Xcel Brands Q3 Loss Narrower Than Expected, Sales Tumble 28% Y/Y

Core Insights - Xcel Brands Inc. (XELB) reported a significant decline in net sales, dropping 28% to $1.9 million from $2.6 million in the prior-year quarter, primarily due to reduced licensing revenue following the divestiture of the Lori Goldstein brand and delayed sales from canceled shows [1][12] - The company ended the quarter with cash and cash equivalents of $0.2 million, long-term debt of $3.3 million, and stockholders' equity of $35 million, indicating a stable financial position despite challenges [2] - Adjusted EBITDA loss improved to $1 million from a loss of $1.4 million in the previous year, attributed to successful business restructuring and new long-term licensing agreements [5][12] Financial Performance - Gross profit decreased by 37.6% year over year to $1.5 million, with gross margin contracting by 1280 basis points to 78.7% [14] - Total direct operating costs and expenses were reduced by 50% year over year to $2.8 million, reflecting cost management efforts [14] - The adjusted loss per share was 6 cents, better than the Zacks Consensus Estimate of a loss of 12 cents and an improvement from a loss of 15 cents in the year-ago quarter [13] Future Outlook - The company is positioned for future growth with improvements in operating performance and a strong pipeline of planned brand launches in 2025 [3] - A new term loan agreement secured in November 2024 for $10 million provided approximately $5 million in additional liquidity, enhancing working capital by about $6 million [6]