Iconix Brand Group is considering "strategic alternatives" for its business, including a potential sale, according to a document filed with the Securities and Exchange Commission. The company owns, markets and licenses a number of apparel companies including Ed Hardy, Starter, Umbro, Rocawear, Joe Boxer, London Fog and Material Girl.
The company is also considering other paths, including a potential merger, refinancing and recapitalization, according to the filing. Iconix is working with Ducera Partners as a financial adviser and its existing legal counsel, Dechert LLP, to explore its options.
The licensing company recently entered into definitive agreements to sell the rights to its Umbro and Starter brands in China, according to the filing. Starter China was sold in June for $16 million.
Iconix doesn't know the timeframe regarding its next steps.
The New York-based company stated that it will not disclose developments surrounding its search for strategic alternatives unless its board approves a "specific transaction or course of action," according to the filing.
"[O]ur 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," CEO Bob Galvin said in a statement.
The company had past success by tapping into trends that were backed by celebrities, including Madonna's Material Girl line, tattoo artist Don Ed Hardy's namesake brand, and Damon Dash's and Jay-Z's Rocawear. Recent years, though, have seen shifts in consumer spending regarding clothing, including a drop in apparel spend, a number of bankruptcies by specialty retailers and struggles within the department store sector — a segment of the industry where Iconix has been a steady supplier.
As a wholesaler, Iconix took a hit in 2018 when Sears filed for bankruptcy. Its Mossimo brand was edged out of Target in 2017 when the big-box retailer sharpened its focus on private label apparel. That same year, Walmart announced that it would not renew its brand license with Danskin.
Apparel in particular has experienced a tremendous sales impact due to the pandemic, which has acted as an accelerator in dragging down companies that were already struggling. In May, brand collective Centric Brands, which licenses for labels including Calvin Klein, Tommy Hilfiger and Nautica, filed for Chapter 11 bankruptcy protection as it too contended with the decline of department stores and the impact of COVID-19.