Differential Brands Sees Sales Grow in the Second Quarter

Differential Brands Group—the Los Angeles company whose labels include denim label Hudson, Robert Graham and SWIMS—reported net sales growth for its second quarter but a net loss.

Differential Brands lost $4 million in the second quarter, ending June 30, compared to a net loss of $3.6 million during the same period last year.

Net sales for the second quarter totaled $36.5 million, up 13 percent from $32.4 million the previous year.

In more positive news, earnings before interest, taxes, depreciation and amortization (EBITDA) jumped to $2 million in the second quarter, compared to $600,000 a year earlier.

“In our consumer-direct segment, we saw significant growth in our e-commerce channel driven largely by higher conversion rates across our brands as a result of better adoption of our product offerings, including 5 percent comparable-store sales at Robert Graham,” said the company’s chief executive, Michael Buckley, in a statement. He noted that e-commerce net sales grew by 38 percent over the second quarter of fiscal 2016.

“In the wholesale segment, growth was driven by the addition of the SWIMS business as well as increases in both Hudson and Robert Graham sales as consumers responded favorably to new product,” he added. “As we look ahead, we intend to continue making investments in our brands to expand our consumer reach and better capitalize on our strong digital presence.”

He said this included major new Fall ’17 and Spring ’18 content and brand marketing campaigns at Hudson and a much expanded SWIMS product line, now showing for Spring ’18.

For the Hudson Fall/Holiday campaign, Differential Brands tapped up-and-coming models Kaia Gerber and Gabriel-Kane Day-Lewis for the face of the label.

The fashion industry’s fresh faces are children of celebrities. Gerber is the daughter of supermodel Cindy Crawford and Rande Gerber, and Day-Lewis is the son of Oscar-winning actor Daniel Day-Lewis.

The campaign was photographed by Patrick Demarchelier under the art direction of advertising guru David Lipman and will be Gerber’s and Day-Lewis’s first apparel brand campaign.

“Overall, we plan to continue building on our strong momentum and remain focused on further strengthening our platform over the remainder of the year,” Buckley explained.

For the six-month fiscal period ending June 30, Differential Brands had a net loss of $6.4 million compared to $10 million last year. Net sales in the first six months totaled $76.5 million compared to $66 million.

Last year, Differential Brands acquired SWIMS, a Scandinavian-style footwear, apparel and accessories company started in Norway in 2006. SWIMS was founded to build a better rubber boot that was tasteful and had a bold look. Its products include boots, water-resistant loafers, ponchos and sportswear.

SWIMS sells its products through high-end department stores such as Neiman Marcus, specialty stores, luxury resorts and through 10 licensed SWIMS-branded stores as well as through e-commerce.

Before becoming Differential Brands Group, the apparel venture operated as Joe’s Jeans, which hit a financial hurdle in 2013 when it borrowed $90 million to buy Hudson for $97.6 million and then defaulted on its loans.

The company was close to declaring bankruptcy in 2015 but ended up selling its flagship brand, Joe’s Jeans, to Sequential Brands Group and Global Brands Group Holding for $80 million. Funds from the sale were used to retire Joe’s Jeans’ debt.

The Hudson label remained behind and the company was merged with the high-end label Robert Graham and then combined under the Differential Brands Group corporate name, which is publicly traded on the NASDAQ.