Iconix Brands Show 'Exciting' Results
August 10, 2009-- Home Textiles Today,
Iconix Brand Group Inc. last week posted a 32% profit increase and attributed much of the gains to its OP, Starter and DanskinNow apparel and lifestyle brands at Walmart. But the consumer brand licensing firm said its home brands —Cannon, Charisma and Royal Velvet, and to a lesser degree Waverly — also shined during the period.
In the home category, explained Iconix chairman and ceo Neil Cole, "We are most excited with the progress we are making with our Cannon brand at both Sears and Kmart, as it takes more and more shelf space from the exiting Martha Stewart business."
He said Kmart and Sears have been showing "great commitment" to the Cannon brand, and new Cannon product has arrived for back-to-school. In addition, "we're working on some new possible brand extensions for Cannon."
Iconix is also "excited" about a new direct-to-retailer deal it signed during the quarter with Costco for the Charisma brand.
"Since the Charisma launch, Costco has already seen a spike in its towel sales, which we believe is attributable to the power of the Charisma brand," he said. "Based on these strong initial sales results, we believe there will be opportunities to expand this program later this year and into next."
Royal Velvet has been "on plan," and Iconix is working to expand into new categories with Bed Bath & Beyond.
Not as strong has been the performance of Waverly at Target, which Cole said might be the result of consumers' misperception of the retailer's product value.
"I think Target is a great company that will flourish and survive and be back on top in the near future. I think, quite honestly, from my personal view, that they are a victim of their own success," he explained. "They've had amazing marketing over the last five to 10 years where people thought it was more of a designer feeling and more upscale. And when we went into this recession. their great marketing kind of hurt them and there was a backlash."
Cole said he is noticing that more recently, Target "is starting to get back some momentum by going after more price and value. So I think they'll get back on track in near future. We have total faith in them as a great retailer."
But he warned that "where I think the consumer is maybe missing it, or maybe Walmart is beating Target," is that while the discount chain admittedly "has great prices and they are very competitive and product is priced well, I just think there is a perception that it's not as good as it is."
But buoying the Waverly brand in the meantime has been the direct-to-retail business at Lowe's and its other distributions, he said.
For the quarter ended June 30, net income rose 32% to $19.3 million, from $14.6 million 2008's second quarter, and diluted earnings per share was 30 cents versus 24 cents. Revenue climbed 9% to $56.4 million.
Based on the second quarter performance, Iconix raised its guidance for the full year 2009 to $223 million to $230 million from prior guidance of $218 million to $225 million. Additionally, Iconix said it estimates that free cash flow for 2009 will be approximately $130 million. This guidance relates to the existing portfolio of brands only and assumes no acquisitions.
That said, Iconix feels it is in a good position to make acquisitions — "a major focus for us," Cole said.
"We believe that we are well positioned to execute against our acquisition strategy," Cole said. "This quarter, we raised $153 million through an equity offering, and now have well over $200 million of cash on hand, which should allow us to move quickly."
Related Content By Author
Industry Related Content
Explore Latest Business Trends at Heimtextil