HONG KONG — Global Brands eked out a net profit for the first six months of the year as investments and new licensing deals prompted a jump in operating costs.
Meanwhile, the company’s chief executive officer Bruce Rockowitz said he expects the Donald Trump presidency to “very positive” for business, adding that he is optimistic about the president-elect’s plans to lower corporate taxes and build infrastructure, which could spur economic growth and consumption. He added that he does not believe Trump would carry through with a punitive tariff on China as he has threatened. Such a a move would be “catastrophic” for the U.S. economy, he said.
“He’s a very smart businessman and he’s been around a long time. One thing we believe in, it’s going to be an economic boom for the U.S. because of the policies he’s planning to enact and he’ll be able to enact it with the way he’s controlling both houses” of Congress, he said. “The one thing he will want to be known for is a great economy.”
The company, a spin-off of sourcing giant Li & Fung, said net profit attributable to shareholders of the company came in at $777,000 compared to a year-earlier profit of $15.29 million, which was boosted by financial gains.
The company said adjusted net profit, which strips out merger and acquisition costs and one-time items, grew nearly four times to $44 million.
Sales for the six months ended Sept. 30 rose 15 percent to $1.84 billion.
Operating profit slid 6.4 percent to $41.36 million. Global Brands said investments in its brand portfolio and the addition of new licenses caused operating costs to grow 12.6 percent to $578 million.
Global Brands licenses, manages and controls brands for celebrities such as Jennifer Lopez, Sean John and David Beckham. In September it formed a joint venture with Katy Perry to produce a range of consumer goods for the star’s brand. Other fresh deals from the first half of the year include a license for apparel and bags for Kenneth Cole and a joint venture with the Creative Artists Agency to manage celebrity brands.
The company also manages the Ivanka Trump line of accessories. The line, created by Donald Trump’s daughter, has seen a backlash in the U.S. with some consumers boycotting the brand and other Trump businesses. Nevertheless, Rockowitz said the line could present a large opportunity but he was unsure of how much a priority her fashion brand was for her after Trump’s election win.
“She’s very bright and she’s good. I don’t know if that will be a focus for the family now that they have bigger fish to fry,” he said. “She may focus on helping him on the bigger things like real estate, Trump Tower, the golf courses that he owns. I just don’t know at this moment.”
Rockowitz, chief executive and vice chairman of Global Brands, characterized the six-month period as a “challenging” one marked by an ongoing fundamental shift in consumer behavior and consumers’ growing tendency to buy online rather than in traditional brick and mortar stores.
“Looking ahead, we anticipate continued challenges with the macro and industry environment,” he said. “However, we are full of confidence about our prospects and expect that our growth momentum will continue. We will focus on increasing market share across all distribution channels, and continue to expand our business across Europe and Asia.”