and are not guarantees of future performance. These statements may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Her Imports to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Her Imports assumes no obligation to update any forward-looking statements as a result of new information, future events or developments, except as required by applicable securities laws. For more information, please refer to Her Imports’ financial statements as filed with the Securities and Exchange Commission.
|Condensed Consolidated Balance Sheets|
|September 30, 2017||December 31, 2016|
|Related party receivables||43,752||26,612|
|Prepaid maintenance fees - current||75,000||75,000|
|Other prepaid expenses||76,776||46,411|
|Total current assets||2,854,154||2,629,570|
|Property, equipment and software, net||306,153||256,525|
|Prepaid maintenance fees - non current||228,125||284,375|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Accounts payable and accrued liabilities||$||834,628||$||728,425|
|Income tax liability||292,864||127,651|
|Total current liabilities||1,127,492||899,881|
|Callable $0.144 per share per year non-cumulative dividend liquidation|
preference of $2.00 per share, preferred stock, $0.001 par value,
5,000,000 shares authorized and outstanding as of September 30, 2017
and December 31, 2016, respectively
|Common stock, $0.001 par value, 70,000,000 shares authorized and|
24,899,788 shares issued and outstanding as of September 30, 2017 and
December 31, 2016, respectively
|Additional paid-in capital||26,630,497||26,630,497|
|Total stockholders’ equity||10,485,940||10,470,589|
|Total liabilities and stockholders’ equity||$||11,613,432||$||11,370,470|
|Condensed Consolidated Statements of Operations|
|For the Three Months||For the Nine Months|
|September 30,||September 30,|
|Cost of products sold||1,996,633||1,567,465||6,889,965||5,597,174|
|General and administrative expense||364,122||174,397||974,081||638,759|
|Total operating expenses||1,628,538||1,542,386||5,031,231||5,177,795|
|Income (loss) from operations||42,869||(98,936||)||731,641||(164,931||)|
|Other (expense) income|
|Loss on abandonment of fixed assets||(2,162||)||-||(2,162||)||-|
|Total other expense||(2,512||)||(337||)||(7,394||)||(774||)|
|Income before benefit (provision) for income taxes||40,356||(99,273||)||724,247||(165,705||)|
|Benefit (provision) for income taxes||76,760||37,972||(168,896||)||63,336|
|Net income (loss) attributable to company||117,116||(61,301||)||555,351||(102,369||)|
|Preferred stock dividends||(180,000||)||-||(540,000||)||-|
|Net income (loss) to common stockholders||$||(62,884||)||$||(61,301||)||$||15,351||$||(102,369||)|
|Net basic income per share attributable to common Stockholders: basic and diluted||$||0.00||$||(0.00||)||$||0.02||$||(0.01||)|
|Weighted average number of common shares outstanding: basic and diluted||24,899,788||16,275,331||24,899,788||16,291,576|
|Condensed Consolidated Statements of Cash Flows|
|For the Nine Months Ended|
|Net income (loss) attributable to Company||$||555,351||$||(102,368||)|
|Adjustments to reconcile net income (loss) to net cash provided by (used by) operating activities:|
|Depreciation and amortization||92,439||835,266|
|Loss on abandonment of fixed assets||2,162|
|Changes in operating assets and liabilities:|
|Related party receivables||(17,140||)||(316,950||)|
|Prepaid maintenance fees||56,250||31,250|
|Other prepaid expenses||(30,365||)||(5,226||)|
|Accounts payable and accrued liabilities||106,203||164,013|
|Income tax liability||165,213||(63,336||)|
|Net cash provided by (used by) operating activities||581,431||(254,858||)|
|Purchase of fixed assets||(144,229||)||(25,592||)|
|Investment in subsidiary||(25,000||)||-|
|Net cash used in investing activities||(169,229||)||(25,592||)|
|Repayment on notes payable||(43,805||)||(24,115||)|
|Payment of preferred dividend||(540,000||)||-|
|Net cash used in financing activities||(583,805||)||(24,115||)|
|NET (DECREASE) INCREASE IN CASH||(171,603||)||(304,565||)|
|CASH - BEGINNING OF PERIOD||355,568||449,675|
|CASH - END OF PERIOD||$||183,965||$||145,110|
|Income taxes paid||$||4,337||$||9,855|
|SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:|
|Issuance of note payable for buy back of stock from stockholder||$||-||$||57,940|