Sign Up for Updates

Iconix Q4 Net Loss Widens on Lower Sales image

Iconix Q4 Net Loss Widens on Lower Sales

Iconix Brand Group will take $443 million in impairment charges against Q4 earnings, including $70 million related to trademarks, amid continuing efforts to right its menswear business.

Iconix’s men’s business, which includes the Pony, Starter, Ecko, Rocawear, Ed Hardy and other brands, posted a sharp rise in operating income in Q4 ended Dec. 31 to $7.3 million despite a 10% decline in sales to $11.8 million as the turnaround of the business is “taking longer than we anticipated,” CEO John Haugh told analysts.

Iconix has achieved “a little bit of success” with the Ed Hardy brand which is being expanded into new categories. And the expected turnaround with Rocawear didn’t materialize, Haugh said. “We haven’t turned the corner and the fashion has been tricky,” he said. The Ed Hardy and Rocawear brands “have been drags” on Iconix’s earnings “for a long time but we think we’ve found the floor,” Haugh said.

In contrast, Iconix is experiencing “good momentum” with the Ecko and Pony brands, Haugh said. In a sign of sales of the Ecko brand stabilizing, J.C. Penney is opening in-store shops at 30 locations later this year to “maximize the brands presence at retail,” Haugh said. Iconix also is introducing the Ecko Function activewear sub-brand. The “resurgence” in retro fashion brands has been a benefit for Pony, which signed a new footwear licensing agreement. While Iconix’s revenue from a Starter DTR at Walmart decreased in Q4, legacy jackets featuring team logos have had strong sales, Haugh said.

The women’s business reported a 25% decline in operating income to $15.1 million on a 12% drop in revenue to $18.7 million amid a decline in the sales of Candies brand DTR apparel at Kohl’s, Haugh said. Iconix recently extended the Candies agreement with Kohl’s through 2021 in lowering the guaranteed minimum while increasing the royalty rate, Haugh said. Iconix recently signed a new licensing agreement with a licensee for Candies children’s apparel. Iconix’s Bongo women’s brand also has struggled with its DTR at Sears amid “overall soft trends” at the retailer, Haugh said.

Iconix’s Danskin Now brand posted higher sales at Walmart, but hit a lower royalty rate in its contract with the retailer late last year. Iconix also signed a two-year extension for Danskin Now with Walmart, Haugh said. Iconix recently signed licensing pacts for Material Girl children’s apparel and hosiery and London Fog tech accessories that will launch mid-year at retail.

Overall, Iconix’s Q4 net loss widened to $297.5 million from $263 million a year earlier on an 8% decline in revenue to $87.1 million. The net loss came despise Iconix posting a $28 million gain on the $100 million sale of the Sharper Image brand in December. Iconix purchased Sharper Image for $65.6 million in 2011. In addition to the menswear and womenswear business, the Iconix entertainment unit, which includes the Peanuts and Strawberry Shortcake properties, posted a 36% decline in Q4 operating income as revenue fell 20% revenue to $28.3 million. The home group – Fieldcrest, Waverly, Royal Velvet – reported an 8% gain in operating income to $8.4 million on a 9% gain revenue to $10.5 million.

become a member today

learn more

  • Copyright © 2024 Licensing International
  • Translation provided by Google Translate, please pardon any shortcomings

    int(221)