Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Xcel Brands Inc (XELB, Financial) reported a 16% year-over-year increase in net licensing revenues for the second quarter.
- The company achieved an 85% improvement in non-GAAP earnings compared to the previous year.
- The C. Wonder brand exceeded sales expectations on HSN by 6% in the second quarter.
- The new brand, Tower Hill by Christie Brinkley, launched successfully on HSN, surpassing plans by 40%.
- Xcel Brands Inc (XELB) recognized a net gain of $3.8 million from the sale of the Lori Goldstein brand, reducing liabilities by $6 million.
Negative Points
- Total revenue for the second quarter decreased by approximately $3.8 million compared to the same period in 2023.
- The company experienced a decline in net product sales to effectively zero due to exiting wholesale operations.
- Despite improvements, adjusted EBITDA was still negative $40,000 for the current quarter.
- The Isaac Mizrahi brand's performance was down from the previous year due to changes in QVC's remote show policies.
- The Halston brand's revenue ramp-up has been delayed, impacting expected contributions for the current year.
Q & A Highlights
Q: Can you give me a sense of how well the Christie Brinkley brand, Tower Hill, is performing heading into Q3? Are you anticipating licensing revenue from Halston in Q3?
A: Tower Hill exceeded plan by 40% at launch, and we anticipate doubling the business in 2025. We expect licensing revenue from Halston, as there are minimum guaranteed royalties, and potential for exceeding those minimums depending on shipments of shoes and bags.
Q: What products are being rolled out under the Halston brand, and what is the timeline?
A: Halston is launching apparel across multiple categories, with handbags and shoes introduced in August. We expect to see increased royalties from these activities and third-party licenses.
Q: Can you give us a sense of whether you will see year-over-year increases in licensing revenue in Q3?
A: Yes, we are on a steady ramp-up with all brands, including new licenses with significant players like G-III and Jewelry TV, and new brand launches on HSN.
Q: How should we think about the brand portfolio after divesting Lori Goldstein? Which brands are you most excited about for growth opportunities?
A: We see tremendous growth potential in C. Wonder and Christie Brinkley brands. Longaberger is now an e-commerce-only business with potential licensing opportunities. We continue to seek new brands that will perform well across various distribution channels.
Q: Can you provide details on Orme's progress and expectations for commercialization?
A: Orme has generated 20,000 downloads in less than three weeks and onboarded 13 major brands. It targets better brands with higher average order values. Orme plans to do a capital raise before year-end to drive business growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
