Apex Global Brands reports 22% revenue decline, highlights future challenges
Sherman Oaks, California-based brand ownership and licensing company Apex Global Brands announced a 22% drop in second-quarter revenues on Wednesday and outlined some of the challenges it anticipates that its business will face as the coronavirus crisis evolves.
For the second quarter ended August 1, 2020, the company, whose brand portfolio includes Cherokee, Hi-Tec, Magnum and Interceptor, reported total revenues of $4.4 million, down from $5.6 million in the prior-year period.
This decline was related both to the non-renewal of certain Cherokee brand licenses and a decrease in the sales of the company’s licensees’ products due to restrictions implemented in response to Covid-19.
Apex’s net loss for the quarter came to $1.3 million, or $2.38 per diluted share, compared to a net loss of $1.3 million, or $2.34 per diluted share, in the same period in the previous year.
Taking the first quarter into account, the company’s revenues totaled $8.4 million in the first half of the fiscal year, reflecting a 21% decrease compared to the $10.7 million reported by Apex in the first six months of the previous year.
Net loss for the period was $3.2 million, or $5.69 per diluted share, compared to a net loss of $3.5 million, or $6.69 per diluted share, in the first half of fiscal 2020.
“As we enter into the second half of the fiscal year, we remain acutely focused on supporting our licensees and promoting our brands in unique ways that reflect the changes in consumer interests and behavior,” commented Apex CEO Henry Stupp in a release.
Stupp also highlighted a significant drop in the company’s selling, general and administrative expenses, thanks in part to increased efficiencies enabled by the use of new technologies, such as virtual showrooms, during the pandemic.
“Ultimately, while we cannot predict the long-term impact the pandemic will have on our licensees’ abilities to meet their royalty agreements, we have adapted and positioned our company to manage the new realities of the retail market,” he concluded.
Like many companies, Apex is not currently providing financial guidance for the third quarter or the full fiscal year, due to ongoing uncertainty surrounding the Covid-19 pandemic. The group did, however, explain that increasing pressure could be placed on its business model by anticipated difficulties in obtaining license renewals or new licenses.
Apex also clarified that the previously reported forbearance agreement achieved with its senior secured lender on September 1, 2020, which extends forbearance through December 31, 2020, also accelerates the maturity of the company’s underlying debt to March 31, 2021, or to December 31, 2020, if certain milestones are not met.
According to Apex, “there is substantial uncertainty about the potential success of the company’s efforts to find strategic alternatives to provide liquidity to repay the debt on or prior to the maturity date.”
Copyright © 2023 FashionNetwork.com All rights reserved.