Iconix Brand Group’s shares fell more than 20 percent today following the announcement of COO Seth Horowitz’s resignation late Friday evening.
After just one year in the COO spot — Horowitz assumed the position in March 2014 — the company said he tendered his resignation on April 13, 2015.
In a U.S. Securities & Exchange Commission document filed after the bell Friday, the parent company of Candies, Ecko Unlimited and Rocawear said it does not intend to seek a new COO at this time and that Horowitz’s responsibilities are being assumed by the broader Iconix team.
Horowitz’s departure comes two weeks after CFO Jeff Lupinacci’s departure on March 24 — leading to analysts’ speculation about the company’s managerial structure.
“The sudden departure of another senior management member in the last few weeks, as well as last few years, is dismaying, to say the least,” said CL King & Associates analyst Steven Marotta in a note this morning. “Chronic instability at the epicenter of power is most decidedly not in shareholders’ best interest, nor, obviously, a merit to our investment thesis.”
Nomura Securities analyst Robert Drbul wrote in a note last Friday that he does not think the two C-suite departures are related, adding that he “[looks] forward to additional color at the company’s 1Q earnings release in a few weeks.”
At the time of Lupinacci’s departure, the company said it had started a search for his replacement and anticipated filling the position in the near term, and that David Blumberg, EVP and head of strategic development, would assume the CFO duties on an interim basis.
“A combination of the stock being near its 52-week low, a new CFO expected to be named shortly, the near-term Peanuts movie catalyst, as well as an attractive free cash flow yield of 13 percent, keeps us constructive [about the brand],” said Marotta, adding that he reiterates his ‘buy’ rating of the firm’s stock.
An Investigation Is Under Way
Meanwhile, another announcement made today by Los Angeles-based law firm Glancy Binkow & Goldberg LLP is also stirring up chatter. The firm said it is investigating potential claims on behalf of investors in Iconix concerning the “company’s and its officers’ possible violations of federal securities laws.”
“The investigation is focused on recent events and disclosures that demonstrate the company has allegedly overstated its organic growth and engaged in irregular accounting practices regarding booking of its joint venture revenues and profits,” wrote Glancy Binkow & Goldberg LLP in a release. “In addition, the company announced recently the departure of [its CFO] and also announced post-market on April 17, 2015 that its COO has resigned.”
When reached for comment regarding both the resignations and the investigation, a spokesperson for Iconix told FN that the company is currently “in a quiet period and cannot make further comment.”