An L.A. denim company changed its business model earlier this year, and now it’s changed leadership to match its ambitions.
Sequential Brands Group Inc., formerly high-end jeans company People’s Liberation Inc., announced Nov. 20 that Chief Executive Colin Dyne had resigned and that Yehuda Shmidman replaced him.
The announcement sent shares down 26 percent, closing at $4.25 on the Over-the-Counter Bulletin Board. That made the company the biggest loser for the week ended Nov. 21 on the LABJ Stock Index. (See page 52.)
Shmidman joins Sequential after seven years at New York brand licensing company Iconix Brand Group Inc., where he had been chief operating officer since 2010. He is expected to lead the former jeans manufacturing company in its efforts to become a licensing company with a wide portfolio of consumer product brands.
Paul Zaffaroni, a director at Newport Beach investment bank Roth Capital Partners LLC, said the change in leadership is a positive development for the company.
“If you’re going to switch from a manufacturing model to a licensing model, you want to find the right person,” he said. “With Yehuda coming in, it signals that he’s going to take that successful Iconix blueprint and apply it to Sequential.”
Zaffaroni said the falling stock price has to be taken in context as Sequential is closely held and thinly traded.
“One mom-and-pop investor selling shares can have an impact,” he said.
Shmidman said he knows most stockholders personally and that they’re pleased with the news of his hire.
“The trading is not really representative today of where we see the stock in the future,” he said. “As the scale of the company grows, stock movement will begin to tell a much bigger story.”
Sequential changed its name and business model in February after receiving a $14.5 million capital infusion from private-equity firm Tengram Capital Partners in Westport, Conn.
At the time, the company owned two apparel brands: People’s Liberation and Justin Timberlake’s William Rast. Since then, the company has acquired DVS, an action sport lifestyle brand with a focus on shoes.
Shmidman said the company intends to speed up the acquisition of brands to build its portfolio over the next year.
“We’re excited about brands in all different industries,” he said. “Whether it’s in home furnishings, electronics, food and beverage, we’re looking at brands first and industry second.”
Shmidman lives and works in New York but said the company will continue to have an L.A. presence. However, he wouldn’t confirm that the West Coast office will retain headquarter status.
“I foresee lots of planes, trains and automobiles in my future,” he said. “We’re hitting the ground running. We expect to have a lot of activity in the near term.”
