Owner of Hudson Jeans and Robert Graham Sees Net Loss in Third Quarter

Differential Brands, the Los Angeles parent company of Hudson Jeans, Robert Graham and SWIMS, reported that its third-quarter net loss was $183,000, down from a net loss of $2.82 million for the same time last year.

However, net sales for the third quarter ending Sept. 30 were up slightly, totaling $42.4 million in the third quarter compared to $41.2 million in the third quarter of 2016. Net sales were driven by the addition of the SWIMS brand last year as well as high, double-digit sales growth in Hudson products to specialty retailers.

E-commerce sales have been the company’s strong point. “Our consumer-direct segment growth rate continued to outpace our wholesale segment, with double-digit e-commerce growth this year, which came on top of more than 50 percent growth in the comparable quarter last year. The increase was driven largely by higher conversion rates and more units sold per order across our brands’ websites,” said Michael Buckley, chief executive of Different Brands. “Robert Graham retail comparable-store sales improved 3 percent for the quarter, excluding stores affected by hurricanes Harvey and Irma. Just prior to the hurricanes, total retail-store sales compared to the same period in the prior year were trending in the high single digits.”

E-commerce sales at the company’s recently acquired SWIMS brand of footwear more than doubled compared to the same quarter last year, due to the launch of a U.S. website this past June for the Norwegian brand and the addition of a second outlet store in Norway.

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 fashionably tasteful and had a bold look. Its products include boots, water-resistant loafers, ponchos and sportswear.

The Norwegian footwear label 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.

Moving the brand forward, Differential Brands said it got its U.S.-based sales team up and running during the quarter, which will play a key role in the label’s rapid growth next spring.

The SWIMS brand has now expanded into approximately 380 better specialty stores and department stores in the U.S. and Canada and could be approaching 600 doors in the near future, company executives said.

More exposure for Hudson also has helped sales. “At Hudson, increased doors combined with better sell-through in both the men’s and women’s categories drove growth. Overall, we continue to navigate the sales-distribution shift in our industry from traditional bricks-and-mortar channels, especially at department stores, to e-commerce-driven sales on both our brands’ sites and our partners’ sites and to new and innovative digital marketplaces around the globe,” Buckley said.

Before becoming Differential Brands, 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.