Iconix Brand Group Is Open to Selling Itself as It Looks to Tidy Balance Sheet

Iconix Brand Group Inc. has opened itself up to a sale.

The New York-based brand management house, parent to brands such as Rocawear, Pony, Danskin and Joe Boxer, informed the Securities and Exchange Commission on Monday that it is considering a potential sale of the company, or a merger. In a bid to shore up cash, the company had already reached agreements to sell off the Umbro China and Starter China businesses, deals worth $62.5 million and $16 million, respectively.

Iconix is also exploring other strategic alternatives including recapitalization of its existing capital structure, refinancing or a stock share.

“We are confident in the company’s strategy to continue to de-lever its balance sheet and rationalize our cost structure. While we have undertaken a number of actions toward positioning the company to drive growth and preserve operating leverage to achieve sustainable market leadership in the brand management sector, including recent asset sales, after careful consideration, our board has determined that it is prudent at this time to undertake a broader strategic review in order to ensure that all available alternatives for the company are being evaluated to maximize value for our shareholders,” said CEO and board member Bob Galvin in a statement. “As the board conducts its review, we remain focused on executing on our strategy and continuing day-to-day operations as usual.”

As of now, Iconix has not set a timetable to conclude its review of strategic alternatives.

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Like others in the fashion and footwear space, Iconix has faced increased challenges stemming from COVID-19. In its earnings report for the first quarter ended March 31, the company said the pandemic has had a “meaningful” impact on its performance. What’s more, the firm said it had “substantial” doubt regarding its ability to continue going forward, suggesting it could be forced to either file for bankruptcy and/or liquidate.

At the end of Q1, the group had a debt load of $644.7 million, with assets of $465.3 million and annual pre-tax revenues of $141 million. As of Monday, Iconix’s market capitalization sat at just $9.3 million, with shares closing at just 78 cents.

Months of government-mandated store closures and decreases in discretionary spending have brought significant difficulties for brands across the fashion and footwear space. Since May, numerous boldface names have filed for Chapter 11 protection, among them J.Crew, JCPenney and Neiman Marcus. On Monday, RTW Retailwinds, parent to New York & Co., joined the bankruptcy fray, filing a Chapter 11 petition in U.S. Bankruptcy Court for New Jersey.

 

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