RYU Apparel Reports Second Quarter 2017 Results

VANCOUVER, Aug. 10, 2017 /PRNewswire/ - RYU Apparel Inc. (TSX VENTURE: RYU & Frankfurt Stock Exchange: RYA) (the "Company"), creator of urban athletic apparel, is pleased to report its financial results for the six months ended June 30, 2017.

Revenue in the second quarter of 2017 was $641,231, 113% higher than revenue of $300,773 during the same period in 2016. Now into its second year of operations, the RYU team is encouraged with its sales record to date and a 46% gross profit for the quarter.

Second quarter 2017 results included additional revenue from the Company's new retail store locations in Downtown Vancouver and Park Royal South in West Vancouver whereas second quarter revenue in 2016 was comprised primarily of sales from the Flagship retail store and e-commerce sales.

During the six months ended June 30, 2017, the Company achieved the following milestones:

• RYU continues to show a balanced ratio of apparel sales between men and women at 46% and 54% respectively. By identifying an underserved gap in the industry for men, and developing the Beautiful Tough™ brand positioning that's resonating with women, RYU has achieved an enviable gender balance that is rare in the industry.
  
  
• As an omni-channel retailer, RYU currently has 17% of revenue from e-commerce with a target of reaching 30% by the end of 2018.
  
  
• RYU's retail store expansion plan is on target to have five stores open by the end of 2017. The Company currently has three stores in operation and two under construction. In addition to the opening of Park Royal South on March 28, 2017, management anticipates that the third quarter 2017 will see the opening of its first Toronto store on Queen Street West, and its first enclosed mall location at Metrotown in Vancouver.

Second quarter summary:

• Second quarter revenue of $641,231 compared with $300,773 in the same period in fiscal 2016. Revenue increased by 113% as it included sales from three versus one retail store and growth in e-commerce sales from its improved website that had higher visitor traffic than in early 2016.
  
  
• Second quarter revenue was adversely affected because of a shortage on key stock items and sizes due to higher than anticipated demand and after keeping inventory purchases to a minimum in 2016. In the first and second quarter of 2017, RYU started placing inventory deposits to fill the gaps, but deliveries did not begin until the end of the second quarter and such deliveries are expected to continue through the end of the third quarter of 2017. As a result, closing inventory as at June 30, 2017 increased 61% to $1,716,330 from $1,067,560 at December 31, 2016, and inventory deposits increased 369% to $539,276 from $115,017.
  
  
• Second quarter gross profit of $294,776 compared with $139,185 in the same period in fiscal 2016, an increase of 112%. Gross profit percentage of 46% was achieved in both the second quarter of 2017 and 2016.
  
  
• Second quarter expenses of $2,475,870 compared with $2,245,903 in the same period in fiscal 2016. The increase of 10% is primarily due to the expansion of our retail operations from one to three stores.
  
  
• Second quarter comprehensive loss was $2,181,094 compared with $1,680,184 in the same period in fiscal 2016. The loss was 30% higher due to the 2016 recovery of the warrant derivative of $261,241, a non-cash item, and the $165,283 gain on settlement of debt recognized in the first quarter of 2016. Without these outliers, comprehensive loss in the second quarter of 2017 and 2016 would have been $2,181,094 and $2,106,718 respectively. The $74,377 (4%) increase is due to higher retail store costs, the share based payments from the stock option grant in February 2017 and higher depreciation of leasehold improvements.
  
  
• The Company closed a non-brokered private placement, raising gross proceeds of $2,252,841 on June 22, 2017.

Year-to-date summary:

• Six month revenue of $1,108,234 compared with $560,500 in the same period in fiscal 2016. Revenue increased by 98% as it included sales from three versus one retail store and growth in e-commerce sales from its improved website that had higher visitor traffic than in early 2016. The Park Royal location opened March 2017.
  
