Giggles N Hugs Inc (OTCMKTS:GIGL) Earnings Shows Growth (Sort Of)

On the past couple of occasions that we've taken a look at Giggles N Hugs Inc (OTCMKTS:GIGL), we've focused on the company's marketing strategy. The on-boarding of a couple of quasi-celebrities (maybe that's a little harsh, these individuals are big names on social media, and that's incredibly important these days) demonstrated an attempt to use social influence as a client capture tool, and we saw this (and still do see it) as a smart way to brand build, while upping footfall.Well, the company just put out it's latest financials, meaning we can take a look at Giggles N Hugs from a more quantitative standpoint, and then see where this standpoint fits in with the above described strategy.So, here goes.By way of a quick introduction, this one's a restaurant and entertainment stock based to of California. The company has a few locations active right now, and it's trying to execute on an aggressive franchise/centrally owned combo location expansion strategy so as to build on said active locations. Its approach is relatively simple – the company kits its locations out as a kid friendly environment, with magic shows, face painting, all that sort of thing on offer as and while the customers (usually said kids and their parents) eat healthy (but again, kid friendly) food.It's a neat USP, and it's helped Giggles N Hugs to garner something of a cult following, with a number of celebrities and their kids frequenting the California locations. This, of course, is something management has jumped on as a marketing ploy, and we suspect that's where the idea for the above influencer-based ploy came from.Anyway, we're not here to discuss that now. Let's get to the numbers.The report details the fiscal year 2016, which represents the twelve months to January 31, 2017. For the period, net sales dropped by a little over $428,000 when compared to the same period a year earlier – a drop of 12.4%. That's not great at first glance, but stick with us. Giggles N Hugs closed one of its stores while the mall in which it's located shut for remodeling. Of the net sales dip, more than $555,000 was attributable to this closure. Remove this location from the equation then, and you get a net increase of more than $127,000. There's a good chance many will miss this detail in their initial analysis of the numbers, so if Giggles N Hugs starts to sell off, that's why, and it might be an opportunity to jump in at a discount on wider market misinterpretation of the numbers.The rest of the numbers, total operational costs and total gen/admin costs are a bit distorted because of said closure. The trend across both, however, was that food costs decreased while labor costs increased, and that these movements pretty much offset each other.Again, bottom line is a bit distorted, but net loss came in at $1.38 million.The all important cash on hand figure came in at $144,000 as of January 1, 2017 (we're taking this from the 10K, not the PR). Management noted alongside this figure that it expects the balance to last until June this year, so we're almost certainly going to see some degree of dilutive financing over the next few weeks. That's not too much of a surprise, and it's something we've noted previously as a risk factor, but it's one of those things that have to play into the equation when considering an exposure.So how do these numbers play into the bigger picture?Well, they are a bit off because of the closure, but on aggregate, they seem to show growth. The company is spending on building its brand right now (although it seems as if it's doing so pretty smartly) and so there's going to be some near term burn if it's going to expand into its own targets. That said, if the recognition it is seeking comes from its campaigns, there's plenty of PPS run potential for the stock heading into the latter half of 2017 and beyond.We will be updating our subscribers as soon as we know more. For the latest updates on GIGL, sign up below!Disclosure: We have no position in GIGL and have not been compensated for this article.