Xcel Brands (NASDAQ:XELB) reported second-quarter revenue of $1.1 million, down from $1.3 million a year earlier, as the company continued reshaping its portfolio around influencer-led brands and divesting certain legacy assets.
For the first six months of 2026, revenue totaled $2.3 million, compared with $2.7 million in the prior-year period. Chief Financial Officer Jim Haran said the year-over-year declines were primarily attributable to the divestiture of the Judith Ripka brand.
Influencer-Led Brand Launches Continue
Chairman and Chief Executive Officer Robert D’Loren said Xcel is continuing to build its portfolio of influencer-led brands, which it has developed with Cesar Millan, Gemma Stafford, Jenny Martinez, Coco Rocha and Shannon Doherty.
Two of the brands began wholesale shipments through licensees during the first quarter, with on-air programming beginning on QVC and HSN in the second quarter, according to D’Loren. The remaining influencer-led brands are expected to begin shipping and launching through the rest of 2026 via interactive television and e-commerce retailers such as Amazon, followed by brick-and-mortar retailers. One brand is expected to launch in 2027.
D’Loren said the company’s brand portfolio social-media following increased from 5 million to more than 46 million in less than a year through the new partnerships. He characterized the brands’ expert-led content and established audience reach as increasingly important amid changes in online search driven by artificial intelligence.
“The game has moved from ranking to being the source the answer is built from,” D’Loren said, arguing that named experts with established content libraries can provide sources that AI platforms can attribute in response to consumer queries.
He also said Cesar Millan and Jenny Martinez reach English- and Spanish-speaking audiences, with content developed bilingually from the outset. D’Loren said Xcel’s television and streaming content reaches more than 100 million households and generates tens of millions of media impressions per month.
The company said product development generally takes approximately 12 to 18 months from an agreement with an influencer to the point when products are first offered for sale, depending on the category and manufacturing location.
Portfolio Strategy and Long-Term Goals
Xcel’s model is designed to be capital light, D’Loren said, with the company not deploying manufacturing capital, carrying inventory or taking markdown exposure. The company generates revenue from royalties on licensees’ or retailers’ sales.
D’Loren said Xcel believes it is on track to reach $100 million across its brand portfolio, while cautioning that social-media follower counts are inputs rather than results. He said the company’s assets include product designs, existing brand awareness, content libraries, retail-search presence and its licensee supply-chain network.
The company said it believes each of its eight existing brands has the potential to produce an average of $7 million in annual royalty income by the end of 2030. D’Loren attributed that outlook to Xcel’s platform, influencer-led brand strategy and changes in the industry related to AI.
Xcel also continues to explore sales of certain legacy brands. Haran said the company completed the Judith Ripka sale during the second quarter at approximately six times gross royalty income. He said that multiple was consistent with the sale multiple for the company’s former Isaac Mizrahi brand and supported management’s view of the brands’ value.
Costs, Earnings and Liquidity
Direct operating costs were approximately $1.9 million in the second quarter, essentially flat from the prior-year quarter. For the first six months, direct operating costs were $4 million, down $200,000 from a year earlier.
Haran noted that the prior-year quarter included an approximately $500,000 employee retention credit refund that reduced expenses. Excluding that nonrecurring benefit, he said direct operating expenses declined by approximately $500,000 in the second quarter and $700,000 for the six-month period.
Adjusted EBITDA loss was approximately $480,000 in the second quarter, compared with a $300,000 loss in the prior-year quarter. Excluding the prior-year employee retention credit-related expense reduction, Haran said adjusted EBITDA improved by roughly $320,000.
For the first six months, Xcel reported a net loss of approximately $5 million, or $0.82 per share, compared with a $6.8 million loss, or $2.84 per share, in the prior-year period. The company’s adjusted EBITDA loss for the six-month period was approximately $1.2 million, compared with a $1 million loss a year earlier. Excluding the nonrecurring prior-year item, Haran said the comparison represented an improvement of about $300,000.
As of June 30, Xcel had approximately $400,000 in unrestricted cash and cash equivalents, $12 million in stockholders’ equity and approximately $12 million of debt. In April, the company repaid part of its variable-rate term loan debt and entered into $3 million of senior secured notes with a fixed interest rate. During the quarter, it paid $450,000 of the senior notes, primarily using proceeds from the Judith Ripka sale.
Haran added that most interest due under the company’s current debt is paid in kind and will accrue rather than require cash payment until 2027. Xcel also has access to up to $15 million over two years under a committed equity line facility entered into in January 2026, for working capital and potential acquisitions at the company’s discretion.
About Xcel Brands (NASDAQ:XELB)
Xcel Brands, Inc (NASDAQ: XELB) is a lifestyle brand management company that acquires, develops and markets consumer product brands spanning fashion, entertainment and home categories. The company works with designers, celebrities and entertainment properties to create branded apparel, accessories, jewelry and home décor collections. Its portfolio includes licensed and proprietary brands such as Judith Ripka, Isaac Mizrahi and Simple Joys by Carter’s, among others.
The company’s business model centers on sourcing creative talent and intellectual property, then leveraging an in-house product development team to design collections that are manufactured by third-party partners.
