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Iconix sums up recent home brand performances

New York - On the heels of the announcement earlier this week of its exclusive alliance with JCPenney for the Royal Velvet soft home program, Iconix Brand Group today offered a summary of recent performances of its other home brands during the company's third quarter earnings call.

Neil Cole, chairman and ceo, called Filedcrest "the shining star" in Iconix's home brand family.

"Target's really gone after the brand and dramatically improved the business, so we're excited about what's happening with Fieldcrest," he elaborated.

Charisma is "picking up momentum -- in the last couple of weeks, especially, at Costco," Cole continued, as well as with high marks lately at Bloomingdale's.

"Cannon is okay, maybe not growing as dramatically as we would like," he added. "And Waverly is on plan. Not a big business, but it is growing."

As for Iconix's hopes for Royal Velvet at JCP stores and online at come spring 2012: "We see this as a substantial, long-term growth opportunity," even if it means some likely shortcomings at first as history has proven, Cole warned.

He reminded that Royal Velvet was previously licensed with Li & Fung, "where it had been underperforming. Reflecting a new start-up launch with JCPenney and a long first year, we expect royalties to be down significantly in 2012. However, we have found that strategically, sometimes it's better to take a near-term loss in order to procure a strong future as we did successfully with our Mudd [apparel] brand when we launched it with Kohl's."

The new partnership with JCP, similarly to that with Kohl's for Mudd, "will take time to fully expand, and therefore we expect short-term revenues to be down followed by long-term revenue growth."

Results for the Sept. 30th-ended third quarter were somewhat challenged against year-over-year comparisons, as total revenue dipped 9.87% to $92.7 million versus the year-ago period's $96.9 million revenues, the latter of which included approximately $12.5 million related to a contract the company signed with ABC Network for the Peanuts holiday television specials.

Net income attributable to Iconix on a non-GAAP basis, which excludes non-cash interest related to Iconix's two convertible notes, was up 1% to $30.1 million. Non-GAAP diluted EPS for the third quarter was $0.40, unchanged from the prior year period's $0.40.
GAAP net income in the quarter was down 5.1% to $26.0 million compared to $27.4 million last year, and GAAP diluted earnings per share was $0.34 compared to $0.37 in the prior year quarter.

Year to date, total revenue was better off - up 12% to $274.3 million versus $244.6 million for the prior year period.

On a non-GAAP basis, which excludes non-cash interest related to the company's two convertible notes and two non-recurring items recorded in the second quarter, net income increased 15% to $96.2 million, and non-GAAP diluted EPS grew by $1.27 versus $1.12 last year. On a GAAP basis, net income increased 29% to $98.9 million and GAAP diluted earnings per share was $1.31 versus $1.03.

"As we look to 2012, we are excited about the many opportunities ahead as we continue to grow our platform through new retail partners, new categories and new geographies," Cole said. "With now 28 diverse consumer brands in our portfolio that represent approximately $12 billion in annual retail sales we have come a long way, and looking ahead we are very focused on delivering continued value to our shareholders."

Iconix offered its guidance for 2011, "reaffirming" its: full year 2011 revenue guidance of $355 million to $365 million; full year 2011 non-GAAP diluted EPS of $1.63 to $1.68; and full year 2011 GAAP diluted EPS of $1.61 to $1.66.

For 2012, the company's guidance includes: revenue of $370 million to $385 million; non-GAAP diluted EPS of $1.77 to $1.84; and 2012 GAAP diluted EPS of $1.62 to $1.69.


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