• LXRandCo (TSX:LXR) has issued an update to investors, outlining concerns over its ability to continue operations
  • The company is expecting a negative impact on its financial results and liquidity, due primarily to the COVID-19 pandemic
  • For the 2019 calendar year, LXRandCo incurred a net loss of C$10.4 million and negative cash flows of $5.3 million
  • The company previously managed to secure financing via share issuances and a line of credit, but this may not be possible in future
  • LXRandCo (LXR) is currently steady at $0.25 per share, with a market cap of $7.04 million

LXRandCo (TSX:LXR) has issued an update to investors, outlining concerns over its ability to continue operations.

As of December 31, 2019, the company operated 80 stores. The stores specialise in the sale of branded vintage handbags and other personal luxury products.

The ongoing effects of COVID-19 have been significant, particularly among retail-based businesses. As such, LXRandCo’s management team has identified the potential for a materially negative impact on the company’s financial results and liquidity, particularly over a prolonged period.

This comes off the back of a disappointing 2019 calendar year, in which LXRandCO incurred a net loss of C$10.4 million and negative cash flows of $5.3 million.

However, business seemed to pick up in the last quarter of the year compared to the same period in 2018.

Net revenue increased 32.9 per cent to $14.4 million, and gross profit increased 43.8 per cent to $4.7 million. Net loss decreased from $3.7 million to $2.1 million.

Despite the uptick, today’s announcement said that the company’s survival is dependent on a number of factors. These include a sales increase, the underlying health and viability of its retail partners, and general economic and consumer buying conditions.

LXRandCo has previously secured financing through the issuance of shares and a line of credit. However, there is no guarantee that these options will exist in the future.

The company has therefore initiated a number of liquidity-preserving measures. These include accelerating its e-commerce activities, and initiating capital expenditure and expense reductions.

LXRandCo (LXR) is currently steady at $0.25 per share, with a market cap of $7.04 million as of 11:54am EST.

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