Differential Brands Group sees sales slip in first quarter, names new Hudson Jeans president
Commerce, California-based apparel company Differential Brands Group Inc. released its Q1 2018 results on Wednesday, posting widening losses due to declines in its wholesale segment, and announcing the appointment of Maria Borromeo as president of its Hudson Jeans brand.
The company’s total net sales for the three months ended March 31, 2018 were down 3% from the prior year period to $38.8 million. This decline was driven by an 8% decrease in Differential’s wholesale segment, where net sales fell from $31.1m in Q1 2017 to $28.7m in the first quarter of this year due to reductions at the company’s Hudson and Swims brands.
By contrast, direct-to-consumer sales saw a 12% increase during the period, from $8.36m to $9.36m, with the Robert Graham and Swims brands performing particularly well.
Overall, falling sales contributed to widening losses at Differential, which reported a net loss of $4.09m for the quarter, compared to the loss of $2.35m it posted in the same period in the previous year.
EBITDA for the first quarter 2018 stood at $1.5m, down from $2.5m year-on-year. The drop was accounted for by a one-off adjustment of inventory valuation in 2017 which boosted last year's figures, and according to the group, the 2018 quarter would have exceeded last year's result by $0.4m without the adjustment.
Commenting on the results in a release, Differential CEO Michael Buckley said, “Department store brick and mortar shoppers continue to slowly migrate toward ecommerce channels. This ecommerce migration has had some impact on Hudson’s channel distribution,” before going on to outline the company’s projects for the coming months.
These include major investments in the newly revitalized womenswear offering at Robert Graham as an avenue for future growth and the rollout of Hudson sportswear later this year. Swims’ first company-owned full price store is also slated to open in Oslo, Norway in fall 2018.
In a separate release, Differential announced the appointment of Maria Borromeo as president of Hudson Jeans, a role in which she will be responsible for maximizing the brand’s growth potential through strategies that align with Hudson’s culture and values.
She will also be expected to help develop new product and marketing initiatives, and reinforce the brand’s digital and direct-to-consumer strategies.
Borromeo comes to Hudson from Thakoon, LLC, a global luxury brand that she co-founded. As the brand’s CEO, she ensured that Thakoon maintained a steady growth trajectory, leading all aspects of the company, including the development and implementation of its strategic vision, up to its acquisition by Silas Chou’s Bright Fame Fashion.
Prior to Thakoon, Borromeo served in a variety of roles at a range of other globally recognized brands such as Alexander McQueen and Etro.
“It’s a privilege to join such a seasoned brand and to continue to build upon the vision of Peter Kim, its founder,” said Borromeo in the release. “I’m eager to bring all of my experience and energy to further the company’s prestige while tapping into the resources of Differential Brands Group to evolve the business model and strategically position Hudson as a world-class brand in the context of today’s global market.”
Kim, in turn, commented “I believe Maria’s extensive background with global luxury brands will be invaluable as we execute not only on our strategic growth plans, but also on pioneering an evolved business model that addresses a rapidly changing retail environment and speaks to today’s and tomorrow’s consumer.”
Differential Brands Group has been busy developing its brands since the beginning of the year, expanding the assortment at Swim and signing a slew of licenses for Robert Graham in April, in the brand’s largest ever expansion. To these contracts, which cover categories including eyewear, footwear, home furnishings and loungewear, the brand recently added a further license for tailored clothing.
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