Differential Brands gross profit up 15% in Q3

Differential Brands, a portfolio of global premium consumer brands, has recorded gross profit of $18.1 million for the third quarter of 2017, up 15 per cent, compared to $15.7 million in Q3 of 2016.

The increase was due to the operation of the firm's Swims brand, which was non-comparable for 18 days of the quarter in 2017 and added $2.5 million of margin improvement.

Total company net sales for the three months ended September 30, increased 3 per cent to $42.4 million, on the back of a 1 per cent increase in wholesale segment sales and a 5 per cent increase in consumer direct segment sales. Wholesale was driven by over 40 per cent growth at Swims, as well as modest growth from the Hudson brand, primarily at full price specialty stores. The increase in the consumer direct segment was led by e-commerce sales growth of 12 per cent, said the firm.

For the reported period, the company's operating income was $1.2 million, compared to an operating loss of $2.4 million for the same period last year. Adjusted EBITDA was $3.2 million as compared to $1.8 million in the same quarter last year.

"During the third quarter, we continued to grow sales and expand gross margin, resulting in an adjusted EBITDA improvement of $1.4 million. Our consumer direct segment growth rate continued to out-pace our wholesale segment, with double digit e-commerce growth this year, which came on top of more than 50 per cent growth in the comparable quarter last year. The increase was driven largely by higher conversion rates and more units sold per order across our brands’ websites," Michael Buckley, chief executive officer, said.

Total company net sales for the nine months ended September 30, increased 11 per cent to $118.9 million compared to $107.2 million for same period in the prior year, reflecting an 11 per cent increase in wholesale segment sales and 10 per cent increase in consumer direct segment sales.

Gross profit was $52.9 million for the nine months ended September 30, 2017, compared to $44.5 million for the same period last year. Total gross margin was 44.5 per cent compared to 41.5 per cent for the nine months ended September 30, 2016.

"Overall, we continue to navigate the sales distribution shift in our industry from traditional brick and mortar channels, especially at department stores, to e-commerce driven sales on both our brands’ sites and our partners’ sites, and to new and innovative digital marketplaces around the globe," Buckley concluded.