A year after buying Bill Blass, NexCen Brands Inc. is exercising patience.
This story first appeared in the March 19, 2008 issue of WWD. Subscribe Today.
“There’s a way to do things quick, and there’s a way to do things right, like they did with Burberry, which takes more time — and Bill Blass is not the kind of brand you can go forward on without cleaning up current distributions,” said Robert D’Loren, NexCen president and chief executive officer. “Our strategy with Bill Blass was to reposition back at the upper tier. That’s always a challenge when you have product in lots of distribution channels.”
Although sources claim the branding firm overpaid for Blass, which it bought for $50 million last January, and is now seeing too slow and too weak a stream of revenues, D’Loren said the company is pleased with the lone fashion business in the nine-brand portfolio it has built since forming in 2006.
“Sometimes you have to bring it back to bring it forward,” D’Loren said. “I am comfortable where I think we will be in 2008. Two thousand and eight is the year to sign all the new licenses, and the volume will be in 2009.”
Last year was a busy one for the Bill Blass team. On the design front, the company enlisted Peter Som to design the women’s line and Michael Bastian to design men’s.
For licensing, the company has made deals for shoes, handbags and fur in women’s, and for almost every category in men’s. In addition, NexCen is using its Waverly division — which it acquired last May — to create Bill Blass home. Other licenses, like bridal, are in the works.
The company is also cleaning up the brand’s distribution, trying to reclaim its high-end cachet. For example, Bill Blass repositioned its denim from moderate, selling at about $29 a pair, to better, at $59. Another big push is to open the brand to foreign markets such as the Middle East. And in the U.S., NexCen hopes to grow company revenues through direct home sales, where the bridge-priced Bill Blass line is expected to do $30 million this year.
Across all categories, Bill Blass does about $200 million in sales today, and D’Loren said he ultimately wants to see the brand grow to about $500 million.
Speculation about the financial health of the Blass brand began to stir Friday after NexCen posted a fourth-quarter loss of $3.8 million, or 7 cents a share, hurt by one-time expenses and delayed store openings. Excluding one-time items — including depreciation and amortization, stock-based compensation and a provision for deferred taxes — the company broke even per share with earnings of $330,000. Sales for the quarter climbed to $10.3 million from $1.9 million last year.
For its first full year in business, the company’s net loss grew to $4.6 million, or 9 cents a share, on revenues of $34.4 million. In the two months NexCen was in operation in 2006, it had a net loss of $2.1 million, or 4 cents a share, on sales of $1.9 million.
NexCen reaffirmed 2008 earnings guidance of 27 cents to 30 cents per share.
D’Loren said management was not happy with the price of the stock, which closed Tuesday at $3.02, from a 52-week high of about $13. “We think it’s a good buy now,” he said.
Formed in 2006, NexCen owns, licenses, franchises and markets a diverse basket of brands: Bill Blass and Waverly on the consumer products end, The Athlete’s Foot and Shoebox New York for retail franchising, and treats quick-service restaurant franchises Marble Slab, Great American Cookies, MaggieMoo’s, Pretzelmaker and Pretzel Time.
On the treats side, the company is combining businesses and product offerings. The synergies are less obvious on the consumer products side, but they are there, D’Loren said. For example, the company’s Shoebox stores are now carrying Bill Blass shoes.
D’Loren said he would like to make more fashion acquisitions, from $50 million to $150 million. He said NexCen wouldn’t want a brand in its early stages, but rather would be interested in a more mature one that either is already in a stable distribution channel or “that needs more work.”