  
• Six month revenue was adversely affected because of a shortage on key stock items and sizes due to higher than anticipated demand and after keeping inventory purchases to a minimum in 2016. In the first and second quarter of 2017, RYU started placing inventory deposits to fill the gaps, but deliveries did not begin until the end of the second quarter and such deliveries are expected to continue through the end of the third quarter of 2017. As a result, closing inventory as at June 30, 2017 increased 61% to $1,716,330 from $1,067,560 at December 31, 2016, and inventory deposits increased 369% to $539,276 from $115,017.
  
  
• Six month gross profit of $514,032 compared with $274,179 in the same period in fiscal 2016, an increase of 87%. Gross profit percentage of 46% in the six months ended June 30, 2017 was lower than gross profit of 49% in 2016 due to the difference in the weighted average cost of finished goods inventory and the amount of sales discounts applied in each period.
  
  
• Six month expenses of $4,802,273 compared with $4,176,593 in the same period in fiscal 2016. The increase of 15% is partially due to depreciation, foreign currency fluctuations and share based payments in relation to stock option grants. Without these three items, expenses increased $286,541 (7%) during the comparative periods, aligned with the increase in retail operations from one to three stores.
  
  
• Six month comprehensive loss was $4,280,537 compared with $2,420,290 in the same period in fiscal 2016. The loss was 77% higher due to the 2016 recovery of the warrant derivative of $1,267,504, a non-cash item, and the $214,620 gain on settlement of debt for two transactions that took place in 2016. Without these outliers, comprehensive loss during the six months ended June 30, 2017 and 2016 would have been $4,288,241 and $3,902,414 respectively. The $385,827 (10%) increase is due to the additional depreciation from the Thurlow and Park Royal stores, the share based payments from the stock option grant in February 2017 and foreign currency fluctuations.
  
  
• The Company closed a short form prospectus offering, raising gross proceeds of $3,734,441 on February 2, 2017 and a non-brokered private placement, raising gross proceeds of $2,252,841 on June 22, 2017.

For convenience, copies of the Company's unaudited condensed consolidated interim statements of financial position, comprehensive loss and cash flows for the periods discussed herein are attached to this news release.  Readers are encouraged to review such statements in their entirety, including the notes thereto, on SEDAR.  Full details of the Company's financial performance can be obtained by viewing the unaudited condensed consolidated interim financial statements and corresponding MD&A available on SEDAR.

For regular updates on RYU Apparel visit: http://ryu.com

About RYU
RYU Apparel Inc. is tailored innovation for the urban athlete. An award winning athletic apparel and accessories brand engineered for the fitness, training and performance of the multi-discipline athlete. Designed without compromise for comfort, style and durability, RYU exists to facilitate human performance. For more information, visit: http://ryu.com

On Behalf of the Board

RYU APPAREL INC.
"Marcello Leone"
Marcello Leone, CEO, President and Chairman of the Board
Tel: 604-235-2880

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

This news release contains forward-looking information that involve various risks and uncertainties regarding future events. Such forward-looking information can include without limitation statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance of the Company, such as statements that: (i) the Company has a target of reaching 30% of revenue from e-commerce by the end of 2017; (ii) the expansion plan is to have five stores open by the end of 2017, and the intention to open the Toronto store on Queen Street West and the Company's first enclosed mall location in Metrotown within the third quarter of 2017; and (iii) deliveries of inventory are expected to continue through the end of the third quarter 2017. There are numerous risks and uncertainties that could cause actual results and the Company's plans and objectives to differ materially from those expressed in the forward-looking information, including the ability of the company to finance operations, the ability of the management team to execute on its business plan, risks in the apparel industry in general, and delays and risks associated with renovating and opening new store locations. Actual results and future events could differ materially from those anticipated in such information. These and all subsequent written and oral forward-looking information are based on estimates and opinions of management on the dates they are made and are expressly qualified in their entirety by this notice. Except as required by law, the Company does not intend to update these forward-looking statements.

SOURCE RYU Apparel Inc.