Yahoo Sports Halston Finds a New Home at G-III With Licensing Deal
Halston is joining the G-III Apparel Group family of designer brands through a 25-year master licensing deal with Xcel Brands Inc.
It’s an extended family of big names at G-III — and one that’s going through some big transitions. G-III owns Karl Lagerfeld and Donna Karan, among others and, for now, licenses Tommy Hilfiger and Calvin Klein.
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But after PVH Corp. decided last year to take back the Tommy and Calvin businesses by 2027, G-III has become intent on controlling its own destiny (and is not keen to put any partner in a position to walk away with what was about half of its revenues again).
Enter Halston, which along with a reworked Donna Karan business and a new license for Nautica is part of G-III plans to build for a new future.
G-III has the right to buy Halston at the end of the license, which involves an upfront cash payment, future guaranteed minimum royalties and a minimum net sale requirements. The company has the right to sign subleases for goods it doesn’t produce, driving royalty revenues.
Robert W. D’Loren, chairman and chief executive officer of Xcel Brands, told WWD: “The timing was right for us to either do a capital raise and keep going, or partner with someone like G-III that has a track record of building half-billion to $1 billion brands. We felt that G-III was the best option for us and there was a need for them. So this is going to be a great collaboration.”
G-III will design, produce and distribute all Halston categories and products — something that plays to strengths of the company, which topped first-quarter earnings expectations and upped its outlook for the year.
Investors were certainly keen to get on board and sent shares of G-III up 28 percent to $20.98 in trading on Tuesday. Xcel shares also rose, gaining 16 percent to 99 cents.
Morris Goldfarb, G-III’s chairman and CEO, stressed to analysts on a conference call that Halston is an “American heritage brand with a rich legacy of glamour and designs across a range of price points.…At G-III, we’re known for our success with American heritage brands and believe there is tremendous opportunity to grow Halston by leveraging our proven model to unlock its potential.”
Goldfarb added, “The new Donna Karan, Nautica and Halston opportunities, along with our focus on our strategic priorities, will continue to drive growth for the company. Our strategic priorities remain: drive our power brands across categories, further expand our portfolio through ownership of brands and their licensing opportunities, extend our global reach, maximize omnichannel opportunities by leveraging data and continue to scale our private label business.”
With Halston, G-III picks up a brand that’s already been on the move.
Xcel’s D’Loren said: “We have invested close to an additional $10 million into Halston over the last three years above what we paid for it to build relevancy and premium distribution” to Bergdorf Goodman and Bloomingdale’s. The Halston distribution is also growing with Macy’s and other similarly positioned retailers, he said. Halston also sells at Saks Fifth Avenue, Neiman Marcus, Nordstrom and on the brand’s website.
Xcel purchased Halston in two tranches — in 2014, when the H by Halston and H Halston diffusion labels were bought, and in 2019 when the Halston and Halston Heritage brands were bought. The total price was about $40 million.
Ken Downing, creative director for Xcel and Halston, will continue as such. “He will be advising G-III, like any licensor would, on the overall direction of the brand, but as the licensee, G-III has control of the design, subject to reasonable approvals,” D’Loren said.
Through its long-term Halston license with G-III, D’Loren said he hopes to bring some of Xcel’s livestreaming expertise to G-III “to help them in their d-to-c [direct-to-consumer] businesses.”
Categories for Halston includes dresses, tops, knits, pants, jewelry, intimates, bags and footwear.
“I think there’ll be additional categories added, and additional domestic and international distribution,” D’Loren said, citing the potential to grow Halston’s midtier distribution, meaning better department stores. Xcel had been doing the product development, design, systems, warehousing, sourcing and merchandising for Halston women’s sportswear, dresses and fine jewelry, while licensing out other categories.
In the first quarter of 2023, Xcel began to restructure and streamline its business by entering into licensing agreements, including licensing wholesale production of its C Wonder Brand to the One Jeanswear Group, which also produces the apparel for Xcel’s Logo by Lori Goldstein brand.
“Halston is one of the last remaining iconic American brands that has the ability to scale and to be in the zeitgeist again,” D’Loren said. He credited the 2021 Netflix series on Halston for furthering interest in the brand.
Now G-III will work to keep that interest growing.
G-III’s first-quarter net income for the quarter fell to $3.2 million from $30.6 million a year earlier, but came in much better than the $5 million to $10 million in losses the company projected in March.
Adjusted earnings per share tallied 13 cents when Wall Street analysts had a 10 cent loss penciled in, according to FactSet.
Sales for the quarter ended April 30 fell 11.9 percent to $606.6 million from $688.8 million, coming in well ahead of the $558 million analysts projected.
G-III set its sights for the full year on profits of $132 million to $137 million instead of the $125 million to $130 million projected in March. The revenue outlook rose to $3.29 billion from $3.23 billion.
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