Iconix is ending long-running DTRs at Sears Holdings for the Bongo (juniors’ apparel) and Cannon (home textiles) brands and extending one at Hudson’s Bay for London Fog, CEO John Haugh told analysts as the company reported quarterly earnings.

Iconix has had DTRs for Cannon and Bongo at Sears since 2008 and 2010, respectively, and ending the deals will make both brands non-exclusive and potentially broaden their distribution, Haugh said. Iconix did, however, renew its DTR with Sears for Joe Boxer (men’s and women’s apparel), extending a deal first signed in 2010.  Sears accounted for 8% of Iconix’s of $225.8 million in revenue in the fiscal year ended Dec. 31.

“We are working hard to reduce our exposure at Sears,” Jones told us.

Iconix also renewed a London Fog DTR with Hudson’s Bay covering luggage, raincoats, boots and caps.

The changes in licensing agreements and extensions come as Iconix moves to offset the loss of DTRs for Danskin and Ocean Pacific (Walmart) and winding down one at Target for Mossimo. In the case of Ocean Pacific, the label will be available at select retailers as in limted production runs this year – Urban Outfitters recently launched a jointly -designed collection – and expand more broadly in 2019, Haugh said. The Mossimo label will re-emerge this fall as a direct-to-consumer web site,  although whether that will involved licensing hasn’t been decided, CFO David Jones told us.

Starter, once an exclusive at Walmart, was relaunched on Amazon earlier this year and about 400 SKUs will be available by fall. Having previously launched the Starter Black label as a premium brand, Iconix was able to reposition Starter on Amazon at a higher price as it parted with the opening price point it occupied at Walmart, Haugh said. Starter apparel carried a $5.88 average unit price at Walmart, while it’s priced in the $12-$27 range on Amazon, he said.

Iconix’s net income rose to $32.7 million from $4.4 million in Q1 ended March 31 as the company posted gains of $24.4 million tied to 5.75% convertible notes and $4.5 million on early payment of part of its 1.50% notes.

On the other hand, Q1 revenue declined 16% to $48.5 million due largely to the ending of Danskin and Ocean Pacific DTRs and winding down the Mossimo business that formally ends in early 2019. Operating income in Iconix’s women’s business dropped 44% to $14.6 million as revenue dropped 41% to $16.5 million. Operating income in the men’s business declined 1% to $5.8 million as revenue fell 2% to $9.9 million, while the home category’s operating income was down 13% at $5.7 million as revenue dropped 11% to $6.5 million. International business was a bright spot, as operating income increased 18% to $6.4 million on a 29% revenue gain to $15.4 million.

Contact:

Iconix, David Jones, Chief Financial Officer, 212-730-0030, djone@iconixbrand.com