Global Brands Group, which spun off from sourcing giant Li & Fung July, said Thursday that net profit rose nearly 25 percent in the second half of the year while revenue rose 7.5 percent.
“This is evidence of the tremendous growth potential unlocked by the spin-off,” chief executive officer Bruce Rockowitz said.
The company, which manages brands such as Frye, Spyder, Juicy Couture, Coach, Calvin Klein and Seven Global, its new joint venture with David Beckham and Simon Fuller, posted net profit of $202 million for the six-month period ending in December, while revenue totaled $2.1 billion.
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For the full year, net profit declined 8.2 percent to $104 million, while revenue rose 5 percent to $3.45 billion. Net profit excluding mergers and acquisitions costs as well as other expenses rose 9.3 percent for the year to $108 million, the company said.
Speaking at a press conference Thursday at the Grand Hyatt hotel, Rockowitz said was upbeat about the company’s outlook, despite the uncertain macroeconomic outlook.
“There’s a movement to affordable luxury,” he said.
Global Brands Group focuses primarily on American brands with the aim of making them global. The company’s business is mostly U.S.-centric with the majority of revenue coming from the U.S. Rockowitz said “that’s a good thing” given that the enormous size and strength of the U.S. market. Europe has been sluggish and has issues, he said, while Asia is also facing headwinds. Rockowitz said the company would continue to focus on the U.S. but would also be targeting growth in Asia. However, because it would be off a small base, any growth there would not make a material impact on overall results.
The company has two main business categories, licensed brands and controlled brands. Licensed brands, which include Michael Kors, Nautica, Disney, and various characters under Disney, Pixar and Marvel, among others, saw core operating profit increase 20.4 percent to $146 million in the second half; rising 15.9 percent to $113 million for the full year. Revenue rose 2.8 percent in the second half to $1.59 billion or 2.5 percent for the full year to $2.75 billion.
The controlled brands business, in which the company owns either the brands’ intellectual property or have a long-term license, includes brands such as Frye and Spyder, saw core operating profit increase 88 percent to $72 million in the second half and 13.3 percent for the full year. Revenue rose 25.3 percent to $511 million in the second half and up 16.3 percent to $707 million for the full year.
The company gave few details about the much-publicized joint venture with David Beckham. Rockowitz said there would be an announcement coming up regarding apparel but was not ready to reveal anything yet.
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