Walmart isn’t renewing its direct-to-retail (DTR) agreement for Iconix Brand Group’s Danskin Now, ending the retailer’s 10-year run with the brand. As a result, Iconix’s royalty revenue from Danskin and Danskin Now will decline by $15.5 million in 2018, forcing Iconix to seek waivers of its debt covenants and amend its senior secured term loan. As part of its talks with lenders, Iconix agreed to reduce its credit facility to $225 million from $300 million.

The Danskin Now brand first became a Walmart DTR for women’s and girl’s apparel and footwear in July 2008, and the agreement had been expanded to include activewear and other products. Danskin Now is one of four brands that Iconix licensed Walmart as a DTR, a list that also includes Starter (men’s and boys’ apparel signed in December 2007), OP/Ocean Pacific (lifestyle apparel/swimsuits, August 2007) and Waverly (fabric and crafts, July 2014). Sales of those brands at Walmart accounted for 13% of Iconix’s $368.4 million in revenue in the fiscal year ended Dec. 31, 2016, the company said.

Meanwhile, Amazon launched an exclusive collection of Starter apparel, securing an agreement with Iconix after Walmart didn’t renew a DTR pact that is to expire Dec. 31. Walmart is expected to sell through remaining Starter apparel by mid-2108 (Inside Licensing Aug. 10). Walmart also isn’t renewing the DTR for OP/Ocean Pacific, with a department store expected to pick up the line in 2018.

Contact:

Iconix Brand Group, David Jones, Chief Financial Officer. 212-730-0030, djones@iconixbrand.com