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Source: Iakov Filimonov, Shutterstock
Summary
- Xcel Brands will acquire Lori Goldstein brands, including LOGO™.
- Ever since its inception in 2009, LOGO™ has been profitable.
- This acquisition is expected to bring high-growth opportunities for XCEL Brands.
Stocks of apparel and accessories retailer Xcel Brands Inc (NASDAQ:XELB) surged 54.4 per cent during on Monday, April 5, after it announced plans to acquire leading brands by fashion icon Lori Goldstein, including LOGO™.
The move comes amidst the Xcel’s plan of growing the popular brand by offering new products under various categories. It is expected to go into the expansion mode through multiple distribution channels like e-commerce, TV networks, smartphones and live streaming platforms.
Robert W D’Loren, the Chairman and CEO of Xcel Brands, said in a statement that the company is committed to providing its customers with a fully integrated shopping experience by using multiple channels. He said that acquiring LOGO™ by Lori Goldstein is part of that strategy.
Ever since its inception in 2009, LOGO™ has been profitable with over US$ 1.5 billion in retail sales. The brand deals in women’s clothing and provides casual wear, activewear and outerwear products. It also offers accessories like jewellery and eyewear.
Commenting on the move, Lori Goldstein said that this partnership will allow both the companies to grow as more popular brands. It will likely cement their position in the market and enable the companies to become leaders across multiple distribution channels.
Source: Pixabay
What to expect from this move?
This acquisition is expected to bring high-growth opportunities for XCEL Brands and the sudden surge in the company's stock means investors are paying attention to the company. The scrips were priced at US$ 2.98 apiece at market close on April 5, up by 484 per cent from its 52-week low of US$ 0.51 and 28 per cent down from the 52-week high of US$ 4.15.
Like every other stock, the XELB stock is also not immune to market volatility, and this surge may level out in some time. However, this doesn't mean that the stock would crash, it is likely to sustain as the company is backed by its different brand labels and products.
A look at the company's stock and financials
Penny stocks are often a popular choice for investments and this stock might be worth exploring for investors looking for long-term gains. In a year, the stock skyrocketed and went up by 422.8 per cent and 150.4 per cent year-to-date (YTD).
Due to the ongoing COVID-19 pandemic and overall economic slowdown, the company's prospects were affected too. The total revenues in Q3 2020, was US$ 7.4 million, down by 32.1 per cent year-over-year (YoY). For the same period, despite the decrease in revenues, the company's overall gross profit margins increased to 83 per cent, up by 10 per cent.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view.
