Welcome to a.k.a. Brands Holding Corp.'s fourth quarter and full year 2022 conference call. At this time, all participants are in listen only mode. A question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded. At this time, I'll now turn the conference over to Emily Schwartz, with Head of Communications. Emily, you may now begin. Good afternoon. Thank you for joining a.k.a. Brands fourth quarter and full year 2022 conference call to discuss the results released this afternoon, which can be found on our website at ir.aka-brands.com. With me on the call today is Ciaran Long, Interim Chief Executive Officer and Chief Financial Officer. Before we get started, I'd like to remind you of the company's Safe Harbor language. Management may make forward-looking statements which refer to expectations, projections, and other characterizations of future events, including guidance and underlying assumptions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed. For a further discussion of risks related to our business, please see our filings with the SEC. Please note, we assume no obligation to update any such forward-looking statements. This call will contain non-GAAP financial measures such as adjusted EBITDA and adjusted EBITDA margin. Reconciliation of these non-GAAP measures to the most comparable GAAP measures are included in the earnings release furnished to the SEC and available on our website. The call will also contain certain numbers presented on a pro forma basis, which includes the impact of Culture Kings as if we owned it for all periods and comparable periods described. With that, I'll turn the call over to Ciaran. Thanks, Emily. Good afternoon, everyone, and thanks for joining our call today. As you saw in today's press release, unfortunately, Jill is dealing with some unforeseen medical issues and is taking time to work through that. I will be taking on Jill's responsibilities as acting CEO on an interim basis, but Jill will continue to stay as involved in the business as her health allows for, and she will remain on the board. She will not be on today's call, but she prepared remarks that I will read on her behalf, and then I will continue with my commentary on the financials before taking your questions. The following are her remarks. Before we discuss our fourth quarter and full year results, I want to commend our teams for their unwavering dedication this year and for stepping up to every challenge that came our way. Despite the external pressures, we are steadfast in our vision to be the leaders in next generation fashion for the next generation consumer, and we remain laser focused on growing our brands profitably. Our brands, teams, and flexible business models give me confidence that we have tremendous runway ahead and will deliver on our long term goals. For the full year, net sales grew 9% to $612 million or were flat on a pro forma basis, which as a reminder, assumes we owned Culture Kings for all periods in 2021. On a constant currency basis, net sales increased 13%. The U.S., which is now our largest market, led our growth at 16% and Australia grew 4%. Importantly, despite the challenges in the macro environment, we continued to generate profit and delivered $32 million of adjusted EBITDA for the year. Our brands continued to gain market share and grow awareness around the world. In 2022, we grew our customer base to $3.8 million, we expect that number to grow this year as we expand our brands, particularly Culture Kings in the U.S. We grew our social media followers by nearly $1.5 million this year across the portfolio, further proving the demand and relevancy of our brands. Turning now to the fourth quarter. The fourth quarter was softer than we anticipated as we faced a highly promotional backdrop and made strategic decisions on marketing and inventory newness that impacted both our top line and bottom line. Sales decreased 18% year-over-year to $149 million, or were down 13% on a constant currency basis, and we delivered adjusted EBITDA of $6 million. The U.S. declined by 11% on top of a very strong 74% growth in the fourth quarter last year on a pro forma basis, and Australia declined 12% on a constant currency basis. I want to give you some color on the factors that impacted our business in the fourth quarter. A key anchor of our strategy is balancing growth and profitability across our brands. We're proud to run a profitable and durable business, and we're committed to building great brands for the long term. We entered the fourth quarter knowing it was going to be promotional due to the inventory glut across the fashion sector. As we went through the holiday season, particularly in the second half of the quarter, the promotions and discounts were abundant and much more intense than we anticipated. As part of our efforts to balance growth and profitability, we made the strategic decision not to compete at our peers' promotional levels, and we held our discounts and promotions relatively flat to last year. Furthermore, because of the heightened promotional environment, we also saw that the returns on marketing investments were lower than previous levels and incremental marketing spend was hitting diminishing returns and was not profitable. In an effort to maximize profitability, we held our marketing spend at the same 10% of net sales on a rate basis, which also impacted our top line. Lastly, as we aggressively tightened our inventory in the back half of the year, we entered the peak holiday selling period with fewer new styles in our women's brands, which impacted both the top and bottom lines. While our marketing decisions and lower levels of newness had short-term impacts on the quarter, we believe that they protect the integrity and durability of our brands and business model for the long term. I'm pleased to report that we have already taken steps to course