Iconix hits record revenues and profit, but not expectations
-- Home Textiles Today, 10/27/2009 8:07:00 AM
New York – While Iconix Brand Group Inc. did not meet its guidance expectations for the third quarter, the company generated record revenues and net income for the period.
An unspecified credit issue with a large licensee and over-projected sales volume for the Op brand at Walmart hampered results, the company said. On a GAAP basis, profit jumped 25% to approximately $20.5 million, compared to $16.4 million last year, and earnings per share were 28 cents versus 27 cents a year ago.
"I believe our ability to achieve positive organic growth and record earnings despite facing some unforeseen challenges within the quarter speaks to the strength of our business model,” said Neil Cole, chairman and ceo.
Revenue for the third quarter, which ended Sept. 30, increased by 8% to $59.4 million. The results included a gain of $3.7 million related to the sale of the Joe Boxer trademark in Canada. Excluding that, Iconix’s third-quarter 2009 revenue rose 6% to $55.7 million compared to $52.5 million, which excludes the $2.6 million gain related to the Iconix China joint venture transaction.
Also noteworthy for the period is that the 21-brand company saw its direct-to-retail brands grow to 50% of total revenue up from 20% a year ago.
“Op had an outstanding spring/summer season,” Cole said. “Now the breadth of the assortment has been reduced for fall, as the business was planned more seasonally for this year than we expected. However, we are still excited about Op’s potential at Walmart, both in the U.S. and around the world.”
Among the home brands, Cole said the rollout of the Cannon brand at Kmart and Sears “is on plan, and we are seeing sales levels increase week after week as Cannon takes over more space and more categories.”
In other news released during the call, Iconix announced a 51% acquisition of Ecko International’s apparel and lifestyle brands, from which it expects to collect about $26 million annually in net royalty revenue.
On a GAAP basis, year-to-date profit increased 16% to $55.4 million versus $47.6 million, and diluted earnings per share were 83 cents per share compared to 78 cents in the prior year period. Revenue grew by 2% to about $166.3 million.
Looking ahead, Iconix reiterated its recently revised revenue guidance of $215 million to $220 million and full year GAAP earnings per share of $1.06 to $1.11. The guidance does not include the newly acquired Ecko brand, “as the timing of the close is uncertain.” The deal is expected to be completed in the fourth quarter.
Iconix’s guidance for 2010 calls for revenue of $260 million to $270 million – which includes the assumption that the Ecko acquisition will close in the fourth quarter of 2009. The company projects GAAP earnings per share to be $1.13 to $1.18.
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