The direct-to-retail business is taking a bigger slice of the pie at Iconix Brand Group Inc.
Analysts said the company’s move to ink more exclusive deals with retailers such as Macy’s and Sears is a sound strategy for growth. Iconix saw double-digit gains in almost all its direct-to-retail brands in the second quarter, the company said last Tuesday.
Two of its Walmart lines, Danskin and Starter, have continued to gain market share, while sales of the Candie’s brand at Kohl’s, a partnership in its sixth year, were “up substantially,” the company said in a conference call with analysts.
And there is more to come from the company.
Iconix’s Material Girl collection with Madonna will launch exclusively in 200 select Macy’s stores across the country and on Macys.com on Aug. 3 for the back-to-school season.
“The retailer creates the line, but Iconix gives it that sizzle,” said Eric Beder, analyst at Brean Murray, Carret & Co. “Material Girl has cemented the Iconix-Macy’s overall relationship and serves as a springboard for other things. This collection is more about her daughter, but I wouldn’t be surprised to see a Madonna-branded line in 2011.”
Iconix also recently renewed its license with Sears and Kmart for the Joe Boxer brand for the sixth time — a move that CFO Warren Clamen said “further demonstrates the power of our direct-to-retail model, which offers our partners strong national brands at private-label economics.”
The company also is eyeing “major international expansion,” said Iconix Chairman and CEO Neil Cole. The firm reported that global business tripled in the past year and now represents 18 percent of its total revenue, compared with 6 percent in 2009.
Cole said he is particularly optimistic about opportunities in China. He expects to see monetization of equity stakes in joint ventures there starting in the next 12 to 18 months, and is working on IPOs in China for two businesses — Rampage and London Fog — possibly as early as next summer. Cole said each of the company’s 27 brands could ultimately be established in the country under the Iconix China joint venture and then be taken public.
Iconix reported last Tuesday that second-quarter profits rose 27 percent, as an increase in revenues boosted the bottom line.
Net income attributable to the firm rose to $24.5 million, or 33 cents a diluted share, from $19.3 million, or 30 cents, a year earlier. Adjusting results to exclude non-cash interest related to convertible debt, profits of 36 cents a share came in a couple of pennies better than analysts predicted.
Revenues for the three months ended June 30 were up 35 percent to $76 million, from $56.4 million a year earlier.