In seeking to expand, Iconix Brand Group must “think more broadly” in acquiring companies, and rely less on buying distressed IP, Iconix CEO John Haugh said at a recent Cowen & Co. investor conferenece.

Since hiring Haugh a year ago, Iconix has sold off the Sharper Image brand. And Iconix is now turning to acquiring brands with business that is “accelerating,” Haugh said.

Iconix previously was a “passive manager” of the brands it purchased, satisfied with “renting them” to licensees and receiving a financial return, Haugh said. Yet in a highly competitive market, Iconix must be “more active” in managing the brands and seeking DTRs and other agreements that give the company a greater say in how the products will be displayed and promoted, Haugh said.

“It will be critical that we show organic growth” which requires Iconix buy brands “on the way up rather than on the way down,” Haugh said. “We are making progress, but we aren’t out of the woods yet.”

In expanding its North American business, Iconix will seek brands capable of delivering $10-$15 million in annual royalties. In international markets, Iconix will pursue brands generating $5-$6 million in annual royalties, Haugh said. To make the purchases, Iconix will draw on its $120 million in cash and cash equivalents.

Among its own brands, Iconix will focus on Umbro, which generates about $750 million in annual retail sales, only $28 million of which comes from the U.S. market, Haugh said.

“We think there is significant opportunity to get some traction with Umbro,” Haugh said. “We are not going to dethrone Nike, but we are the only” soccer-only brand for the U.S. market.

Iconix also recently signed a two-year extension for its Danskin DTR at Walmart. The Danskin brand, used for activewear and other products, generates about $1 billion in annual retail sales, Haugh said. With the new deal in hand, Iconix plans to move the Danskin Now brand to department stores, Haugh said.

Iconix also is moving to expand its entertainment business that includes Peanuts and Strawberry Shortcake. The entertainment business generates about $100 million in annual retail sales, about 70% of which comes from outside the U.S.

As Iconix signs new agreements and makes acquisition, it is forecasting revenue to increase 4% annually through 2019. Acquired brands will add about $25 million to revenue over that period, Haugh said. Iconix forecasting revenue of $350-$360 million this year, down from $368.4 million  in 2016.

Contact: Iconix Brand Group, John Haugh, CEO, 212-730-0030, jhaugh@iconixbrand.com

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