Lulu's Fashion Lounge Reports 11% Revenue Decline and Net Loss in Q2 Fiscal 2025

Lulu's Fashion Lounge Holdings, Inc. reported a decline in financial performance for the second quarter of fiscal 2025, with net revenue of $81.5 million, down 11% from $92.0 million in the same period last year. The company also recorded a net loss of $3.0 million for the quarter, a significant improvement compared to a loss of $10.8 million in the prior year. For the first half of the fiscal year, total revenue was $145.7 million, down 14% from $169.2 million in the previous year, while the net loss for the period was $11.0 million, compared to a loss of $16.5 million in the same timeframe last year.

The decrease in revenue was attributed to a 16% decline in total orders placed, although this was partially offset by an increase in average order value (AOV) and lower return rates. Cost of revenue also decreased by 11% to $44.6 million, reflecting the lower sales volume. Gross profit for the quarter was $36.9 million, representing a gross margin of 45.3%, slightly down from 46.0% in the previous year. Selling and marketing expenses decreased by 12% to $22.0 million, while general and administrative expenses fell by 18% to $17.6 million, primarily due to reduced headcount and lower equity-based compensation.

Operationally, Lulu's reported a customer base of 2.46 million active customers, down from 2.67 million in the previous year. The company has been focusing on cost reduction measures, including adjustments to marketing and other operational expenses, in response to macroeconomic pressures such as inflation and changing consumer behavior. As of June 29, 2025, the company had $1.5 million in cash and cash equivalents and $5.8 million in outstanding amounts under its revolving credit facility.

Strategically, Lulu's has undergone significant organizational changes, including the resignation of its Chief Financial Officer, Tiffany R. Smith, effective June 30, 2025. Crystal Landsem has been appointed as the interim CFO while the company searches for a permanent replacement. Additionally, the company executed a 1-for-15 reverse stock split effective July 7, 2025, to comply with Nasdaq listing requirements, which had previously been at risk due to stock price fluctuations.

Looking ahead, Lulu's is actively seeking alternative debt financing and negotiating a new asset-based revolving credit facility. The company has expressed uncertainty regarding its ability to secure this financing in a timely manner, which raises concerns about its liquidity and ability to continue as a going concern. The management remains focused on optimizing operations and managing expenses to align with revenue expectations while navigating the challenges posed by the current economic environment.