Iconix Up in Q1, Collects Peanuts

BOSTON — Iconix Brand Group Inc. started 2010 off with a bang, as first quarter net profits surged 53 percent. And the firm is expecting more of the same as the year progresses.

Iconix also said that with the iconic Peanuts brands soon to be included in its portfolio, thanks to a $175 million acquisition announced last week, its multibrand strategy will continue to pay off, especially amid a healing economy.

Neil Cole, Iconix chairman and CEO, said on the firm’s post-earnings conference call that there is “no doubt” the economy is in a recovery.

“The consumer that was worried about losing their job is no [longer] a worry, and they are spending money. And people have been saving for about a year or year-and-a-half and living under fear of losing their jobs. So the consumer is slowly coming back, and actually, you could argue, not so slowly. The last two months have been pretty incredible,” he said.

He added, however, that Iconix is “planning conservatively” in case the recovery does not continue.

The New York-based firm lifted its full-year 2010 revenue estimate to $305 million to $315 million — assuming $35 million to $40 million from the Peanuts acquisition — up from a prior estimate for $260 million to $270 million. The firm also expects earnings per share of $1.23 to $1.28, versus a prior forecast for $1.13 to $1.18.

Regarding Peanuts, Iconix said it has formed a new subsidiary, which will be 80 percent owned by Iconix and 20 percent by the Schulz family, to acquire the brand and other assets from United Features Syndicate Inc. and E.W. Scripps Co.

According to Iconix, the Peanuts brand generates retail sales of $2 billion a year and is licensed in more than 40 countries. Once completed, the Peanuts buy should add $75 million to Iconix’s annual royalty revenues and as much as 15 cents to annual EPS.

“We view this as a transforming acquisition for our company and one that moves Iconix well beyond fashion into a true brand management company,” Cole said.

Eric Beder, an analyst with Brean Murray Carret & Co., agreed in a report released last week that the Peanuts buy “is a clear sign to us that the company continues to explore new avenues of growth while diversifying its portfolio; post-transaction, only two-thirds of its revenues will now rely on its fashion brands.”

Iconix reported last Tuesday that first-quarter net income rose to $27 million, or 36 cents a diluted share, compared with earnings of $17.6 million, or 29 cents, a year ago. Licensing and other revenues totaled $71.7 million, up 42 percent from $50.5 million last year.

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