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COVID-19: Store closures impact Sequential’s Q1 results

Sequential Brands Group’s first-quarter results were impacted by store closures due to the COVID-19 outbreak. However, its active brands – including AND1, Avia, Gaiam and SPRI – were cited as “bright spots” as consumers look to stay active at home.

Revenues, which consist of royalties from licenses, reached $20.2 million in the quarter compared to $25.5 million in the prior year quarter, a decline of 20.8 percent.

The net loss came to $85.3 million or $1.30 per share, after non-cash impairment charges of $85.6 million related to the trademarks for the Jessica Simpson, GAIAM, Joe’s and Ellen Tracy brands, reflecting the financial impacts of COVID-19. In the year-ago period, the net loss was $4.8 million or 7 cents a share.

On a non-GAAP basis excluding special items, the net loss was $10.4 million or 16 cents, compared to $4.3 million, or 7 cents. Adjusted EBITDA declined 13.3 percent to $9.8 million from $11.3 million a year ago.

The company’s licensing partners have been affected by mandatory store closures and shelter-in-place orders.

In response to COVID-19, Sequential Brands is implementing significant compensation reductions across the company, reducing all non-essential expenses, maximizing liquidity by drawing on its revolver, and working with lenders to provide more flexibility.

 
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