correct. Given that we have flexibility in our operating model, as we've seen changes in the promotional environment, we've adjusted our marketing spend, and the fashion newness is back at our brands as we head into spring. I'm confident that with our levels of newness normalizing, we will also register a meaningful sequential improvement in our gross margin. Despite the challenging macro environment, I'm proud of the progress we made during the quarter, strengthening the foundation of the business. The Culture Kings flagship store that opened in November is exceeding our expectations, and we're pleased with the halo effect the store is having on online sales. We also have continued to make sequential improvements on our inventory, which is down $17 million over the last six months, and we had another quarter of positive cash flow in the fourth quarter. Subsequent to quarter end, we also paid down $6 million of our revolver. While we can't control the macro environment, we can control how we drive the business forward. To that extent, I'm excited to talk about the new initiatives across our portfolio that will drive growth, but more importantly, accelerate brand awareness for the long term. As we look to the future of fashion, we believe that core to building durable next generation brands is showing up everywhere our customers are, whether that's direct to consumer, through wholesale partners, digital, mobile, or in stores. Our brands have already mastered building authentic relationships directly with customers and providing great experiences, and we believe they will excel in other channels too. To that end, in 2023, we're piloting select wholesale partnerships, and we're also testing a Princess Polly store in Southern California in the back half of the year. We have an exciting year ahead filled with new tests and initiatives while simultaneously strengthening our balance sheet to fuel profitable growth for the long term. Let me share some highlights from our brand initiatives. Starting with our women's brands, using robust data and analytics in combination with comprehensive survey work, it's clear that Princess Polly customers are creating more ways to experience the brand. As mentioned, we're very excited that Princess Polly is piloting a store in Southern California this year, and we'll share more information on the store in the coming months. I'm also excited to announce that Princess Polly signed a wholesale agreement with Pacsun to carry select best-selling styles online and in 15 stores. Pacsun is a strong strategic fit for Princess Polly's first wholesale engagement because they are also a top 10 brand according to Piper Sandler's Taking Stock With Teens survey. They have a large footprint in prime locations nationwide, providing convenience for our existing customers to physically experience the quality of the Princess Polly brand in stores, as well as the opportunity to acquire new customers and promote brand awareness. The partnership launched today and a broader rollout will follow this summer. While we're looking forward to the new initiatives at Princess Polly, the brand is also laser focused on the core strategy. On the merchandising front, Princess Polly's core product has been about clothes for going out and hanging out, but the brand is uniquely positioned to offer a full range of merchandise from formal dresses to vintage tees. To that end, they're expanding their formal wear offering for this year's prom season. Similar to Culture Kings, Princess Polly is also leveraging the print shop we acquired in 2021 to quickly print graphic tees. They're dropping 10-15 new styles per month, which is a mix of Princess Polly's branded merchandise and licensed properties. They recently launched a Betty Boop licensed collection that exceeds expectations, and we're excited for an upcoming partnership with the NCAA. Leaders in next generation marketing, Princess Polly has mastered organically appearing on their customer screens and feeds no matter the channel. They continue to lean heavily into TikTok, growing their follower base nearly 40% in 2022. It's now a top performing channel based on ROI. They've also fine-tuned and improved their TikTok influencer strategic partnerships with recent successful collaborations with influencer Alix Earle, who garnered over 4 million views in her campaigns, and Melody Miles, a micro-influencer who brought nearly 1,000 new customers to the brand. We're also excited that Princess Polly is bringing back its in-person events with the launch of their spring break activation in Miami next week. Touring around popular hotspots in a branded Jeep, the Princess Polly team will be giving out merch, gathering viral-worthy social media content, and engaging with their customers. They're also hosting an exclusive party for influencers, college ambassadors, and their top-tier loyalty members to promote the brand and increase customer engagement. As I noted earlier, we view wholesale as a brand building activity and the seeds of growth for the back half of 2023, but mostly for 2024 and beyond. In addition to piloting our wholesale strategy for Princess Polly with Pacsun, we're in active discussions with other wholesale partners within the U.S. and internationally for all of our brands. We're also exploring marketplace opportunities. Petal & Pup launched on Target Plus last month and is gaining traction. We'll be selective when choosing wholesale and marketplace partners to ensure a strong strategic fit and partners that would enhance our brand's awareness. Turning now to our streetwear brands. As I mentioned earlier, we're bullish on Culture Kings expansion in the U.S., and I'm more confident than ever after seeing the initial success of the stores in Vegas. The store is exceeding expectations in revenue, traffic, and brand building activities. Equally as exciting is the impact