By  on March 11, 2010

Madonna and Iconix Brand Group Inc. made a big media splash with Wednesday’s unveiling of their joint-venture fashion partnership — but analysts don’t expect the collaboration to create a significant financial return for the parties for at least a few years.

As reported exclusively in WWD Wednesday, Madonna and Iconix have formed a joint venture, MG Icon LLC, to launch multiple fashion-related projects around the world. Among these will be a collaboration with a designer label for an eyewear line and speculation is the collection will be introduced with Dolce & Gabbana. The designers are longtime friends of Madonna’s, and she appears in their latest ad campaign. Iconix, Dolce & Gabbana and Luxottica, the brand’s eyewear licensee, declined comment.

In a Wednesday research note, analyst Todd Slater of Lazard Capital Markets called the Madonna-Iconix deal an “interesting twist” but “not a material game changer” for Iconix’s bottom line in the foreseeable future.

The deal is expected to be earnings per share neutral in 2010 and slightly accretive in 2011.

“Due to up-front costs associated with marketing the Material Girl brand in the first half of 2010, the earnings impact appears to be 2010 neutral, with royalty income offset by investment expense,” Slater noted. Material Girl is a fast-fashion juniors’ label that will launch in 200 Macy’s doors and on in August.

Mimi Bartow, a director at Telsey Advisory Group, said the initial EPS impact would be negligible as the investments Iconix initially sunk into the joint venture, in addition to the marketing expenses necessary to support the launch of Material Girl, will be on par with the royalty minimums Macy’s has pledged for the new line.

“There’s a lot of buzz but the real test will be how the product is executed and the consumer response to Material Girl,” said Bartow. “It will be interesting to see if this demographic responds to the brand. It’s still very early to predict, but Iconix has been very successful in the juniors’ zone, with brands like Candie’s and Rampage, as well as working with celebrities like Jay-Z at Rocawear.”

Slater observed that if Material Girl expands to 500 Macy’s doors in 2011 as well as into new categories, like fragrance, as planned, royalties could reach “several million dollars.” However, those royalties would go to the joint venture, and he forecast would add just 3 cents per share to Iconix earnings in 2011. However, he added, “We are not ruling out further accretion as the venture builds out over time.”

Still, Madonna can afford to be patient for MG Icon’s profits to start rolling in. In 2009, she was the fourth-highest-earning celebrity, raking in $110 million — just behind Oprah Winfrey, George Lucas and Steven Spielberg, according to Forbes. Madonna’s most recent “Sticky and Sweet” concert tour, which spanned 2008 to 2009, grossed $408 million and was the most successful tour by a solo artist in history.

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