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Iconix Beats, Ups View on Buyout

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Iconix Brand Group, Inc. (ICON - Free Report) posted fourth quarter 2012 adjusted earnings of 41 cents per share, flat compared to the year-ago quarter. The results were ahead of the Zacks Consensus Estimate of 38 cents by 7.8%.

Quarter in Detail

Total revenue in the quarter declined 10.9% year over year to $85.1 million, due to year-over-year decline in the Men’s businesses and transition of the Royal Velvet license. However, revenue surpassed the Zacks Consensus Estimate of $83 million.

On a year-over-year basis, earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased 12.7% to $50.0 million in the fourth quarter.

Iconix exited the quarter with free cash flow of $37.9 million, compared with $43.2 million at the end of the third quarter of 2012. In anticipation of full use of the $200 million share repurchase program which was authorized in October 2011, Iconix has announced a new share repurchase program to repurchase up to $300 million of its common stock over a three-year period.

Full Year 2012 Results

For the full year 2012, Iconix posted adjusted earnings of $1.70 per share, up a penny from the year-ago level. The results were ahead of Zacks Consensus Estimate of $1.66 by 2.4%.

Total revenue in the year declined 4.3% from 2011 to $353.8 million. Revenue also surpassed the Zacks Consensus Estimate of $350 million.

Recent Acquisition

On Feb 20, 2013 Iconix acquired the renowned lifestyle brand Lee Cooper for $72 million in cash through the company's Luxembourg subsidiary, Iconix Luxembourg Holdings Sarl. The acquisition will strengthen its brand portfolio and also help Iconix to expand in important international markets, which now account for 33% of its overall business.

In Feb 2013, Iconix formed a joint venture with Buffalo International ULC to acquire a 51% interest in the latter’s Buffalo David Bitton brand for $76.5 million in cash. According to the deal, Buffalo International will be the core licensee for the joint venture. Iconix will control the joint venture, manage the brand’s operations and expand its retail footprint in the U.S. and Canada.

The brand offers denim, sportswear, activewear, and accessories that are primarily sold through 3000 department stores including Macy's Inc. (M - Free Report) and Dillard's Inc (DDS - Free Report) and specialty store locations in over 18 countries around the world. It also has 30 standalone retail stores, mainly in Canada.

Again, in early-Dec 2012, the company added sports apparel and footwear brand, Umbro from its peer Nike Inc. (NKE - Free Report) to further strengthen its diversified portfolio.


To account for the effect of the acquisition of Lee Cooper, Iconix raised its 2013 adjusted earnings guidance to $2.05-$2.15 from the previously announced range of $2.00-$2.10. Iconix also raised its revenue guidance to $425-$435 million from $415-$425 million. Currently the stock carries a Zacks Rank #3 (Hold).

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