Xcel Brands, Inc. (NASDAQ:XELB) Q3 2022 Earnings Call Transcript

Our interactive television business is less sensitive to that. There are by commitments in place with HSN on the new programs that we’re launching, and we’re on track with that business.

Anthony Lebiedzinski: Got it. Okay. And then that business a year ago was certainly hurt severely by the QVC warehouse fire, so I guess you have, in theory, an easier comparison, right?

Robert D’Loren: Yes. I don’t think most people fully understand the implications of that fire and the impact on QVC and curate in general. It’s €“ they didn’t really have the capacity in their other warehouses. It’s not so easy to just switch to a 3PL. It doesn’t happen overnight. And I do think QVC did an amazing job of navigating through a very difficult situation.

Anthony Lebiedzinski: Got it. Okay. Well, thanks and best of luck for the holiday season.

Robert D’Loren: Thank you, Anthony.

Operator: Your next question comes from the line of Debra Fiakas with Crystal Equity Research.

Debra Fiakas: Good morning and thank you for taking my questions. I was hoping to return to the gross margin discussion. Just one additional €“ just a follow-up. Would we perhaps see an impact in the December quarter from your Mexico operations and the benefits thereof? Or would it perhaps really not be visible until the first quarter in 2023?

Robert D’Loren: So you won’t see it, Debra, until first quarter. When we brought those goods into the U.S. into the LA 3PL, we paid the duty. We’re moving goods down to Mexico now really just to run test. And just be sure by January, everything is running efficiently. And then go forward next year, goods will arrive in port in LA and will be trucked from LA bonded to Mexico and then shipped direct to consumer for the duty savings.

Debra Fiakas: Thank you. And then another question. I appreciate you perhaps don’t want to provide dollar figures or number figures, but I was hoping you might provide a little bit more color on the launch of the optical product, at least perhaps tell us whether or not it’s tracking your expectations and your plans in the early days of the introduction.

Robert D’Loren: So I would say on both networks, they were soft launches, and there were a lot of back-end pieces to it that had to be debugged, so to speak, and it’s operating efficiently. Heading into the New Year. I do believe QVC will begin and HSN will begin to market more aggressively the program. The program really brings to QVC and HSN eyewear brands that they previously did not offer their customer base. So we are very optimistic that, over the coming years, this will develop into a strong business for us.

Debra Fiakas: Thank you. And then I also wanted to ask about the two newest additions to your roster of personalities and designers. Ken Downing already got into the €“ just jumped right in. Will we see the same thing with Christian Siriano? Or will we have to wait until spring of 2023 before we see him on air?

Robert D’Loren: So Christian’s first show is scheduled for March of 2023. The goods are €“ we expect goods to land in the warehouse early January. So first show will be toward the end of March. And is it possible that we may do some type of marketing before? Absolutely. I think Christian will become very visible as the face and the Creative Director of C. Wonder when we start the new year.

Debra Fiakas: Very good. And then just last question, it has to do with €“ it’s more of a shopping question really. You’ve talked about putting together a multi-brand site. And I just wanted to know, technically speaking or just a description of how shoppers will navigate or if they can navigate, between the QVC platform and HSN, two Xcel Brands site where you’re going to allow direct-to-consumer sales to take place? How would they interact €“ how is the interaction going to be crafted?