Iconix sees big things for Royal Velvet at JCP; 1Q profit falls 12%
HTT Staff -- Home Textiles Today, 4/25/2012 2:22:30 PM
New York - The 4% decline in first quarter revenue at Iconix Brand Group resulted from "a few challenges" that in part included the transition of the company's Royal Velvet brand to JCPenney.
But this hurdle is seen as only temporary as Iconix and JCP are working together to rapidly develop the brand into a major home products line.
"As we had previously stated the transition of the [Royal Velvet] brand to JCPenney will impact the near term, and for the full year this impact is expected to total $14 million," explained Yehuda Shmidman, coo, during the company's quarterly conference call this morning. "However, the launch at JCPenney is a positive for the long-term future of the brand, and will be a growth driver for the company in 2013 and onward."
He noted that products have already started shipping to stores, "and the initial response has been favorable."
Royal Velvet at JCP is to grow it into a "full lifestyle presentation," Shmidman added, "with furniture, tabletop, bedding and bath, and window coverings."
In the first quarter, Iconix's net income dropped 12% to $27.6 million, or 37 cents per share.
Revenue was $88.5 million versus the year-ago period's $92.4 million.
Due primarily to softness of its men's brands - Rocawear, Ecko and Ed Hardy -and a project in India that the company said it no longer expects to complete in 2012, Iconix lowered its fiscal year guidance.
Annual revenue is now expected to range from $340 million to $350 million, down from $370 million to $385 million. EPS was lowered to $1.48 to $1.57 from $1.62 to $1.69.
"With the majority of our portfolio performing well in the U.S. and our continued expansion into new geographies, we believe our company remains strong and is well positioned for growth in 2013 and beyond," said Neil Cole, chairman and ceo.
Iconix is still waiting on government approval for its joint venture in India that had been expected to close in the first quarter. Had it closed, it would have contributed $5 million to $6 million in revenue, or 4 cents to 5 cents in EPS, the company said. Iconix now expects the deal to close in the second quarter.
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