Sequential Brands Swings into Q2 Loss Despite Sales Hike

In Industry News, What's New by Accessories Staff

Sequential Brands’ William Rast will be available in the United States only at Lord & Taylor stores.

Sequential Brands’ William Rast will be available in the United States only at Lord & Taylor stores.

New York–Sequential Brands Group, a brand management company, has swung to a net loss in the second quarter, despite a significant hike in revenue.

The company’s net loss amounted to $600,000 for the three months to June 30, compared to a net profit of $700,000 in the same period of the prior year.

Sequential, owner of clothing and footwear brands such as Ellen Tracy and Heelys said revenue jumped 61% to $7 million. Analysts had expected $5.9 million. Earnings of 4 cents per share beat by a penny, but that was still down from 5 cents in the prior year’s same quarter.

Strong Ellen Tracy

Excluding pending acquisitions, Sequential forecasts $28 million to $30 million in revenue for the full year. Analysts expect $31 million in revenue.

All eight of Sequential’s brands recorded year-over-year gains in Q2. But Ellen Tracy and Heelys “were the star performers,” said analyst Eric Beder of Wunderlich Securities in a client note.

Despite Ellen Tracy’s “maturity” — the women’s clothing, footwear and accessories brand is 65 years old — it “continues to take share at Macy’s and expand into bedding and housewares,” he said.

Casual-footwear brand Heelys has e-commerce sales to thank, especially with key player and the brand’s website “gaining momentum,” Beder said.

Sequential’s pending acquisition of Galaxy Brand Holdings, which is expected to close by year-end, will nearly double the scale of the firm’s brand portfolio, CEO Yehuda Shmidman stated in the earnings release

“Our performance over the first half of the year demonstrates the power of our business model and our ability to continue growing both organically and through acquisitions,” said Shmidman.

Year-to-date profit amounted to $100,000, compared to a loss of $20.8 million in the same period last year, while revenue more than doubled to $13.3 million from $6 million a year ago.

Sequential Brands owns Ellen Tracy, William Rast, Revo, Caribbean Joe, Heelys, DVS, The Franklin Mint and People’s Liberation.