Sequential Brands Group, Inc. reported wider losses in the fourth quarter and year and the company’s new chief executive officer said it may consider selling off more brands in its portfolio as it seeks to continue a “transformation” that started in 2019.
Sequential owns the Joe’s Jeans, William Rast, Ellen Tracy, Jessica Simpson, Avia, And 1 and Gaiam brands, among others.
Last April, the New York-based brand management company sold its Martha Stewart and Emeril Lagasse home division to Marquee Brands for $166 million. That led to a significant reduction in operating expenses that will become evident this year, according to ceo David Conn during a conference call Friday morning.
Conn, who joined the company in January after a 25-year career that included VF Corp., Sharper Image and FAO Schwarz, said operating expenses are expected to drop to $30 million this year from $70 million prior to the sale of those brands.
But to improve its fortunes, he said the company has amended its lending agreement to increase liquidity and cash flow, and has started a strategic review that “may include the divestiture of one or two more existing brands, the acquisition of one or more brands, or a stock buyback program.”
He also said that the Jessica Simpson brand benefitted from the release of the entertainer’s memoir earlier this year, and that its Gaiam yoga brand is positioned to expand in the popular health and wellness space. Sequential will also consolidate its New York offices from two locations to one.
In the fourth quarter ended Dec. 31, 2019, Sequential reported that the loss from continuing operations on a GAAP basis was $7.9 million or 12 cents a diluted share, compared with a loss of $5.7 million, or 9 cents a share, in the same period last year. Adjusted EBITDA from continuing operations for the period was $8 million, compared to $17.8 million in the prior-year quarter. Total sales from continuing operations fell to $24.2 million, compared to $35.2 million in the prior-year quarter.
For the year, GAAP losses from continuing operations more than doubled to $34.3 million, or 53 cents a share, from $17.5 million, or 27 cents a share, in the prior year. Adjusted EBITDA from continuing operations for was $45.8 million, compared to $69.9 million in the prior year. Sales fell to $101.6 million, compared to $127.3 million in the prior year.