Marc Ecko may be close to finding a new partner in Iconix Brand Group Inc.
After months of speculation, a possible deal was in the works between Marc Ecko Enterprises Inc. and Iconix. Sources said the two firms are close to signing an agreement, and it could happen as early as today.
The deal would give the marketing and licensing firm, which generates about $8 billion in annual retail sales, the rights to the Ecko brand and its trademarks. The deal also could help Ecko pay down significant debt owed to a group of lenders headed by CIT, as well as trade receivables owed to its sourcing agent, Li & Fung Ltd. Ecko hired investment bank Peter J. Solomon in November to assess and facilitate these strategic options.
Iconix executives could not be reached for comment and an Ecko executive declined comment on Monday.
At a company barbecue for employees on Sept. 24, hosted by chief executive officer Seth Gerszberg at his home in Highland Park, N.J., Marc Ecko explained to WWD that the debt was racked up prior to the financial crisis of 2008, when leverage was almost considered a badge of honor.
“Now, leverage is a hot potato,” Ecko said of the changed financial environment and the tougher lending requirements that have forced the company to seek ways to reduce its debt load.
“We want to have less debt and be more nimble,” explained Gerszberg.
However, both Ecko and Gerszberg were adamant at the barbecue that they would not sell a majority stake in the Ecko brand. “We would never give up control of the intellectual property in Ecko,” said Ecko. “We’ve built this company up over 16 years.”
If the Ecko brand is sold, it would mark a stark about-face on that stance by Ecko and Gerszberg. At press time, it was unclear if Iconix would buy only a minority stake in the Ecko brand or signing a long-term license agreement.
Marc Ecko Enterprises was founded in 1993 by Gerszberg, chief creative officer Ecko and Marci Tapper, president of Zoo York and Ecko’s twin sister.
Until this point, in order to raise funds, Ecko and Gerszberg have unloaded several noncore properties. In June, the company sold its $50 million Avirex young men’s brand to Kids Headquarters, the longtime children’s licensee of the Ecko Unltd. brand and the former children’s licensee for Avirex.
Earlier that month, it also sold its Marc Ecko watch trademarks to Timex Corp. The Middlebury, Conn.-based watchmaker had been the brand’s watch licensee since 2002.
In cost-cutting moves, the company this year shuttered nine Zoo York stores, as well as several Marc Ecko Cut & Sew stores that were not turning a profit. The company abandoned long-held plans to open a large Manhattan flagship on 42nd Street near Times Square, which was kept as an empty shell or under construction for more than three years.
As of June, the company still operated nine Marc Ecko Cut & Sew units and 73 Ecko Unltd. mall-based stores.
In a company memo to employees in April, Gerszberg and Ecko explained: “The market has made it clear to us that each of our individual businesses is worth more on a stand-alone basis than combined. Accordingly, we are working to decentralize the businesses of Marc Ecko Enterprises. We want to ensure that the difficult environment does not ultimately impede the continued growth and development of any business unit.…Each brand should be aligned with the strategic or financial partners that will optimize its future growth and opportunities.”
On the growth front, this month, the brand’s first men’s fragrance hit department store counters via licensee Parlux. In September, it introduced a new contemporary label called Marc Ecko Rx to retailers at the Project trade show.
Last winter, the company relaunched its junior Ecko Red brand with licensee Icer Brands. The move came after several previous incarnations in the category — it was licensed to Paul Davril Inc. from September 2004 until early 2007, then taken back in-house and relaunched as Red by Marc Ecko in fall 2007. In December 2008, the Ecko Red brand was brought back to life as a junior label licensed to the New York-based Icer Brands.
Apart from its apparel businesses, Marc Ecko Enterprises’ other holdings include Complex magazine and Marc Ecko Games, a video game developer. On its Web site, the company claimed total retail sales of $1.5 billion in 2007.
With the potential acquisition of Ecko, Iconix would add its 18th brand into a portfolio that includes Candie’s, Rocawear, Mudd, Rampage, Badgley Mischka, London Fog and Op. In May, Iconix acquired 50 percent of the Ed Hardy brand, having paid $17 million for its half, comprising $9 million in cash and $8 million in stock.
This latest acquisition for Iconix would come just after the firm cut its earnings outlook for the year, prompting a sell-off that drove the stock down 21.1 percent to $12.47. The company said 2009 earnings would range from $1.06 to $1.11 a diluted share instead of the $1.16 to $1.21 previously projected. The estimate reflects a dilution of 12 cents a share related to a June offering of 10.7 million shares and a negative impact of 4 cents from the transition of the Rocawear women’s business to a new licensee. Revenues are slated to range from $215 million to $220 million, instead of the $223 million to $230 million previously projected.
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews