Iconix Brands' Fieldcrest lagged despite record results in Q2
July 27, 2010-- Home Textiles Today,
New York - Iconix Brand Group Inc. had a "record" second quarter, ringing a 35% increase in total revenue and a 25% gain in net income over the prior year, despite sales slowness for its Fieldcrest home products at Target.
"At Target, our Fieldcrest business was down," explained Yehuda Schmidman, who was recently promoted to coo. "However, Target is in the process of transitioning this business to be the luxury home brand at Target, and we expect to see sale improvement over time with the positioning and in-store displays."
He added that Iconix is actively working with Target for a solution. The brand's repositioning and re-launch as "Fieldcrest Luxury and Spa," Schmidman continued, "looks wonderful in the store today so we think it should have a good back half."
Added Neil Cole, Iconix's chairman and ceo: "We just came off a long-term renewal with Fieldcrest and we know Target is committed to the brand and its position."
Another home segment for Iconix that has lately shown "general softness" is Waverly.
But Cannon, which sells at sister retailers Sears and Kmart, is giving the brand company reason for optimism - and expansion efforts, especially with new products in store this season.
"We are working with both the Sears and Kmart teams to expand our Cannon brand," Schmidman said. "And for the back-to-school season, a new dorm line called ‘Co-Exist by Cannon' is being launch in-store with a new national TV campaign being run by Sears Holdings. With this collection we are branding out into new hard-goods categories such as futons and storage items."
Charisma, which sells at Costco Wholesale Club, was also singled out as a "strong" brand in Iconix's growing portfolio.
For the company, second-quarter results included many highlights. Total revenue grew by 35% to $76.0 million, compared to $56.4 million in the year-ago period. Non-GAAP net income came in at $26.7 million, a 25% increase over 2009. Diluted non-GAAP earnings per share were $0.36 compared to $0.33 in the prior year. EBITDA attributable to Iconix was approximately $49.4 million, an 18% increase as compared to approximately $41.8 million in the prior year.
The recent acquisition of the Peanuts brand - which was added to Iconix's portfolio officially on June 3 - has boosted the company's retail sales share and its international footing.
Cole said Iconix's brands, including Peanuts, on a pro-forma annual basis now represent over $12 billion of retail sales and in addition, its international business today represents 18% of Iconix's total revenue, compared to only 6% in 2009.
"For the second quarter, we continue to make progress in our international strategy by acquiring the Peanuts brand, which has a large international platform and footprint," he noted. "With this acquisition and the infrastructure we have already put in place with our joint ventures in China, Europe and Latin America, we are beginning to make progress on our goal of positioning our company for major international expansion."
For its outlook, Iconix reiterated its full year 2010 revenue guidance of $305million to $315 million, its 2010 non-GAAP diluted EPS guidance of $1.35 to $1.40, and its GAAP diluted EPS guidance of $1.23 to $1.28. The company said it expects to continue to generate "strong" free cash flow this year of approximately $150 million to $155 million, "relating to the existing portfolio of brands only and does not include any additional acquisitions."
Cole elaborated on Iconix's outlook for the shorter term, including guardedness about fourth quarter.
"On a short-term basis, we think third quarter is going to be pretty good," he said. "Maybe a lot of that had to do with [knowing] you have to buy the goods around the first quarter when things were pretty good in February, March and April. We're seeing inventories are pretty strong....We do see a strong third quarter in terms of looking at our levels of visibility. However, we remain a little conservative about holiday."
In other news, Cole announced during the company's second quarter presentation the promotion of three executives.
We are promoting three well-deserved executives of our company who have greatly contributed to the success at Iconix and have been integral in growing our brands and driving our business," he said.
--Schmidman, formerly evp, operations, has been named coo.
--Lanie List is now chief merchandising officer, promoted from evp.
--Carolyn D'Angelo has been appointed svp, home brands, from her prior post as vp, brand management.
"In these expanded roles, we are confidant that these individuals will excel," Cole added.
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