Apex Global Brands, the company based in Sherman Oaks, California, which owns popular brands like Cherokee, Hi-Tec, Magnum, and Interceptor, has experienced a 17% decrease in sales during the third quarter. This decline is a direct result of the ongoing disruption caused by the Covid-19 pandemic, which has had a significant impact on the retail industry as a whole.

For the quarter ending on October 31, 2020, Apex reported revenues of $4.1 million, a decrease from $4.9 million during the same period the previous year. The decline in sales can be attributed to lower demand for Apex’s licensed products due to the effects of the pandemic, as well as the non-renewal of certain licenses.

Despite the decrease in sales, Apex was able to narrow its loss for the quarter. The net loss amounted to $6.0 million, or a loss of $10.58 per diluted share, compared to a net loss of $6.8 million, or $12.35 per diluted share, in the same period last year. This improvement can be credited to the cost-saving measures implemented by the company, resulting in a 28% decrease in selling general and administrative expenses.

Furthermore, Apex received an income tax benefit of $9.4 million throughout the first nine months of the fiscal year under the CARES Act, which further contributed to the company’s improved financial performance.

Despite these efforts, Apex acknowledges the challenges posed by the current macro conditions and remains focused on rationalizing costs and improving operational efficiency. Year to date, the company’s revenues have reached $12.5 million, representing a 20% decrease from $15.5 million in the first nine months of the previous year. The net loss for this period amounted to $9.2 million, or a loss of $16.34 per diluted share, compared to a net loss of $10.4 million, or $19.32 per diluted share, during the same period last year.

Apex also announced that it has renegotiated its credit agreement with its senior secured lender, extending the forbearance period until December 31, 2020, with the possibility of an extension until March 31, 2021, subject to the fulfillment of certain milestones.

Looking ahead, Apex has chosen not to provide financial guidance for the fourth quarter or the full fiscal year due to the uncertainty caused by the pandemic. The company anticipates that renewing or securing new licenses may become increasingly challenging under the current circumstances, which could put pressure on its business model.

Additionally, Apex acknowledged the potential challenges it may face in refinancing its debt before the maturity date. The company’s forbearance agreement with its senior secured debt states that the maturity date will be accelerated if certain criteria are not met. Apex stated that there is significant uncertainty surrounding its efforts to find strategic alternatives for liquidity and refinance the debt on or before the maturity date.

CEO Henry Stupp emphasized that the Covid-19 pandemic continues to impact the company’s business, making it difficult to predict both short-term and long-term effects. While Apex’s licensees and business partners are adapting to the current conditions, there are still challenges ahead for the company.

Useful Links:
1. Centers for Disease Control and Prevention: Covid-19 – Official information and guidelines on Covid-19 from the CDC.
2. World Health Organization: Covid-19 – Global updates and resources on Covid-19 from the World Health Organization.