Differential Brands Group Inc., which includes Hudson Jeans, Robert Graham and Swims, reported fourth quarter net sales increased 108 percent to $42.0 million; full year net sales increased 104 percent to $149.3 million, driven by the inclusion of the Hudson Jeans and Swims brands in addition to sales growth in the Robert Graham brand.

Michael Buckley, chief executive officer, commented, “We are pleased with the progress we are making on a number of initiatives designed to drive organic growth across our brands. This includes enhancing product offerings and improving product sourcing across all brands, making strategic and swift investments in e-commerce, consolidating operations into a single platform enabling us to leverage talent and expenses, and building a world class leadership team. During the quarter, Robert Graham’s assortment shift to fashion basics was well received among customers. As a result, wholesale sell-through improved at both specialty and department stores and consumer direct customers embraced the product, evidenced by an e-commerce sales increase of 63 percent versus the same quarter last year. At Hudson Jeans, we executed quality and fit improvements, as well as strategic sourcing changes, which led to modest growth in overall comparable sales during the quarter. Our recent investments in product development positions us to capitalize on existing fashion trends in denim that we’ve targeted over the past 12 months. Finally, at Swims, we completed our integration process and we have seen strong demand for the line due to its unique design perspective, especially in the US market. We have also completed building the Swims US based sales team and we look forward to increasing consumer demand in the upcoming year. Looking ahead, we will continue to drive organic growth as we evolve and expand the product offering, work towards building out a retail and ecommerce presence and increase penetration in the wholesale channel.”

Fourth Quarter Financial Review

Total company net sales for the three months ended December 31, 2016, increased 108 percent, reflecting a 179 percent increase in Wholesale segment sales and a 34 percent increase in Consumer Direct segment sales. Sales increased for the period primarily due to the addition of the Hudson Jeans and Swims brands, as well as 3 percent growth in Robert Graham.

Gross profit was $21.8 million, compared to $12.1 million in the fourth quarter of fiscal 2015. Gross profit includes $9.7 million in gross profit from the Hudson and Swims acquisitions. Robert Graham gross profit was flat to the comparable period last year. Gross margin was 51.8 percent compared to 59.9 percent in the fourth quarter of 2015, reflecting the inclusion of Hudson Jeans, which carries a lower gross margin rate as a wholesale business.

Operating expense for the three months ended December 31, 2016, was $24.6 million, compared to $11.3 million in the same period of the prior year. The increase is attributable to the addition of Hudson and Swimsoperating expenses, which were not reflected in the same period last year. Robert Graham recognized retail store impairments of $1.9 million. Operating expense rates, less depreciation and amortization and store impairments, were essentially flat to last year.

Net loss from continuing operations was $4.9 million, or $0.37 per share, for the three months ended December 31, 2016. This compares to net income from continuing operations of $0.7 million, or $0.07 per share, for the prior year period.

Full Year Fiscal 2016 Financial Review

Total company net sales for the twelve months ended December 31, 2016, increased 104 percent, reflecting a 163 percent increase in Wholesale segment sales and a 29 percent increase in Consumer Direct segment sales. Sales increased primarily due to the addition of the Hudson Jeans and Swims brands. Robert Graham sales declined 4 percent for the year.

Gross profit was $79.5 million in fiscal 2016, compared to $44.9 million in fiscal 2015. Gross profit includes $37.2 million in gross profit from the addition of the Hudson and Swims brands. Robert Graham gross profit was down 6 percent compared to the prior year. The annual decline for Robert Graham related to a decrease in product sales featured in the higher-fashion Spring catalog and resultant markdowns. Gross margin was 53.3 percent compared to 61.5 percent in fiscal 2015, reflecting the inclusion of Hudson Jeans, which carries a lower gross margin as a wholesale business.

Operating expense for the twelve months ended December 31, 2016, was $89.6 million, compared to $43.5 million in the prior year. The increase is attributable to the addition of Hudson and Swims operating expenses and merger and acquisition costs, which were not reflected in the same period last year. Robert Graham recognized retail store impairments of $2.2 million. Operating expense rates, less depreciation and amortization and retail store impairments, were essentially flat compared to last year.

For the year ended December 31, 2016, net loss from continuing operations was $16.5 million, or $1.33 per share. This compares to net income from continuing operations of $0.8 million, or $0.09 per share, in fiscal 2015. This loss was primarily driven by one-time expenses related to the acquisitions and merger of Hudson Jeans and Swims.