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.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews