Iconix First-Quarter Profit off by 5%
May 18, 2009-- Home Textiles Today,
Coming off a first quarter driven by the rollout of its Op, Danskin and Starter brands exclusively at Wal-Mart, Iconix Brand Group Inc. says it's in a position to build more direct-to-retailer deals this fiscal year and beyond.
During a conference call with analysts earlier this month, chairman and ceo Neil Cole said the company's brands collectively generated more than $6.5 billion in annual retail sales last year. Iconix expects that number to grow to $8 billion in 2009 "as we role out new programs at retailers such as Wal-Mart, Kohl's and Costco ...we will continue to look to partner our brands with the best of breed in retailers around the world."
The recently inked deal with Costco for Iconix's Charisma home brand marks the consumer brand company's 15th direct-to-retailer relationship. The non-exclusive partnership — Charisma also sells at Bloomingdale's and in catalogs — will comprise "a number of product categories" that are set to roll out at Costco club units this fall.
Iconix does not expect this deal to materially impact its '09 revenue, "but it will provide upside in 2010," Cole said, adding "We believe Charisma is a great addition to Costco and anticipate new category opportunities in future."
Another bright spot for Iconix's growing home portfolio of brands was the launch last month of Cannon bedding at Sears and Kmart.
"The new Cannon bedding, which just launched in April, is doing phenomenally, and we plan to expand it into additional categories such as kitchen textiles later in the year," Cole said.
Other home-related opportunities this year include the addition of beach towels and other beach gear to Iconix's Op brand sold exclusively at Wal-Mart. Op, which launched in April at select Wal-Mart stores, was rolled out to the whole chain and will be expanded later this year to include the new beach products.
Iconix is also actively pursuing an international expansion of its brand presence. Wal-Mart International is being tapped as a viable vehicle for this effort. For example, Op, which is already available in Wal-Mart stores outside the U.S., including in Canada, is adding the brand to its stores in Argentina this fall.
"Wal-Mart International could pose a big opportunity for us," Cole said, adding that Iconix has been conducting several meetings with various Wal-Mart International territories to build new relationships.
For the first quarter ended March 31, net income declined 5% to $15.6 million, with earnings per share of 26 cents versus 27 cents in the prior year quarter. Licensing and other revenues were off 9.2% to $50.5 million.
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