the store is having on online sales since it opened in early November. They've seen great traction with in-store events, drawing artists such as A$AP Ferg, and athletes such as Kirk Cousins and Marlon Humphrey from the NFL. Celebrities such as Ludacris and Cardi B have all shopped the Vegas store. They have a robust marketing calendar and events lined up this year, both in the U.S. and Australia. This past weekend, Culture Kings had an official partnership with Rolling Loud, a big hip-hop festival in L.A., where they had a branded stage and a basketball court and a merchandising collab. They also partnered with professional boxer Caleb Plant, who hosted a live streamed boxing session in the Vegas store this week and released an exclusive collaboration with mnml. Snoop Dogg DJ'd at the Melbourne Culture Kings store this past weekend. As a reminder, unlike our women's brands, Culture Kings carries a mix of in-house designed fashion brands and third-party athletic, footwear, and fan gear apparel brands. We've always seen strong demand for the exclusive in-house design product in the U.S., which has now accelerated even further after the store opening. We're thrilled that 7 of the top 10 brands by sales in Vegas are in-house exclusive brands, including mnml, which is now a top 10 brand on the Culture Kings website and in the Vegas store. In addition to the success of the in-house brands, we're excited that the store has unlocked new partnerships with third-party brands like New Balance and Crocs and more that will be available online and in stores in the coming months. I want to share that Simon and Tah-nee Beard have stepped down from their day-to-day operating roles as co-CEOs of Culture Kings to spend time with their family and pursue entrepreneurial ventures. Simon and Tah-nee have built an incredible brand over the last decade and have set the brand up for tremendous global success. They will transition to advisors to the company, and Simon remains an active member of the AKA board of directors. I want to express my gratitude to Simon and Tanit for their partnership through this transition and more importantly, their unwavering commitment to building the brand into the global success it is today. Adrian Gribbin, Culture Kings CFO, has been promoted to Chief Operating Officer, and Joe Gnosca remains president of the U.S. We have confidence in this leadership team as they are industry veterans with tenured backgrounds in global streetwear and retail. I also want to share that subsequent to quarter end, we sold Rebdolls back to the founder, Grisel Paula. The brand saw tremendous growth under our ownership, and we believe in its long-term success, but we've determined that the brands of Rebdolls size does not experience the full potential of the a.k.a. platform. I want to thank Grisel for her partnership over the past three years. We're excited to remain a minority shareholder in the brand. To conclude, I want to give you my perspective on 2023 and beyond. We anticipate that the macro environment will remain dynamic and pressured in the coming year. As you've heard today, we're evolving our model and our strategies to build high quality, durable fashion brands for the long term. We're testing new ways to expand awareness and grow our customer base across the portfolio. We're aligned and nimble and will move even faster to accelerate these brands while continuing to deliver profit. We're viewing 2023 as a year to test and learn new channels and innovations while simultaneously strengthening our balance sheet. When I think about the long term, I'm confident that we have significant opportunity to deliver both growth and profit as Gen Z and millennials continue to gain spending power. Our brands are young and at the beginning of their life cycles with tremendous global runway ahead of them. We'll continue to manage our business prudently, and I'm looking forward to an exciting year. Now, let me turn to my comments on the financials. Our fourth quarter results were softer than we anticipated, largely due to the macro environment and our strategic decision to pull back on marketing spend as we balanced profitability during a holiday season that became even more promotional than we anticipated in the second half of the quarter. We also made the decision not to compete at the same promotional and discount levels as our peers and held our promotions roughly flat to last year to protect the long-term integrity of our brands. Lastly, we aggressively brought down inventory in the back half of the year, particularly in our women's brands, which we believe impacted new units, our top-line results, and our margins. Combination of these factors resulted in fourth quarter sales that came in below expectations. The lower-than-plan sales, combined with a lower gross margin, deleveraged the middle of the P&L. That said, we continue to make progress on strengthening our balance sheet in the fourth quarter. We delivered another quarter of positive operating cash flow. We registered sequential improvements on inventory, hitting our quarter end goal with continued improvements ahead in 2023. We continued reducing our outbound shipping and fulfillment costs, which lays the foundation for greater cost efficiencies this year. As I mentioned, we remain disciplined on the promotional front, limiting the breadth and depth of our discounts, protecting our brands. Additionally, subsequent to quarter end, we paid down $6 million of our revolver. Despite the challenging environment, I'm confident that we are well-positioned for the upcoming year as we look to improve our operating model and exit 2023 with growing brands and a much stronger balance sheet. Before I go through the results in more detail, let me spend a few minutes on the non-cash impairment charge related to our acquisition of Culture Kings that you saw in our