Global Brands Group sales slip, but divestments boost balance sheet

Global Brands Group sales slipped 4.1 per cent in the September half year to US$699 million, largely due to falling sales in Mainland China and the disposal of the homewares business.

That figure excludes any impact from the $1.2 billion sale of the North American business which is likely to lead to an extraordinary dividend of 28 HK cents to shareholders as well as reducing debt. That sale closed on October 29 with a further cash transfer likely once the final sale price is agreed in 90 days, once reconciliation is complete.  

The company has also agreed to sell its share of the loss-making kids business to its controlling shareholders for $20 million.

“We are now a financially stronger and more nimble organisation able to adapt to a rapidly changing environment,” said Dr William Fung, Global Brands Group’s chairman.

The divestments have created a stronger balance sheet and allowed a simplified organisational structure, focusing on core fashion, footwear and brand management businesses.

“Despite significant levels of disruption, both from an industry and a macroeconomic perspective, we are well-positioned to focus on growing our core businesses and take advantage of the opportunities ahead,” said Fung. “I am very confident about the company’s prospects.”

CEO Rick Darling said the company is in the midst of implementing “a substantial restructuring program” to reduce operating expenses and improve efficiencies.

“Going forward, we will build on the strengths of our portfolio of brands, and expand our global brand management business, particularly in Asia.”

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