XCel Brands, Inc. (NASDAQ:XELB), a New York-based company specializing in patent ownership and licensing, has entered into a definitive agreement to sell certain assets to Lori Goldstein Ltd. The transaction, which was announced today, is set to be effective as of June 30, 2024.
The assets involved in the sale were originally acquired by Gold Licensing, LLC, a wholly-owned subsidiary of XCel Brands, under a prior asset purchase agreement dated March 30, 2021. These assets include intellectual property created subsequent to the original purchase that is based on such assets.
This move comes after a binding term sheet was agreed upon by both parties on May 22, 2024. The agreement between XCel Brands and Lori Goldstein Ltd, which includes the sale of all assets acquired by Gold Licensing, represents a strategic shift for the company, although the specifics of the strategy have not been disclosed.
The financial terms and other details of the asset purchase agreement have not been made public. However, the deal is expected to close by the end of June, with no further conditions mentioned in the press release.
This sale could potentially lead to changes in the operations or strategic direction of XCel Brands, but the company has not provided any further information on the future implications of the transaction.
Investors and market watchers will be keeping a close eye on the developments following this sale, as it may affect XCel Brands' position in the patent owners and lessors market.
The information in this article is based on the 8-K filing by XCel Brands, Inc. with the Securities and Exchange Commission.
In other recent news, Xcel Brands reported a dip in total revenue in their first quarter of 2024 earnings call, attributed to the strategic discontinuation of wholesale operations. However, the company saw an uptick in licensing revenues across most brands, barring the LOGO, Lori Goldstein brand.
Xcel Brands is set to launch a new brand with Christie Brinkley and a celebrity designer on HSN, in addition to discussing the potential sale of the LOGO Lori Goldstein brand back to its namesake designer. The company anticipates returning to profitability in 2024 with a positive adjusted EBITDA expected later in the year.
Xcel Brands has also delayed the Halston brand launch until fall. The company is working with JTV to offer more product assortments and expects strong sales momentum. Despite experiencing technical difficulties in issuing the earnings release and 10-Q filing, these issues have been resolved. These are the recent developments surrounding Xcel Brands.
InvestingPro Insights
As XCel Brands, Inc. (NASDAQ:XELB) navigates through its strategic asset sale to Lori Goldstein Ltd., investors may gain valuable insights by considering the company's financial health and market performance.
With a market capitalization of $14.14 million and a striking gross profit margin of 69.58% in the last twelve months as of Q1 2024, XCel Brands showcases a strong ability to generate earnings relative to its revenue. Still, the company's challenges are evident, with a substantial revenue decline of 39.83% in the same period and an operating income margin plunging to -124.97%, reflecting operational difficulties.
InvestingPro Tips suggest that XCel Brands is trading at a low Price / Book multiple of 0.31, which may attract investors looking for undervalued stocks. Moreover, the company's impressive gross profit margins indicate efficient cost management relative to its peers. Nevertheless, with analysts expecting a sales decline in the current year and no anticipation of profitability, the company's financial trajectory requires careful monitoring.
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