filing. The $173.8 million charge relates to an updated valuation of the Culture Kings business since acquisition, which is the result of the adverse economic trends in the fourth quarter, including inflation and interest rates, as well as pressured consumer demand. This charge does not impact our cash position, debt covenants or future operations. As mentioned, we are pleased with the performance of the Culture Kings store and the halo effect on online sales, and it gives us confidence in the future of the brand in the U.S. For a detailed discussion on our results. For the fourth quarter, net sales declined 18% to $149 million compared to $182 million last year. On a constant currency basis, net sales were down 13% or $24 million. Active customers on a trailing twelve-month basis was up 3%. Total fourth quarter orders were down 14% to last year at 1.9 million from lower marketing spend, and the average order value of $77 was down 8% on a reported basis and flat in constant currency due to a lower mix of full price items. I'll provide a few highlights from our three regions. In the U.S., fourth quarter net sales decreased to $71 million, down 11% from the fourth quarter last year, driven by macro factors including softness in demand trends, the highly promotional macro environment, fewer new styles in our women's brands as we move through inventory in the back half, and our decision to pull back on marketing. Australian net sales decreased 21% to $61 million, or were down 12% on a constant currency basis. Australia net sales were impacted by similar macroeconomic environment trends in the U.S., including softer demand and inflationary pressures, as well as an exaggerated shift of customers returning to stores post-pandemic. Notably, in the fourth quarter, Culture Kings stores continued to be the fastest growing area of the business in Australia. Turning to rest of the world. Net sales of $80 million decreased 33% from the fourth quarter in the prior year. Similar to the third quarter, given the significant appreciation of the U.S. dollar, we made a strategic decision to shift marketing dollars from the U.K. and Europe to our main regions that have higher returns. Additionally, our pricing model for markets outside of the U.S. and Australia is tied to the U.S. dollar, so when the dollar strengthens, our products become more expensive for customers in international regions. Moving to profitability. Reported gross margins in the fourth quarter was 52.8% versus 54.6% in the same period last year, or a decline of 180 basis points. When adjusted for the impact of the $3.7 million Culture Kings inventory step-up in the fourth quarter last year, gross margins would have declined 360 basis points, largely the result of a lower mix of full price items. Additionally, we continue to experience elevated freight rates as we work through older inventory. Selling expenses were $39 million, compared to $45.5 million in the fourth quarter of 2021. Selling expenses were 26.2% of net sales, compared to 24.9% of net sales in the fourth quarter of 2021. The increase was primarily due to fixed cost deleveraging our distribution centers, given the lower volume of sales, partially offset by improvements we've made on outbound shipping and labor productivity. Importantly, we continue to make progress and this was the second quarter of sequential rate improvement in selling expenses. Marketing expenses were $15.4 million compared to $21.5 million in the fourth quarter of 2021, a 28% reduction. On a rate basis, marketing expenses were 10.3% of net sales, compared to 11.8% of net sales in the fourth quarter of 2021. The lower marketing expenses as a% of sales was due to our strategic decision to pull back on spend as we balance both sales and profitability. As I mentioned, as we went through the quarter, we determined the return on incremental marketing spend was lower than prior levels, given the heightened levels of promotion during the holiday season. As we go through Q1, we are seeing some reduction in promotional intensity, and we're increasing our marketing spend with the expectation that we'll be around 12% of net sales for marketing expense in Q1. General and administrative expenses were $26.1 million compared to $27.3 million in the fourth quarter of 2021. On a rate basis, G&A expense were 17.5% of net sales, compared to 14.9% of net sales in the fourth quarter of 2021. The increase in G&A expenses as a percent of net sales was primarily due to lower sales in the fourth quarter of 2022. Adjusted EBITDA was $6.1 million or 4.1% of net sales compared to $16.1 million or 8.8% of net sales in the fourth quarter of 2021. Net loss as adjusted was $3.4 million or $0.03 per share in the fourth quarter of 2022 compared to a net income of $4.3 million or $0.03 per share in the same period last year. Turning to the balance sheet. We ended the quarter with $46 million in cash and cash equivalents and $144 million in debt. At the end of the quarter, we had total liquidity of approximately $56 million. Inventory at the end of the quarter was $127 million compared to $116 million at the end of the fourth quarter of 2021. While we were up in inventory dollars year-over-year, inventory units are down 2% compared to last year. The increase in inventory year-over-year was primarily associated with Culture Kings' new fulfillment center, the U.S. store opening and higher air freight expense. Compared to the end of the third quarter, inventory decreased $10.4 million or 8% and is down 5% on a unit basis. Inventory is down $17 million since the second quarter of 2022. Overall, we are pleased with the sequential improvement in inventory in the back half of 2022, and we feel confident in the composition, newness, and quality of our inventory and expect to see continued sequential decline in inventory dollars and units in fiscal 2023 on a constant