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Iconix Brand (ICON) Divests Sharper Image for $100 Million
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Iconix Brand Group, Inc. recently sold the rights to the Sharper Image brand and related intellectual property assets to ThreeSixty Group, the brand's largest licensee, for $100 million in cash. Shares of the company improved more than 4% after the Dec 30 announcement.
Iconix Brand plans to utilize the net proceeds from the deal plus additional cash to pay approximately $115 million of debt, including the Senior Secured Notes issued under its securitization facility and Senior Secured Term Loan.
Sharper Image is a strong and widely recognized brand. The move, however, was in line with Iconix Brand's focus on managing its portfolio and spending resources on businesses that generate significant volume through both direct-to-retail relationships and global networks. Note that Sharper Image is the second brand to be divested in 2016, the other being Badgley Mischka. Iconix Brand sold the rights to Badgley Mischka IP to Titan Industries, Inc. for $16 million cash in March.
Although the company's expects to record a gain from the transaction, it will not be reflected in its fourth-quarter 2016 results. For 2017, the company expects the net impact of the Sharper Image sale and debt repayment to be neutral to earnings.
Notably, the company remains skeptical about its full-year performance as it slashed its sales guidance and reiterated its earnings expectation for 2016 during the third-quarter 2016 conference call. The lowered view was due to delayed timing in some new men's programs and difficult macro conditions in Europe. We also note that headwinds like higher expenses, adjustments related to the financial restatement, and transition costs may also hamper its profitability.
Estimates for this Zacks Rank #4 (Sell) stock declined over the past 60 days. For 2016 and 2017, estimates have declined 1.77% and 1.82% to $1.11 and $1.08, respectively. Moreover, the company anticipates 2016 and 2017 earnings to decline 16.5% and 3.2% on a year-over-year basis.
Nevertheless, shares of this clothing brand licensing company have outperformed the industry ever since it reported stellar third-quarter 2016 results, wherein earnings surged about 72.7% from the year-ago level mainly on the back of higher operating income and improved margins. Currency favorably impacted sales in the quarter. The stock improved 16.8% in comparison to the Zacks categorized Shoes & Retail Apparel industry's 1.0% growth.
Stocks to Consider
Some better-ranked stocks in the retail/apparel sector are Francesca's Holdings Corporation , Caleres, Inc. (CAL - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) . While Francesca's Holdings sports a Zacks Rank #1 (Strong Buy), Caleres and Deckers Outdoor hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
While Francesca's Holdings has an expected long-term earnings growth of 13.75%, Caleres and Deckers Outdoor have an expected earnings growth of 11.0% and 9.0%, respectively, for the next three to five years.
Zacks' Top 10 Stocks for 2017
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Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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Iconix Brand (ICON) Divests Sharper Image for $100 Million
Iconix Brand Group, Inc. recently sold the rights to the Sharper Image brand and related intellectual property assets to ThreeSixty Group, the brand's largest licensee, for $100 million in cash. Shares of the company improved more than 4% after the Dec 30 announcement.
Iconix Brand plans to utilize the net proceeds from the deal plus additional cash to pay approximately $115 million of debt, including the Senior Secured Notes issued under its securitization facility and Senior Secured Term Loan.
Sharper Image is a strong and widely recognized brand. The move, however, was in line with Iconix Brand's focus on managing its portfolio and spending resources on businesses that generate significant volume through both direct-to-retail relationships and global networks. Note that Sharper Image is the second brand to be divested in 2016, the other being Badgley Mischka. Iconix Brand sold the rights to Badgley Mischka IP to Titan Industries, Inc. for $16 million cash in March.
Although the company's expects to record a gain from the transaction, it will not be reflected in its fourth-quarter 2016 results. For 2017, the company expects the net impact of the Sharper Image sale and debt repayment to be neutral to earnings.
Notably, the company remains skeptical about its full-year performance as it slashed its sales guidance and reiterated its earnings expectation for 2016 during the third-quarter 2016 conference call. The lowered view was due to delayed timing in some new men's programs and difficult macro conditions in Europe. We also note that headwinds like higher expenses, adjustments related to the financial restatement, and transition costs may also hamper its profitability.
ICONIX BRAND GP Revenue (Quarterly YoY Growth)
ICONIX BRAND GP Revenue (Quarterly YoY Growth) | ICONIX BRAND GP Quote
Estimates for this Zacks Rank #4 (Sell) stock declined over the past 60 days. For 2016 and 2017, estimates have declined 1.77% and 1.82% to $1.11 and $1.08, respectively. Moreover, the company anticipates 2016 and 2017 earnings to decline 16.5% and 3.2% on a year-over-year basis.
Nevertheless, shares of this clothing brand licensing company have outperformed the industry ever since it reported stellar third-quarter 2016 results, wherein earnings surged about 72.7% from the year-ago level mainly on the back of higher operating income and improved margins. Currency favorably impacted sales in the quarter. The stock improved 16.8% in comparison to the Zacks categorized Shoes & Retail Apparel industry's 1.0% growth.
Stocks to Consider
Some better-ranked stocks in the retail/apparel sector are Francesca's Holdings Corporation , Caleres, Inc. (CAL - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) . While Francesca's Holdings sports a Zacks Rank #1 (Strong Buy), Caleres and Deckers Outdoor hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
While Francesca's Holdings has an expected long-term earnings growth of 13.75%, Caleres and Deckers Outdoor have an expected earnings growth of 11.0% and 9.0%, respectively, for the next three to five years.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>