Sequential Brands' loss increases as declining revenues eaten up by impairment
New York-based Sequential Brands Group, Inc. announced a significant expansion in its first-quarter net loss as impairment charges related to the sale of its Martha Stewart and Emeril Lagasse brands decimated declining revenues.
The company’s net loss for the first quarter ended March 31, 2019 came to $125.3 million, or $1.95 per diluted share, compared to a loss of $2.3 million, or $0.04 per diluted share, in the prior-year period.
This was partly due to a decrease of 3.1% in Sequential Brands’ quarterly net revenue, which totaled $36.9 million, compared to $38.1 million in Q1 2018.
However, by far the biggest negative impact on the company’s bottom line in the first quarter was the impairment related to the sale of the Martha Stewart and Emeril Lagasse brands, which amounted to $161.2 million.
According to Sequential Brands Group CEO Karen Murray, the sale, which is expected to close in the second quarter, should improve the group’s net leverage profile and leave it with some additional cash on its balance sheet.
First announced in April, it is hoped that the sale of the cookware labels to Marquee Brands will also allow Sequential Brands to refocus its activities around its fashion and footwear businesses, which include William Rast, Ellen Tracy, Heelys and Jessica Simpson.
“While first quarter results came in below expectations, we are excited to now focus on our active and fashion brands, which we believe have significant growth opportunities in the health, wellness and beauty space,” commented Murray in a release.
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