currency basis. Touching on cash flow. In the fourth quarter, we generated $11.1 million of operating cash flow, marking the second quarter of positive cash flow generation in fiscal 2022. In the back half of 2022, we generated $23 million of operating cash flow. Turning to our outlook. As we look to 2023 and beyond, we want to continue to build these brands to meet their long-term potential, which is why we're testing the omni-channel initiatives I laid out. While we're doing that, we're also going to strengthen our balance sheet so we can build optionality and reinvest in the business. We're anticipating another year of macroeconomic pressure on both the consumer side as well as the expense side. We'll continue to manage the business prudently. Overall, for the year, we expect to deliver between $570 million-$600 million in net sales. We're anticipating the first half of the year to be more challenging from a comp perspective, due to our strong performance in the first half of last year when the consumer was excited to go back to festivals and traveling. We anticipate comps easing in the back half. Importantly, with an improved level of newness in our inventory mix, and if we see better performance in marketing channels, we have the potential to increase our marketing spend to drive top line sales and EBITDA dollars as the year progresses. Our new omni-channel initiatives, including the Princess Polly store and wholesale, represent small initial tests that will not have a material impact on our financial performance in 2023 and are baked into our guidance. Our focus on testing new channels of distribution in 2023 will set the stage for future expansion of our market reach and growth over time. For the year, we expect to see year-over-year improvements in gross margin rate of about 100 basis points as we get past the elevated airfreight rates that we saw in 2022. In selling expenses, we expect the overall rate for the year to be in line with the overall rate we experienced in 2022. We'll see higher rates in the first half of the year due to lower sales volume compared to last year. In G&A, we anticipate limited dollar growth spend year-over-year while ensuring we are driving efficiencies across the business and supporting future growth opportunities. All of these factors taken together, we anticipate delivering $35 million-$37 million of EBITDA for the year. We expect tax rate of 30% and weighted average shares outstanding of approximately $130 million. I also want to call out the improvements that we're expecting in free cash flows and leverage we have in this area. Firstly, we expect capital expenditures to be in the range of $8 million-$10 million this year, significantly down from last year's $20 million. Secondly, we expect to see continued improvements on inventory turns and lower inventory dollars as we go through this year. These two areas, combined with improving EBITDA, will allow us to reduce our debt, improve our leverage, and strengthen our balance sheet. As mentioned, subsequent to quarter end, we paid off $6 million of debt, and we expect to continue to pay down our debt as we go through 2023. Looking at the first quarter, we're anticipating net sales of $113 million-$116 million and EBITDA of $1.5 million-$1.8 million. While we continue to manage our business through the current macro challenges, we remain confident in the long-term growth and success of our brands and business model. Now, we'll open it up for questions. Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question today, please press star one from your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you. Our first question is from the line of Randy Konik with Jefferies. Please proceed with your questions. Hey, good afternoon, Sean. How are you? Just thinking of Jill. Hopefully, everything is okay with her as she gets better soon. I just really have 2 questions. I guess the first one, I just want to get your perspective on just the U.S. consumer relative to the, I guess, the Australian consumer. Maybe give us some perspective on how they feel to you, how they're different or the same. Then just on the related to that, just on the markdown environment, pro-promotional environment. Sounds like things get a little bit better. You know, just maybe unpack that a little bit more then I have a follow-up. Thanks. Thanks, Randy. Yeah, I think, you know, as we kind of step back and think about kind of Q4 and what we saw in the U.S. versus Australia, I would say in the U.S., we did see trends, you know, as we went through the quarter, certainly get much more promotional and the promotional intensity increased significantly more than we had expected as we went through the quarter. I would say we actually saw that in both regions. Now we have seen the promotional intensity in the U.S., you know, ease a little bit as we've kind of gone through the second half of Q1. I think, you know, just that's happening as well a little bit in both regions. I think as we think about the consumer, you know, I think one of the advantages that we have is just the four brands, you know, in Australia and with Culture Kings stores. You know, we're seeing consistency, in the consumer pressure rate, I guess, across the brands in Australia. We are seeing the stores doing well. You know, the stores in Australia are the fastest growing area of the business in Australia. I think, you know, people are back kind of going out, spending more on experiential, being back in stores, enjoying that, enjoying all of that. A bit that we've seen in the U.S., although it seems like the Australia consumer is kind of maybe 1 or 2 quarters behind where the U.S. consumer is. Just on the markdown environment, you know, I kind of talked a little bit about the trends. I think, you know, we do as we think about the year, we are expecting that to continue. The promotional