Hypebeast Posts Fiscal 2023 Loss

Denni Hu
·2 min read

SHANGHAI — An aborted SPAC deal, a bear crypto market and soaring marketing expenses resulted in a 5.1 million Hong Kong dollar, or $651,000, net loss for fiscal 2023 at Hypebeast Ltd., the Hong Kong-listed streetwear media and e-commerce company.

Compared to a net profit of 100.2 million Hong Kong dollars, or $12.7 million, in fiscal 2022, the company said the loss was mainly due to legal and professional fees related to a failed merger with Iron Spark I Inc.

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On Tuesday, Hypebeast reported 7.2 percent year-over-year revenue growth to 960 million Hong Kong dollars, or $122.6 million, for the fiscal year ended March 31.

Gross profit slid 8 percent to 505.4 million Hong Kong dollars, or $64.5 million, for fiscal 2023, which translates to an 8.7 percent decrease in gross profit margin from 61.3 percent during fiscal 2022 to 52.6 percent.

Shares dropped 3.2 percent to 0.3 Hong Kong dollars after the company reported its annual results.

Unveiled last April, the merger with Iron Spark I, a special purpose acquisition company, or SPAC, would have made Hypebeast a public-listed company in New York by the end of 2022. The deal was expected to provide $180 million in proceeds to Hypebeast, giving the company a pro forma equity valuation of $534 million.

Last December, the Hypebeast and Iron Spark I deal failed to complete and the SPAC was liquidated.

During a warning issued earlier this month, Hypbeast also noted that losses incurred from cryptocurrency and NFT investments, physical assets relating to its e-commerce business, and increased sales and marketing expenses continued to put pressure on the company’s top-line growth.

Hypebeast said demand for the company’s media and agency services remained consistent, despite a 1.4 percent year-over-year drop to 644.2 million Hong Kong dollars, or $82 million, for the period.

“As the pandemic has come to an end, the group expects to resume physical campaign production at nearly full capacity worldwide, while remaining cautiously optimistic on near-term concerns and uncertainties as the global economy resumes activity,” Hypebeast said in its latest annual report.

Driven by sales and promotional activities, revenue for Hypebeast’s e-commerce and retail arm, including HBX.com and two brick-and-mortar stores in Hong Kong and New York, increased 30.5 percent year-over-year to 315.8 million Hong Kong dollars. In fiscal 2023, gross profit in that area rose 33 percent to 130.9 million Hong Kong dollars, compared to fiscal 2022.

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