Dive Brief:

• Sequential Brands Group subsidiary Brand Matter has sold Ellen Tracy brand assets for $17 million in cash, according to a securities filing.
• Sequential also unloaded its Caribbean Joe brand for $3 million. The combined proceeds were used to make a payment on the company's revolving loan with Bank of America per the its loan agreement.
• The buyer of both brands is affiliated with GMA Group, owner of apparel design and manufacturing company Capelli New York.

Dive Insight:

Sequential — which owns Jessica Simpson, Joe's Jeans, And1, Avia and other brands — has been working quickly to raise money as it tries to stabilize its financial position. Prior to the Ellen Tracy and Caribbean Joe sale, Sequential sold its 65% interest in the DVS Footwear business to Elan Polo for $2 million in cash. 

The brand specialist has been cycling through executives and missing deadlines on financial filings for months while trying to stay in its lenders' good graces after racking up defaults on loan covenants. The company has issued warnings that it might not survive as a going concern. 

In less than a year Sequential has lost a CEO, a senior vice president of finance and executive chairman. After one of its lenders, Wilmington Trust, gained the right to appoint a majority of Sequential Brands' board, four board members resigned, including Martha Stewart, whose namesake brand Sequential sold in 2019 to Marquee Brands.  

Other recent asset sales include a deal to sell the Heeling Sports brand for $11 million to BBC International. As with the recent brand sales, Sequential paid several million dollars to its lenders with the proceeds. Jessica Simpson, whose eponymous brand is one of the largest in Sequential's portfolio, is also reportedly looking to raise the money to buy it back from Sequential. 

Prior to its sale, Ellen Tracy had some of the deepest roots among Sequential's brands. Founded in 1949 by Herb Gallen as a blouse maker, it eventually grew into a full women's lifestyle brand before Sequential acquired Ellen Tracy in 2013. According to a securities filing, one of Sequential's licensing partners for the brand was Global Brands Group, whose U.S. arm recently filed for bankruptcy owing Sequential $2 million in royalty payments.   

In the same 2013 deal that it bought Ellen Tracy, Sequential also picked up Caribbean Joe, founded in 1999 as an island-inspired lifestyle brand. At the time, Sequential said the two brands together were worth up to $14 million in royalty revenues from licensees, around half of the company's total projected royalty revenue in 2013. 

The purchase price of both brands was $62.3 million, some three times the price that Sequential just sold them for.