Differential Brands sales increase, loss widens due to Swims acquisition
Differential Brands announced its third quarter financial results on Monday, the first financial report to include sales results from Swims, which the company acquired in July.
Overall net sales grew to $41.2 million compared to $17.6 million in the previous third quarter. Hudson Jeans and Swims contributed $19.5 million and $3.5 million, respectively, and the opening of three new Robert Graham stores contributed to the sales boost.
Gross profit increased to $20.3 million from $11.0 million and overall gross margin decreased 49.4% to 62.3% both due primarily to Hudson Jeans and Swims, which generate lower gross margins than Robert Graham.
Net loss was $2.8 million compared to net income of $36,000 in the previous year, and operating loss was $2.4 million compared to operating income of $248,000 in 2015. Operating expense was $22.7 million compared to $10.7 million in the prior year and adjusted EBITDA was $1.8 million versus $1.2 million in 2015. The acquisition of Swims and expenses associated with the merger with Robert Graham contributed to the loss and increased expenses.
Michael Buckley, Chief Executive Officer, commented, “We were pleased with the progress we made in the strategic initiatives associated with each of our brands. Overall, we continue to make meaningful progress in positioning our brands for long-term, profitable growth. Looking ahead, we remain focused on growing our brands organically and acquiring new premium brands that are accretive and complementary to our portfolio.”
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