Xcel Brands' Q3 2025: Contradictions Emerge on Tariff Strategy, Brand Launch Timelines, and Acquisition Plans

Date of Call: November 19, 2025

Financials Results

• Revenue: Net licensing revenues $1.1M for Q3 2025, down from $1.5M in Q3 2024
• EPS: GAAP net loss $7.9M, $-2.02 per share in Q3 2025 vs net loss $9.2M, $-3.92 per share in Q3 2024; Non-GAAP net loss approximately $1.3M, $-0.34 per share in Q3 2025 vs $1.3M, $-0.57 per share in Q3 2024

Business Commentary:

* Earnings and Financial Performance: - Xcel Brands reported a net loss of approximately $7.9 million or $2.02 per share for Q3 2025, compared to a net loss of $9.2 million or $3.92 per share in the prior year quarter. - The loss was mainly attributed to cautious consumer spending amid a challenging economic environment, lower-than-expected performance in certain licenses, and costs associated with the Lori Goldstein brand divestiture.

• Revenue and Licensing Trends:
• 
• Net licensing revenues were $1.1 million for Q3 2025, down from $1.5 million in Q3 2024. On a year-to-date basis, net licensing revenues were $3.8 million, compared to $6.5 million in the prior year.

• The decline was primarily due to cautious consumer spending and the more cautious approach to licensing and product development, leading to lower revenue recognition.

• Operating Cost Reduction:

• Direct operating cost expenses decreased to $2.2 million for Q3 2025, down 23% from the prior year quarter. On a year-to-date basis, direct operating costs were $6.3 million, a decrease of 36% from the prior year.

• These reductions were primarily driven by business transformation and cost reduction actions taken over the past two years, and expenses related to the Lori Goldstein brand divestiture.

• Influencer Brand Strategy:

• Xcel Brands introduced new influencer-led brands, including Cesar Millan, Gemma Stafford, Jenny Martinez, Coco Rocha, and others, with an aim to reach 100 million followers across their portfolio by 2026.
• The strategy is focused on diversifying product categories, transitioning to domestic production, and identifying key category license opportunities to mitigate tariff impacts and exploit growth opportunities.
  

  Sentiment Analysis:

  Overall Tone: Neutral

  • Management highlighted a 38% Y/Y improvement in adjusted EBITDA (approx. -$650k vs -$1.0M) and reduced operating run-rate payroll/overhead to under $8M annually, while reporting a GAAP Q3 net loss of $7.9M and caution around Halston/tariff impacts and a credit amendment. They emphasized a pipeline of influencer-led brand launches (5 brands) and recent $2M equity financing — a mixed tone of operational progress but near-term challenges.

Q&A:

• Question from Thomas Forte (Maxim Group LLC): Can you talk about the importance of hiring Olin Lancaster and how you were able to attract him to Xcel?
  Response: Olin brings 25+ years (including leadership at Ralph Lauren), was attracted by the opportunity to scale influencer-led brands and will lead revenue/licensing efforts and launches into 2026.

• Question from Thomas Forte (Maxim Group LLC): You previously mentioned influencer brand products focused on domestic items to mitigate tariff impact—what have you done in that area?
  Response: Signed domestic-focused influencer brands (Cesar, Gemma, Jenny) to reduce tariff exposure; licenses are in place and these products will launch on QVC starting Q1 2026.

• Question from Michael Kupinski (NOBLE Capital Markets, Inc.): Have the disruption issues with C. Wonder and Christie in Q4 been resolved or do they still linger?
  Response: Resolved—replaced the vendor to restore QVC economics and addressed programming delays from the HSN-to-QVC studio move; sourcing adjusted.

• Question from Michael Kupinski (NOBLE Capital Markets, Inc.): Will G-III's merchandising tweaks be done for the spring line or more for fall?
  Response: Some adjustments will hit spring, but the more material merchandising changes are expected in the fall.

• Question from Michael Kupinski (NOBLE Capital Markets, Inc.): Any updates on the product roadmap and when the new brands will start hitting the market?
  Response: Rollouts begin Q1 2026 (food products and select small electronics), with Cesar pet accessories delayed by sourcing changes and largely expected in-market by fall 2026.

• Question from Michael Kupinski (NOBLE Capital Markets, Inc.): What types of acquisitions are you contemplating and what would they bring?
  Response: Pursuing brand acquisitions and transformative transactions consistent with prior strategy; several targets are under active consideration to expand IP and royalty streams.

• Question from Walter Schenker (MAZ Capital Advisors, LLC): Can you lay out the next-12-month roadmap for ramping revenues toward several million dollars a quarter?
  Response: Revenue ramp driven by five influencer-led brand launches coming online in 2026, resolved Christie/C. Wonder disruptions, category and distribution expansion, and active commercial execution led by the new CRO.

