Alliance Entertainment Reports 29% Q1 2023 Revenue Slip: ‘We Are Not Immune to the Macroeconomic Headwinds’

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Alliance Entertainment posted an almost 30 percent revenue decline for Q1 2023 amid “macroeconomic headwinds.” Photo Credit: Sean Benesh

Now a publicly traded company, Alliance Entertainment (OTC: AENT) has revealed that it generated $227.73 million during 2023’s initial three months – down about 28.93 percent from the same stretch in 2022.

The Florida-based media retailer, which merged with a special purpose acquisition company called Adara in February, just recently posted its Q1 2023 (Q3 of its fiscal year) financials. Notwithstanding a year-over-year (YoY) reduction in cost of revenues ($200.40 million total, down about 28.50 percent YoY), Alliance Entertainment’s aforementioned income falloff contributed to a $7.75 million net loss (or about 16 cents per share) on the quarter, according to the resource.

For reference, the company previously disclosed $3.71 million in net income for the opening quarter of 2022. Shifting back to the $227.73 million in quarterly revenue, vinyl led the pack by generating $75 million for the 13-year-old business, per its Q1 earnings report – although the resurging format’s sales volume is said to have decreased.

CDs, for their part, experienced a two percent average-price boost but nevertheless suffered a 17 percent revenue dip during Q1 as a result of reduced sales volume, Alliance Entertainment indicated.

“Along with other Retailers and Distributors in the United States,” Alliance wrote not long after CD Baby bailed on physical, “we are not immune to the macroeconomic headwinds caused by increased inflation and interest rates. … Our B2B wholesale customer base revenue was down 31% compared to prior year due to their relatively rigorous inventory management.”

Expanding upon the points, Alliance also relayed that vinyl sales had slipped by three percent to total $242 million during the nine months ending on March 31st, with CDs’ own revenue having declined by 24 percent throughout the window.

Addressing his company’s Q1 showing, Alliance Entertainment chairman Bruce Ogilvie touched upon subjects including the “incredible growth in Vinyl shipments at our Kentucky warehouse” and an adjacent automation push.

“Operationally, during the quarter we installed a cube-based warehouse automated storage and retrieval system that is now live and operational, supporting order fulfillment of 33 million pieces of inventory across more than 425,000 SKUs,” Ogilvie communicated in part.

“With our incredible growth in Vinyl shipments at our Kentucky warehouse, we needed a system that could reduce the distance walked to pick product, to store in a more compact form, and reduce the amount of labor needed to handle the product. This system is designed to support future capacity as we shift toward larger scale automation,” he finished.

Elsewhere in the report, Alliance disclosed that it had a $127.43 million revolving credit balance with Bank of America as of March 31st, with “two separate $250,000 promissory notes” having been in June of 2022 “executed between Adara and two of its then shareholders to provide cash to pay operating costs.”

The interest-free notes had an outstanding balance of $471,599 as of March 31st, according to the performance analysis. At the time of this writing, Alliance Entertainment stock was trading for an even three dollars per share.