Iconix brand conglomerate reviewing debt
Iconix Brand Group, grappling with losses and a share price dive to below $1, is working to trim expenses and pay down debt that is coming due, executives told analysts on Wednesday, according to a transcript from Seeking Alpha.
Advised by Guggenheim Partners, the company is working with its bankers and after this quarter will begin speaking with investors, CFO David Jones said on the call. Iconix's debt balance at the end of the second quarter was $789 million, down $15 million from the first quarter.
The company's brands include: Candie's, Bongo, Joe Boxer, Mudd, Mossimo, London Fog, Ocean Pacific, Danskin, Cannon, Royal Velvet, Fieldcrest, Starter, Waverly, Zoo York and Umbro, among others. Iconix also has interest in other brands, including Ed Hardy, Buffalo and Pony.
Iconix is vulnerable to the whims and fortunes of its retail partners, and the company has lost some key accounts lately. Executives on Wednesday painted a picture of mixed results through its direct-to-retail operations.
Target, for example, recently ditched the Mossimo label as the company developed its own stable of private label brands. Iconix recorded an impairment charge of $73 million on that trademark, which resulted in an almost $38 million goodwill charge in its women's segment, CEO Peter Cuneo said Wednesday. But sales of its Umbro and Fieldcrest labels are brisk at Target, and new sales of its Starter activewear brand, now exclusively found on Amazon, are also doing well, he said.
Last year, Walmart said it wouldn't renew its Danskin brand license beyond January 2019, which Iconix then said will ding the Danskin royalty revenue by $15.5 million this year. Walmart had also previously ended sales of its Ocean Pacific and Starter brands. The growth of its home business has been negatively impacted by terms of the renewal of the company's Waverly Inspirations contract at Walmart, which no longer includes guaranteed minimums.
Despite struggles with partnerships, the company has plenty of runway, including with some of those brands, executives said. The company is licensing Danskin for socks and headwear categories in department stores, specialty stores and off-price. Ocean Pacific has signed a new license agreement for footwear and accessories starting in spring 2019, and Walmart will continue to sell Danskin Now Girls' Dance items, both in-store and online, Jones said.
The company has tinkered with its portfolio, last year selling off its Peanuts and Strawberry Shortcake brands for $345 million and Sharper Image for around $100 million, which went to pay down debt. The company is also willing to sell off other brands, but executives expressed skepticism Wednesday that any sale would bring the desired return.
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