World Footwear

Companies

Apex Global Brands adjusts outlook

Oct 3, 2019 United States
Apex Global Brands adjusts outlook
The company reported second quarter results and took the opportunity to lower its fiscal year outlook due to economic uncertainty, Brexit and the impact of a weakened British pound sterling and Euro
"The second quarter 2020 marks our first official quarter reporting as Apex Global Brands. We remain focused on leveraging our infrastructure to maximize our platform and portfolio across multiple retail channels. In addition, we continue to significantly improve our operating efficiency and reduced our SG&A by 23% in the second quarter. We are adding new licenses and product categories at an even faster pace than ever before, as we expand Apex's global reach. We are also establishing new revenue streams for our current portfolio, diversifying across geographies, customers, categories and consumer touchpoints, in addition to introducing our design services arrangement to numerous retailers, which is performing well", commented Chief Executive Officer Henry Stupp.

"Longer term we are optimistic that the actions we are taking and the portfolio we are building will result in a bigger, stronger and more profitable APEX. In the near-term, however, we face some challenges consistent with the entire retail industry – namely, a softening US retail environment and uncertainty surrounding Brexit – which have resulted in lower top-line growth. The actions we’ve taken to stabilize our financial position and refresh our business model have put us in a position to continue to expand the reach of the brands we own, the brands we create and the brands we elevate for others."

Revenue Review


Revenue totalled 5.6 million US dollars in the second quarter, a decrease of 21% from 7.1 million US dollars in similar period in the prior year. The company attributes this year-over-year decline in revenue largely to decreases in the company’s Cherokee and Hi-Tec royalties in Europe, and the non-renewal of the company’s Cherokee license in South Africa at the end of Fiscal 2019. Economic uncertainty related to Brexit continues to impact several of the company’s European licensees. The strong US dollar in relation to the British pound sterling and Euro reduces the dollar value of the company’s European royalty revenues. According to the same source, decreases in revenue were partially offset by revenue from the Company’s new design services agreement with Walmart China.

On a year-to-date basis, revenue for the first six months of Fiscal 2020 reached 10.7 million US dollars, compared to 12.5 million US dollars in the prior year, a decrease of 15%.


Net Loss


The company reported a net loss for the fiscal second quarter of 1.3 million US dollars, narrowing its loss of 9.1 million US dollars the same quarter a year ago. Earnings per share of (8) cents missed estimates by 10 cents.

Fiscal 2020 Outlook


Apex Global Brands is updating its guidance for the remainder of its fiscal year ending on the 1st of February 2020 to account for the continuing negative impact on its licensees’ revenues due to economic uncertainty, Brexit and the impact of a weakened British pound sterling and Euro. The company has also taken steps to further reduce its selling, general and administrative expenses.

Full year revenue
is now anticipated to be in the range of 23.0 million US dollars to 24.0 million Us dollars.

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