Differential Brands Group Q3 net sales up 3 percent

Differential Brands Group said total company net sales for the three months ended September 30, 2017, increased 3 percent to 42.4 million dollars, reflecting a 1 percent increase in wholesale segment sales and a 5 percent increase in consumer direct segment sales. Adjusted EBITDA for the quarter was 3.2 million dollars compared to 1.8 million dollars in the same quarter last year. As a result of Hurricanes Harvey and Irma, the company said, adjusted EBITDA was negatively impacted by approximately 500,000 dollars.

Commenting on the third quarter trading, Michael Buckley, the company’s Chief Executive Officer, said in a statement: “During the third quarter, we continued to grow sales and expand gross margin, resulting in an adjusted EBITDA improvement of 1.4 million dollars. Overall, we continue to navigate the sales distribution shift in our industry from traditional brick and mortar channels, especially at department stores, to ecommerce driven sales on both our brands’ sites and our partners’ sites, and to new and innovative digital marketplaces around the globe.”

Wholesale segment sales boosted by 40 percent growth at Swims

The company said, wholesale increase was driven by over 40 percent growth at Swims, as well as by modest growth from the Hudson brand, primarily at full price specialty doors. The increase in the consumer direct segment was led by ecommerce sales growth of 12 percent. In addition, comparable store sales in the Robert Graham business grew 3 percent, driven by full price stores. The company added that comparable consumer direct growth was driven primarily by improvements in conversion rates and units per transaction across the brands.

As a result of Hurricanes Harvey and Irma, which severely impacted the Texas and Florida markets during August and September of this year, Differential Brands Group said, Robert Graham store sales were negatively impacted by approximately 300,000 dollars. The hurricanes also negatively impacted the company’s wholesale business due to cancellations of approximately 450,000 dollars across brands and inbound inventory receipt delays of 400,000 dollars, which were shipped into the subsequent quarter.

Gross profit was 18.1 million dollars compared to 15.7 million dollars in the third quarter of fiscal 2016 due to the operation of Swims, which was non-comparable for 18 days of the quarter in 2017 and added 2.5 million dollars of margin improvement versus the same quarter last year. Total company gross margin was 42.6 percent compared to 38.1 percent in the third quarter of 2016. Operating income was 1.2 million dollars compared to an operating loss of 2.4 million dollars for the same period last year.

Review of the nine month financial results

Total company net sales for the nine months ended September 30, 2017, increased 11 percent, reflecting an 11 percent increase in wholesale segment sales and a 10 percent increase in consumer direct segment sales.

Gross profit was 52.9 million for the period compared to 44.5 million dollars for the same period last year. Total company gross margin was 44.5 percent compared to 41.5 percent for the nine months ended September 30, 2016. Operating income was 0.7 million dollars compared to operating losses of 7.3 million dollars for the same period last year.

Picture:Swims website