Navigating Growth Amidst Challenges: Lulus Fashion Lounge Holdings Q2 2025 Earnings Call Highlights

Lulus Fashion Lounge Holdings reported Q2 2025 earnings, with adjusted EBITDA in line with expectations. The special occasion and bridesmaids categories drove growth, while shoes and separates weighed on top-line results. Gross margin declined due to outbound and returns logistics costs. Net cash used in operating activities was $1.4 million, a decline from $3.7 million last year. Free cash flow was negative $1.9 million, down from $4.9 million last year.

Lulu's Fashion Lounge Holdings Inc (LVLU) reported its Q2 2025 earnings on August 13, 2025, with adjusted EBITDA in line with expectations. The company's special occasion and bridesmaids categories were key growth drivers, showing robust year-over-year net sales growth. However, shoes and separates categories continued to weigh on top-line results, contributing to the year-over-year decline in net sales.

The company's gross margin declined by 20 basis points compared to the prior year, impacted by outbound and returns logistics cost pressures. Net cash used in operating activities was $1.4 million, a decline from $3.7 million in the same period last year. Free cash flow during the second quarter was negative $1.9 million, reflecting a $4.9 million decrease year over year.

On the earnings call, Crystal Landsem, CEO and Interim CFO, highlighted the positive momentum in the special occasion and bridesmaids categories. The company's wholesale business gained traction with the addition of three new major partners, indicating growing demand across channels. Landsem also noted the need for continued SKU rationalization and category alignment.

Looking ahead, Lulu's Fashion expects to achieve positive adjusted EBITDA in Q3 2025 and is pursuing a new asset-based revolving credit facility to support liquidity. The company plans to mitigate the impact of tariffs through sourcing diversification and pricing strategies, with direct sourcing expected to drive margin expansion in the second half of 2025. Capital expenditures for the full year are estimated at approximately $2.5 million.

References:
[1] https://www.ainvest.com/news/lulus-fashion-2025-q2-earnings-strong-earnings-improvement-2508/
[2] https://ca.investing.com/news/company-news/lulus-fashion-lounge-holdings-inc-lvlu-q2-2025-earnings-call-highlights-navigating-growth--4161271
[3] https://www.ainvest.com/news/lulus-fashion-lounge-holdings-q2-earnings-2508/