• Question from Walter Schenker (MAZ Capital Advisors, LLC): Should each quarter sequentially show higher revenues next year as these initiatives roll out?
  Response: Yes—management expects sequential quarterly revenue growth as new brands phase in and Halston execution improves.

• Question from Howard Brous (Wellington Shields): Can you give a sense of 2026 potential revenue?
  Response: No formal guidance provided; management points investors to two analyst models and emphasizes top-line royalty revenue as the key valuation metric.

• Question from Walter Schenker (MAZ Capital Advisors, LLC): Is the multi-year target of materially higher royalty income (e.g., $50M royalty potential) still achievable?
  Response: Yes—management reaffirms a multi-year opportunity to build significant royalty streams, highlighting Cesar, Jenny and Gemma as high-potential drivers.

Contradiction Point 1

Tariff Impacts and Sourcing Strategy

It highlights different perspectives on the company's strategy to mitigate tariff impacts, which could affect revenue and operational efficiency.

What role does Olin Lancaster's appointment as Chief Revenue Officer play, and how did Xcel Brands attract him? - Thomas Forte(Maxim Group LLC)

2025Q3: The timing of signing influencers like Cesar, Gemma, and Jenny has been advantageous. They focus on domestically sourced products, which helps to mitigate tariff risks. - Robert D'Loren(CEO)

How do you expect Q3 revenue and profitability to perform, and do you have any guidance for Q4? - Anthony Lebiedzinski(Sidoti)

2025Q2: We're launching Cesar, Gemma, and Jenny Martinez earlier than expected. We think we will come in where we've been forecasting. - Robert D'Loren(CEO)

Contradiction Point 2

New Brand Launch Schedule

It involves differing statements on the timing of new brand launches, which could impact revenue projections and market expectations.

When will G-III's merchandise adjustments be ready—spring or fall? - Michael Kupinski(NOBLE Capital Markets)

2025Q3: All new brands will start hitting the market in Q1 '26. - Robert D'Loren(CEO)

What are your expectations for third-quarter revenue and profitability, and any specific guidance for the fourth quarter? - Anthony Lebiedzinski(Sidoti)

2025Q2: We're launching Cesar, Gemma, and Jenny Martinez earlier than expected. - Robert D'Loren(CEO)

Contradiction Point 3

Acquisition Strategy and Goals

It reflects differing statements on the company's acquisition strategy and goals, which are critical for understanding Xcel's growth plan.

Can you outline the types of acquisitions Xcel is pursuing and what benefits they offer? - Michael Kupinski(NOBLE Capital Markets)

2025Q3: Xcel is focused on brand acquisitions and transformative transactions. It is currently exploring several opportunities that could be transformative for the company, but specific details remain confidential. - Robert D'Loren(CEO)

Can you provide an update on your liquidity after the recent stock offering and do you expect to need additional capital? - Anthony Lebiedzinski(Sidoti)

2025Q2: We will be raising capital as we feel makes the most sense for the business and to execute on the new business opportunities that we have. - James Haran(CFO)

Contradiction Point 4

Timing of Product Launches and Market Entry

It involves the timing of product launches and market entry for new brands, which can impact revenue projections and market positioning.

Can you update us on the product roadmap for new brands and their expected market launch timelines? - Michael Kupinski (NOBLE Capital Markets)

2025Q3: All new brands will start hitting the market in Q1 '26. The rollout will begin with food products, electronics, and followed by pet accessories later in the year. - Robert D'Loren(CRO)

Can you discuss the revenue potential of your new or upcoming brands like Cesar Millan, Gemma Stafford, and Jenny Martinez? - Michael Kupinski (NOBLE Capital Markets)

2025Q1: Each brand has significant potential. Cesar Millan, for example, has a very strong social media presence and is expected to generate $5 million to $10 million in royalties per year. We expect significant income from Cesar this year and further growth next year. - Robert D'Loren(CEO)

Contradiction Point 5

Impact of Tariffs on Domestic Production

It highlights differing perspectives on the impact of tariffs on domestic production strategies, which can affect cost management and revenue projections.

What steps have you taken in domestic food products to mitigate tariff impacts? - Thomas Forte (Maxim Group LLC)

2025Q3: The timing of signing influencers like Cesar, Gemma, and Jenny has been advantageous. They focus on domestically sourced products, which helps to mitigate tariff risks. QVC and other retailers are eager for such products. Some licensees are shifting production from China to friendlier locations, and preparations are underway for launches in Q1 '26. - Robert D'Loren(CEO)

Was the 2025 adjusted EBITDA forecast of $1 million to $2.5 million inclusive of potential tariff impacts? - Michael Kupinski (NOBLE Capital Markets)

2025Q1: We are working on short-term domestic production for some brands to address tariff impacts. - Robert D'Loren(CEO)