environment, you know, from a macro perspective, we obviously see the consumer is challenged. We have baked that into the guidance. Okay. Got it. Then just the only other question I have is more kind of long-term nature. You kind of talked a little bit about, you know, some of these wholesale early seeds of wholesale partnership, and, obviously 2 stores here and there. Do you think... Does this change how you think about long-term mix of, you know, the business from a, you know, eCom only to stores or even wholesale? Does that change how you think about, you know, what's normalized $ of CapEx per year and what the normalized marketing rate as a% of sales should be just long term? Just curious on how you think about that. Sure. Thanks, Randy. you know, I think for us, look, as we look to the kind of the long-term future of fashion, you know, our interest in building long-term durable brands, and we really think we have the brands to do that. They're very early on in their life. You know, I think at this point, you know, our brands have mastered that authentic relationship with customers online, right? They just do a great, you know, great job of that, all of the brands. I think at this point, we also see, you know, having the Culture Kings stores in Australia, you know, the progress we're seeing, the success we're seeing with the Culture Kings store in U.S., we do feel that, you know, we do want to be omnichannel for our customers and, you know, particularly to introduce new customers to the brand. Just like we're kind of everywhere from a marketing perspective where our customers are, we also feel that's important from an omnichannel perspective. You know, I think we are, you know, with some really, you know, nice tests kind of in the field right now. I think from a long-term perspective, you know, we're obviously looking for these to, you know, continue to bring revenue, to bring additional EBITDA dollars. You know, I think over. You know, we would certainly expect it to be, you know, accretive overall. I think, you know, as it relates to kind of gross margins marketing, I think we'll let these tests play out a little bit. We'd certainly actively share how they're doing with you guys and what we feel it will do to the long-term model. Understood. All right. Good. Thank you. Thanks a lot. Thank you. Our next question is from the line of Dana Telsey of Telsey Advisory Group. Please receive your questions. Thank you. Good afternoon, our best wishes for a speedy recovery for Jill. Sean, as you think about the business model and what it is, how big a% do you expect wholesale to get to? When you think about Princess Polly and obviously Petal & Pup, what are you thinking about pricing as we move forward in 2023, whether promotions or full price? Are you seeing any cadence of new designs improved? What has your customer told you? Any feedback loop from all the data with your customer, what they expect to spend, how they're spending their $, and how you're managing expenses during this time period. Just lastly, what holes are you looking to fill within the management team now, given the departure of the Culture Kings founders and perhaps any other shifts there? Thank you. Sure. Thanks, Dana. I think as it relates to wholesale, look, first, I think we're really happy that we're starting more tests in the wholesale channel and in the stores channel. We are always gonna be predominantly a direct-to-consumer brand and have that kind of one-on-one relationship with our brand. I don't think we've any long-term targets of how big we want the wholesale channel to be or our stores. You know, as it relates to pricing, I think, you know, and the consumer, I think, you know, what we have seen as we went through Q4 and early Q1, you know, consumers continue to be interested in newness, but we did see them certainly buy more marked down products than we have seen in the past. You know, although we saw AOV just down slightly on a constant currency basis, I would say, AU or down a bit more, but the consumer was kind of putting more units in the basket kind of as they looked for that markdown. You know, for us, I think as we think about the year, you know, kind of expecting that to continue and no big changes there. I think, you know, there's just a lot going on in the macro environment, you know, obviously lapping kind of strong comps in the first half of the year, easing in the back half. I think we're kind of aware of that as we kind of build our guidance as we think about the year and as we think about really, our focus areas. For us, a lot of those are, you know, continuing with the omni initiatives, but also strengthening the balance sheet. I think we're gonna look to. You know, we made some nice improvements on inventory in the back half and, you know, cash flow, positive cash flow in the back half of the year, $24 million. I think we're gonna want to do sequential improvements or reduction in inventory dollars, using that to, you know, pay down debt, reduce leverage, and just continue to strengthen the balance sheet. As it relates to Culture Kings, you know, I think, you know, Simon and Tony as well as building a great brand, they've also built a great team, you know. You know, it's a team that's been able to execute across regions, open the store in Vegas. It's doing really well. We're really happy with it. You know, we have Adrian there, based in Australia, now elevated to the Chief Operating Officer and CFO, Jonathan Yuska in the U.S. You know, I think the whole team are doing really well, and right now we don't feel that there's a need to bring on more management. Thank you. Our next question is from the line of Lorraine Hutchinson with Bank of America. Please proceed with your question. Hi, this is Alice Sal on for Lorraine Hutchinson. Thanks for taking our question, please send Jill our best. Two bigger picture