Global Brands 2015 Interim Earnings Results

Although Hong Kong-based footwear, apparel and accessories company Global Brands Group posted a net loss in the first half of 2015, management said it remains optimistic heading into the second half as losses steadily decline.

The firm — whose footwear partnerships include Under Armour Inc., Coach Inc. and Rachel Zoe as well as its own shoe label Frye — said it trimmed its losses in H1 to $40 million, a 24 percent improvement from the same period of 2014 when its losses were $53 million.

The company said its first half revenues totaled $1.3 billion, a decrease of 5 percent due to FX headwinds and a discontinuation of underperforming businesses. Excluding the impact of these factors, revenues would have grown by approximately 6 percent, the company said.

“This summer, Global Brands marked its first anniversary as an independent listed company. We continue to build on the solid foundation we have established as the partner of choice for American power brands in the affordable luxury space.” Bruce Rockowitz, CEO and vice chairman of Global Brands, said in a release. “We have sharpened our organizational focus around our product categories, as we continue to improve our business mix towards higher margin areas while at the same time driving operational synergies across the organization.”

In line with previous years, the CEO said he expects revenues and profits to accelerate significantly in the second half of 2015, “particularly given the skewing effect of seasonality” on the business.

Operating costs decreased by 3.2 percent, to $449 million while total margin as a percentage of revenues grew to 32 percent in H1.

Margin growth, the company said is mainly due to the group’s focus on “improving business mix towards higher margin areas” which include characters on the licensed brands side as well as its key controlled brands.

“Within licensed brands, the characters and kids fashion areas continued to perform well. This strong performance comes as we leverage our unrivalled global platform and our position as one of the largest licensees of all major kids entertainment franchises,” said Dow Famulak, Global Brands president and COO, in a release. “On the controlled brands side, we have added Jones New York to further strengthen our women’s fashion and apparel brands portfolio. We also continue to grow our key controlled brands, such as Frye, Spyder and Juicy Couture and have bolstered our management teams across several brands.”

CEO Rockowitz added that he expects the company’s future growth to be fueled by a growing “consumer appetite for leading American affordable luxury brands” along with increasing access to the “online arena.”

“Looking ahead, we expect our leading businesses to continue to perform well and maintain the course of their growth trajectory,” Rockowitz said. “At the same time, we will continue to increase our geographic footprint and look for strategic opportunities to add to our existing platforms, through both licenses and acquisitions.”

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