Supported by robust gains from Heelys, Avia and And1, Sequential Brands (Nasdaq:SQGB) reported Q3 revenues more than doubled, to $23 million from $10 million a year ago.
The company acquires brands, then licenses them out to partners. As such, most of its revenues represent royalty income.
On a conference call with analysts, Yehuda Shmidman, CEO, said the Lifestyle vertical continues to be boosted by Heelys, the skate brand, which is seeing double-digit gains in the nine months. Heelys, acquired in Q1 2013, subsequently partnered with BBC International, which is led by Bob Campbell, and has since “grown exponentially” both domestically and internationally, according to Shmidman.
In the Active vertical, And1 and Avia, which each reached exclusive deals to sell to Wal-Mart since being acquired in August 2014, were up a combined 14 percent in the year-to-date period. Shmidman said both brands benefited by delivering “shocking value” to the Wal-Mart shopper, marked by having a “great brand and a quality product at an incredibly compelling price point.”
The Fashion vertical was led by Jessica Simpson. Other owned brands include Revo, And1 and Nevados in the sports space, as well as Caribbean Joe, Linen n' Things, The Franklin Mint, William Rast, and Ellen Tracy. Sequential Brands recently closed on the acquisition of Joe’s Jeans, and reached an agreement to merge with Martha Stewart Living Omnimedia.
With a better-than-planned performance across its portfolio, Sequential Brands increased its 2015 revenue projection from a range of $78 to $81 million to $81 to $83 million. Adjusted EBITDA projection was expanded from $48.5 to $50.5 million to $50 to $52 million. The guidance excluded the pending impact of the acquisition of Martha Stewart.
