Struggling sequential brands offload Ellen Tracy and Caribbean Joe for $ 20 million

Dive brief:

  • Sequential Brands Group subsidiary Brand Matter sold the assets of the Ellen Tracy brand for $ 17 million in cash, according to a securities filing.
  • Sequential also offloaded its Caribbean Joe brand for $ 3 million. The combined proceeds were used to make a payment on the company’s revolving loan with Bank of America in accordance with its loan agreement.
  • The buyer of both brands is affiliated with the GMA group, which owns the clothing design and manufacturing company Capelli New York.

Dive overview:

Sequential – who owns Jessica Simpson, Joe’s Jeans, And1, Avia, and other brands – worked quickly to raise funds as he tried to stabilize his financial situation. Prior to the sale of Ellen Tracy and Caribbean Joe, Sequential sold its 65% stake in the DVS Footwear business to Elan Polo for $ 2 million in cash.

The brand specialist has scoured executives and missed financial filing deadlines for months while trying to stay in the good graces of his lenders after racking up defaults on loan clauses. The company has issued warnings that it may not survive as a going concern.

In less than a year, Sequential has lost a CEO, Senior Vice President of Finance and executive chairman. After one of its lenders, Wilmington Trust, obtained the right to appoint a majority to the board of directors of Sequential Brands, four members of the board of directors have resigned, including Martha Stewart, whose eponymous brand Sequential sold in 2019 to renowned brands.

Other recent asset sales include a sale agreement the Heeling Sports brand for $ 11 million to BBC International. As with recent sales of the brand, Sequential has paid its lenders several million dollars with the product. Jessica Simpson, whose eponymous brand is one of the largest in Sequential’s portfolio, is also reportedly looking to raise funds to buy it from Sequential.

Prior to her sale, Ellen Tracy had some of the deepest roots among Sequential brands. Founded in 1949 by Herb Gallen as a blouse maker, it eventually became a full-fledged women’s lifestyle brand before Sequential acquired Ellen Tracy in 2013. According to a securities filing, one of Sequential’s licensing partners for the brand was Global Brands Group, whose US branch recently filed for bankruptcy. due to sequential royalty payments of $ 2 million.

In the same deal in 2013 that it bought Ellen Tracy, Sequential also took over Caribbean Joe, founded in 1999 as an island-inspired lifestyle brand. At the time, Sequential said the two brands together accounted for up to $ 14 million in royalty revenue from licensees, or about half of the company’s total projected royalty revenue in 2013.

The purchase price for the two brands was $ 62.3 million, about three times the price at which Sequential just sold them.

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