Sales fell 3.7% on a lower average order value during the quarter. On a constant currency basis, sales were flat compared to a year ago.
Gross margin rose to 55.7% vs. 53.2% a year ago. The 250 basis point increase in gross margin rate was primarily driven by a detrimental $6.0M fair value adjustment related to the Culture Kings acquisition included in the prior year, partially offset by increased promotional activity.
Adjusted EBITDA came in at $9.2M vs. $18.5M a year ago.
Looking ahead, AKA sees Q4 sales of $158M to $165M. and $165M and adjusted EBITDA of between $11.2M and $13.0M. CEO Jill Ramsey said the company anticipates another challenging quarter, pointed to "great brands, next-generation merchandising and marketing strategies and the necessary discipline" to deliver long-term growth.
The AKA rally on Friday pushed shares back to where they stood before earnings jitters created some selling pressure.