questions. Any changes to how you're thinking about the two acquisitions per year, sort of business model? Like, is the shift now towards focusing on collaborations and new channels maybe? Also on the long-term goal of attaining low to mid-teens operating margins, what are updated expectations on the timeline to get there? Thank you. Thanks, Alice. Yeah, on the first question, I think, you know, for where we are right now, I think, you know, we are really happy with the four brands that we have. You know, they are they work well together, very synergistic. I think we feel that they're very early in their life cycle and have a, just a huge amount of long-term growth. I think kind of leveraging the authentic relationships that they have today is kind of the right time now to be pushing into wholesale and the omni-channel initiatives with them. I think with that, yeah, I would say kind of this year we'll be certainly focused on those initiatives, strengthening the balance sheet, I think it's kind of, you know, probably, that's the focus area for use of cash. You know, I think we continue to look at acquisitions as opportunities, but I would say the four brands that we have today and growing them organically is kind of focus at number one. From a, you know, long-term EBITDA model, I, you know, I absolutely believe we can, you know, be kind of long term in kind of those low to mid-teens. You know, I think, we're obviously gone through a very, you know, disruptive period from a macro environment perspective, still going through it. I think, you know, when I look at the middle of the P&L and kind of what we control, we certainly have the cost structure and the business model to get there. I think it'll just take a little bit of time to get, you know, sales volume up, really to bring down that G&A percentage and leverage there. Thank you. Our next question is from the line of Edward Yruma with Piper Sandler. Please proceed with your question. Hey, thoughts on for Jill on a speedy recovery. Two quick ones for me. I guess first on Rebdolls. I know it wasn't that significant, but is this part of a broader kind of strategic rethink of the portfolio or is this just really a one-off? Second, as it relates to wholesale, if you do make a bigger push in there, is there investment required to build out the requisite teams to service wholesale accounts? Thank you. Sure. Thanks, Ed. You know, first on Rebdolls. Look, we're big fans of the brand. We're big fans of Grisel, the CEO there. I think what we saw is that at its size, you know, and it did see a lot of growth when it came into the AKA family and portfolio. What we saw is, you know, it was doing about $10 million and really just not at the size where it could get the full benefits of the AKA platform. You know, with that, we just felt for the long-term success of the brand, it was really better back, you know, with Grisel as the owner and running that brand. You know, I would say a one-off and very much looking for the continued success of that brand. Just from a wholesale perspective, you know, at the a.k.a. level, we do have people with expertise in wholesale, you know, with a lot of expertise in wholesale. You know, from our relationships, you know, deal structure, things like that. You know, with our flexible technology stack, it's easy for us to kind of add in additional tools, where, you know, orders, information can flow through the Shopify platform and, you know, very seamlessly flow through all of our systems. We're already doing that today for some of the wholesale orders that we've processed. Don't feel or don't, you know, don't feel a need to have a big investment or kind of a, you know, a difficult technology work through for us to scale wholesale. Thank you. Thank you. The next question is from the line of Oliver Chen of Cowen. Please proceed with your company. Hi, this is Tom on for Oliver. In terms of quarters date trends, just curious if you could characterize consumer behavior in January and February relative to prior months. In terms of inventory composition, and the decision to keep promotions flat relative to last year, is it that you feel comfortable with, you know, the current quality of your inventory, or how long do you think, you know, it'll take the inventory levels to essentially normalize? Sure. Thanks, Tom. You know, as it relates to the consumer, I think, you know, maybe stepping back a little bit to frame up Q1 is kind of what we saw in Q4. I think, you know, we saw that consumer in, you know, I suppose, holding back a little bit in the first half of the quarter, you know, and then leaning in more in the second half of the quarter. You know, at a time when it was much more promotionally intense and, you know, certainly buying more markdown product than we had seen in kind of seen or experienced in the past. I think we saw that continue through January and into the early part of February. I think we've seen promotions slightly ease as we have gone through the quarter. You know, I think we still expect it to be quite promotional as we go through the year. Certainly first half, I feel there's, you know, there's still a lot of inventory out there. You know, as it relates to our own inventory, I think, you know, we've made really nice progress in bringing down the inventory dollars as we've gone through the back half. You know, down $17 million at the end of the year versus June of last year. You know, year-over-year, we're up about 9% on inventory dollars, but we are down 2% on units. I think, you know, just to see those units down year-over-year is nice progress. You know, we'll continue to make progress on inventory as we go through the year and bring down the dollars on a, you know, each quarter on a sequential basis. I think as we go through Q2, as we kind of finish Q2, I feel like we'll be really in check with kind of a