iPower (IPW) Q2 Loss Wider Than Expected, Sales Down Y/Y
iPower Inc. IPW reported second-quarter fiscal 2024 results, wherein both the top and bottom lines lagged the Zacks Consensus Estimate. The company experienced a decline in revenues compared to the year-ago period. However, iPower reported a decrease in its loss on a year-over-year basis.
iPower Inc. Price, Consensus and EPS Surprise
iPower Inc. price-consensus-eps-surprise-chart | iPower Inc. Quote
Quarter in Details
iPower posted a loss of 6 cents per share in the fiscal second quarter, wider than the Zacks Consensus Estimate of a loss of 5 cents per share. However, the company’s loss was narrower than a loss of 11 cents per share reported in the year-ago period. The reduction in the loss was primarily due to an increase in the gross margin, coupled with lower operating expenses.
Net sales were $16.8 million, down 13% year over year. Also, the top line missed the Zacks Consensus Estimate of $27 million. The decrease was mainly due to less promotional activity and reduced orders from its main channel partner, adjusting to better supply-chain conditions. This was slightly offset by growth in its SuperSuite supply-chain services.
The gross profit was $7.3 million, down from $8 million reported in the year-ago quarter. However, the gross margin increased 220 basis points to 43.6% from the prior-year period. The rise in the gross margin mainly resulted from the favorable product mix.
Operating expenses decreased 18.2% to $9.9 million in the second quarter of fiscal 2024. The decline was partly due to lower selling, fulfillment and marketing expenses. However, the operating margin contracted 380 basis points from the prior-year period to 58.9%.
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Other Financial Details
iPower ended the quarter with cash and cash equivalents of $1.5 million. As of Dec 31, 2023, net debt was down 56% to $3.6 million from $8.1 million as of Jun 30, 2023. Total stockholders' equity was $17.8 million at the end of the quarter under review.
Outlook
During the fiscal second quarter, iPower continued to expand its gross margin and reduce operating costs, leading to another period of positive cash flow from operations. The company experienced lower order volumes due to its largest channel partner optimizing inventory management in response to improved supply-chain conditions.
Nonetheless, iPower is prepared to fulfill demand with its high-quality products. The company also reported growth in its SuperSuite business, leveraging its supply chain, warehousing and merchandising expertise to drive sales growth.
The financial improvements were primarily driven by the reduction of high-cost inventory and excess warehousing space. Furthermore, iPower reduced its total debt obligations by approximately $2 million during the quarter, underscoring its commitment to strengthening the balance sheet. These actions, along with signs of normalizing order volumes, are steps toward iPower's goal of returning to profitability in fiscal 2024.
Shares of this Zacks Rank #3 (Hold) company have rallied 41.6% in the past three months compared with the industry's growth of 4.6%.
Stocks to Consider
Here, we have highlighted three better-ranked stocks, namely Reynolds Consumer Products Inc. REYN, GIII Apparel Group GIII and Ralph Lauren Corp. RL.
Reynolds is a consumer-branded and private-label product company that sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Reynolds’ current financial-year earnings suggests growth of 13.4% from the 2023 actuals. REYN has a trailing four-quarter earnings surprise of 5.5%, on average.
GIII Apparel, a manufacturer, designer and distributor of apparel and accessories, sports a Zacks Rank #1 at present. The company had an EPS surprise of 33.7% in the third quarter.
The Zacks Consensus Estimate for GIII Apparel’s current fiscal-year earnings suggests growth of 39.3% from the fiscal 2022 actuals. GIII has a trailing four-quarter earnings surprise of 541.8%, on average.
Ralph Lauren is a major designer, marketer and distributor of premium lifestyle products and currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Ralph Lauren’s current fiscal-year sales and earnings suggests growth of 2.2% and 19.9%, respectively, from the fiscal 2023 reported figures. RL has a trailing four-quarter earnings surprise of 18.7%, on average.
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iPower Inc. (IPW) : Free Stock Analysis Report
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