California Apparel News

Revenues keep growing for Differential Brands Group—the parent company of Hudson jeans, Robert Graham and SWIMS—but that hasn’t translated into a profit yet.

The Los Angeles company reported it had a net loss of $2.5 million in the year ended Dec. 31, 2017, compared with a net loss of $17.8 million the previous year. Net sales for the year totaled $164 million compared with $149.3 million in 2016.

Direct-to-consumer sales were up 9 percent in 2017, fueled by a 13 percent rise in e-commerce comparable sales growth and a 4 percent uptick in same-store sales.

For the fourth quarter, sales were up 7 percent to $45.1 million from $42 million and net income came in at $4.1 million compared with a net loss of $4.9 million in the previous fourth quarter.

“I am pleased to report that all of our brands produced positive total comparable sales, improved margin dollars” and expanded margin rates during the fourth quarter of 2017, said Michael Buckley, Differential Brands’ chief executive. He said that during the fourth quarter, the Robert Graham stores experienced a 7 percent rise in same-store sales, which is continuing into the first part of 2018.

SWIMS—a Scandinavian-style footwear, apparel and accessories company acquired by Differential Brands in 2016—saw its revenues grow 40 percent during the fourth quarter and had one store opening.

“For the upcoming 2018 fiscal year, we have planned several key initiatives within each of the respective brands,” Buckley said. “At the Hudson brand, we plan to test limited retail stores in the United States, and we are in development of a new line of sportswear to complement our denim products for the Fall 2018 season. We are also investing in additional sales staff at Hudson to help grow our diversified and important specialty-store business across the country.”

For Robert Graham, the company is adding additional catalog drops and circulation as well as expanding the brand through licensing to include home furnishings and additional accessories. Differential announced that Robert Graham’s new license partners will be Prodigy Brands for men’s footwear starting for Spring 2018; Nouveau Eyewear for eyeglass frames and sunglasses for Spring 2018; and Komar for sleepwear, loungewear, intimate apparel and daywear for Spring 2019.

The company also has plans to expand its assortment of SWIMS footwear, starting this spring, to go along with SWIMS’ outerwear line in Europe. The brand’s first full-price store is expected to open in Oslo this fall.

SWIMS was founded in Norway in 2006 to build a better rubber boot that was tasteful and had a bold look. Its products include boots, water-resistant loafers, ponchos and sportswear.

Before becoming Differential Brands Group, 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.