balanced, you know, inventory growth versus sales growth. Really for us, I suppose stepping back from a philosophical perspective, we do want our inventory growth lower than our sales growth, and I think we should be back on that by Q2. Great. Thank you. In terms of the CapEx outlook, could you provide some additional color on the nature of those investments? Additionally, on the expense management side, what additional opportunities lie ahead this year? Thanks. Sure. Yeah, CapEx, you know, it's really a combination of some maintenance capital, I would say on the fleet of stores that we have. Some spend in the fulfillment centers, you know, continuing to bring in automation just to make us more efficient as we kind of bring on more sales and more volume. Obviously a little bit of dollars in there for the new omni initiatives that we have in the back half of the year. You know, from an expense area, yeah, it's interesting. You know, I was reflecting there. We talk a lot on this earnings call about the omni initiatives and the progress we're making. I would say that there is the same level of work and intensity going across all areas of the business, right? Whether that's, you know, product design and getting, you know, really great products, high quality for our customers. Also on just cost saving initiatives across the different areas of the P&L, whether that's inside and fulfillment centers, optimizing shipping carriers, you know, getting, improving the balance of air freight and sea, in all areas of the business. We have those. I think, you know, they're all small initiatives, but we all know kind of basis points add up pretty quickly. You know, we've seen, you know, you've seen nice little bits of progress there in, you know, even in the Q4 P&L, right? That our selling expenses are down versus Q3 in a time where you have, you know, more surcharges from carriers and those extra charges, I think is kind of progress and kind of gives us confidence as we think about next year's P&L and the long-term model that we have in this business. Thank you. Our next question is coming from the line of Youssef Squali with Truist Securities. Please proceed with your questions. Great. Thank you very much. Hello, Ciaran. So maybe talk a little bit about the contribution to the P&L that Rebdolls had last year, maybe on the top and bottom lines, just so that we can put in perspective as we look at your 2023 guide. On the balance sheet, how much cash do you need to continue to run the business? Is it fair to assume that with all the initiatives that you have going on, the Q4 kind of cash level is where you'll drop, assuming inventory efficiency continues and CapEx goes down, et cetera. Just help us understand liquidity position and kinda how do you look at the strengthening of the balance sheet throughout the year? Sure. Thank you, Youssef. On Rebdolls first. Rebdolls was doing about $10 million in revenue in net sales for us and kind of an immaterial amount of EBITDA with that. That's kind of as you think about FY 2023, you can, you can remove those, that, those numbers. You know, from a, a balance sheet perspective and liquidity, I think we are very focused on strengthening the balance sheet, you know, bringing down inventory, and bringing down our leverage. You know, I think we've obviously got a couple of key levers on that. I think, you know, what we did in the back half of last year was a, was a good insight, right, of just, you know, $24 million from operating cash flow. I think as we go through this year, you know, we'll certainly have, you know, continue to make improvements to bring down our inventory dollars. You know, you can see units are coming down faster than the dollars, but we will make sequential improvements in Q1 and continue that throughout the year. I think the other thing is we think about kind of when you kind of pencil us in against last year's cash flow, there were some one-off payments there from an accrued liabilities perspective, you know, some final payment to mnml, some final payments on IPO costs that we won't have those this year. You know, that'll again improve working capital. Just, you know, CapEx being down $10 million year-over-year is obviously a big benefit for us as well as we think about the cash flow for next year. Look, I would say they're the main drivers and levers that we have. It's an area of focus for us, you know, with improving sales, improving EBITDA, and improving cash flow is really how we're looking to run this business. Well, I guess related to that, as we try to get to a free cash flow number for 2023, is it as simple as looking at EBITDA, taking out the CapEx, and is that a good proxy, or do you expect working capital to be a net negative for you guys? Good question. I think in Q1, there'll be a little bit of negative on the working capital, Youssef, and that's really just kind of timing of some of the Q4 payables, right? I think after that, we will be in positive operating cash flow generation each quarter. Great. That's helpful. Thanks, Ciaran Long. Thank you. As a reminder, you may press star 1 if you'd like to ask a question at this time. Thank you. At this time, I'm showing no additional questions. I'll turn the floor back to Ciaran Long for closing remarks. Yeah. Thank you all for joining the call. Thank you for your best wishes for Jill. I know she would love to be here. She's probably listening at home. You know, I think, yeah, look, I think there's a lot of great stuff going on in this business. You know, we've got four great brands, they really have a lot of long-term runway ahead of them. I think the initiatives that we have will certainly kind of continue. We'll continue to build on them. There's a lot of strength in these initiatives as we go through 2023 and look to 24 and beyond. Thanks everybody. Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.