Following the footsteps of Justin Timberlake’s William Rast brand, brand Jessica Simpson has also joined the bandwagon to tie up with Sequential Brands Group Inc. (SQBG, Financial). Jessica Simpson is just another pop-star feather in Sequential Brand Group Inc’s hat through which it is looking to generate unprecedented profit in the coming quarters.
Sequential Brands Group Inc., the New York-based brand management and licensing company, spilled beans on its new venture of buying a majority stake in the brand Jessica Simpson which entitles them to have a more than 50% stake in the shoe, clothing and accessories brand that has generated more than $1 billion in annual sales. If reports are to be believed, the sumptuous deal is expected to close within 90 days and add to the Sequential brand's earnings immediately.
“I am extremely honored to partner with Sequential Brands Group to continue the growth and integrity of the Jessica Simpson Collection," Ms. Simpson went on record saying. "Working together with the powerful management team at Sequential and with all of our trusted retailers and licensees, including Camuto Group, there is no limit to our success. I'm as committed as I was 10 years ago. Here's to the next billion," she added.
Brief look at the Sequential brands last quarter earnings report
For the fourth quarter of fiscal year 2014, the company earned revenue worth $18.6 million which hints at a 75% increase over the prior quarter revenue of $10.6 million. Adjusted EBITDA for the fourth quarter increased 56% to $11.1 million which surpassed $7.1 million in the prior year similar quarter. The company boasts of $41.8 million annual revenue for the year that translates into an increase of 85% compared to revenue of $22.7 million accumulated in the previous year.
What do analysts expect from this partnership
Contrary to the amount is being spent on buying stake in Jessica Simpson, analysts are afraid it would bring limited results that might be much lesser than the benefits earned through the $260 million paid for acquiring Galaxy Brand Holdings Inc.’s stable of brands in the previous year. As divulged by a Sequential spokesperson, Sequential is being financially backed for the deal by Bank of America Corp. (BAC, Financial) and GSO Capital Partners LP, a Blackstone Group LP affiliate.
Why Jessica Simpson brand has been chosen
Jessica Simpson didn’t take it longer to figure in the fashion milieu and to be recognised as one of the leading and panache shoe line and the most convincing celebrity brand in the market. It attained another pedestal with the last year’s $1 billion sales rise. Simpson has now devoted itself to design products in more than 30 categories.
Brand Simpson owes a great deal to Jessica Simpson who supervises personally and indulges her expertise in understanding of fashion into every design it churns out. “She has a keen insight into what her customers want: exceptional value. She is committed to developing a vision and [is involved in everything] from selecting materials to determining the prints and styles that work best for a woman’s body,” Camuto said in 2013 review.
Sequential Brands, which also owns Heelys, Ellen Tracy and Justin Timberlake’s celebrity label, William Rast, has long been eyeing brand Jessica Simpson.
After the mountainous deal with Sequential Brands came through, Camuto Group CEO Alex del Cielo stated, “We are excited to work with Sequential and to continue working closely with Jessica and the Jessica Simpson brand. We have enjoyed many years of success with Jessica and we are committed and looking forward to many more years ahead…”
Last word
Sequential has long-term plans to expand its business beyond the U.S with Jessica Simpson brand by its side and also to introduce itself into an ecommerce space.
