Global Brands Group Holding Ltd. spent money to make money in 2015.
The Hong Kong-based consumer brands and licensing business, which spun off from Li & Fung in July 2014, posted its second interim results for the 12 months ended Dec. 31 and revealed that operating costs increased by 3.8% to $1 billion during the year as a result of its investment in key labels and the addition of new licenses to its portfolio.
At the same time, however, total margin grew to $1.17 billion, or 34.2% of turnover of $3.4 billion—despite a warm winter in North America, a weak euro and the tail-end effect of the discontinuation of underperforming businesses, the latter of which had caused the group’s turnover to fall 5 percent to $1.28 billion during the first half of 2015.
Strong growth momentum was seen by the Controlled Brands segment, including Frye, Juicy Couture, Spyder and Aquatalia, to name a few: turnover and core operating profit increased by 19.7% and 108.2% respectively, according to the group.
With that being said, overall turnover in 2015 was down from the previous year’s $3.5 billion, while core operating profit increased by 10.5% and net profit for the period was up 11.9%.
“The financial performance we achieved for 2015 despite a challenging market environment is a testament to the resilience of our business model and the strength of our brand portfolio,” Bruce Rockowitz, chief executive officer and vice chairman, said in a statement. “Our focused strategy of partnering with leading brand owners to take American affordable luxury power brands global by leveraging our strong retail, distribution and product design platform is delivering tangible results in terms of both margin and profitability.”
“Within Licensed Brands, our entertainment characters business performed especially well due to our long-established partnerships with major character franchises globally. Our key footwear brands also performed well, and we added considerably to our accessories portfolio with a number of new brands,” Dow Famulak, president and chief operating officer, said. “On the Controlled Brands side, we made excellent progress in growing our brands, most notably Frye, Spyder and Juicy Couture, and expanding their direct reach to consumers. We also strengthened our women’s fashion and apparel offering and built out a denim platform to strategically position the group to capitalize on consumer demand in these areas.”
Another highlight Famulak mentioned was its Seven Global and Kent & Curwen partnership, which extends the David Beckham brand to the menswear product category.
Rockowitz added, “We are seeing increasing consumer appetite for affordable luxury brands, particularly in Asia but also in other parts of the world. This demand is being fueled by the growing middle class with rising disposable incomes and the widespread use of internet, mobile and e-commerce technologies which are making brands more easily accessible to consumers globally.”