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Iconix Posts Double-Digit Q2 Net Increase

CEO says cash will be used for growth and acquisitions.

Shares of Iconix Brand Group Inc. vaulted more than 10 percent Tuesday after the owner and licensor of fashion brands, including Candie’s and Joe Boxer, matched Wall Street’s expectations with an 11.3 percent jump in second-quarter profits.

This story first appeared in the August 6, 2008 issue of WWD.  Subscribe Today.

For the quarter ended June 30, the New York-based company reported net income of $16.5 million, or 27 cents a diluted share, compared with $14.8 million, or 24 cents a diluted share, in the year-ago period. Revenue for the quarter, all derived from licensing, increased 32.3 percent to $51.7 million, versus $39.1 million.

Analysts forecast earnings of 27 cents a share on revenue of $53.2 million, according to Yahoo Finance.

Shares of the New York-based company closed at $13.45, up $1.27, or 10.4 percent.

“We really believe we’re in the beginning of” a period of growth, chairman and chief executive officer Neil Cole said, adding that strong cash flow is key. Despite “a challenging retail and economic environment…I am confident that we will continue to execute our plan for the remainder of the year.”

Iconix posted a cash flow of $26.3 million for the quarter versus year-ago cash flow of $25.8 million, a 1.9 percent increase. Cole said the company has no plans to repurchase shares, but will “stockpile” its cash to continue to grow both organically and through acquisitions.

Part of this strategy includes initiatives such as a launch of three of the company’s brands — OP, Starter and Danskin Now — at Wal-Mart stores and the debut of Cannon at Sears and Kmart. The company also said recently that it would expand five of its brands internationally, including London Fog, Joe Boxer and Rocawear.

“London Fog has really been one of our great launches,” said Cole, who added that Iconix will begin rolling out the brand to a broader range of retailers. London Fog now has business with stores such as Nordstrom, Dillard’s and Belk.

Profits for the six months jumped 26 percent to $34.7 million, or 57 cents a diluted share, from $27.5 million, or 45 cents, last year. Revenues gained 53.6 percent to $107.4 million, from $69.9 million.

Iconix reaffirmed 2008 guidance for revenue in a range of $215 million to $220 million and diluted earnings per share of $1.15 to $1.20. Cash flow for the year is expected in the range of $166 million to $119 million.

Analysts on average anticipate earnings of $1.17 on revenues of $220.2 million.