Iconix Brand Group INC. has acquired the worldwide master license for the Ed Hardy brand for $55 million plus a $7 million earn-out, and in the process has upped its ownership stake in the brand to 85 percent.
The company acquired the license from Nervous Tattoo, which is owned by designer Christian Audigier. Under the terms of the deal, Nervous Tattoo will continue as a licensee for Ed Hardy T-shirts, hats and hoodies, and will prepay $7 million in royalties under its license.
In May 2009, Iconix acquired a 50 percent stake in Hardy Way, owner of the Ed Hardy trademarks, for $17 million. Tattoo artist Don Ed Hardy still owns a 15 percent minority stake.
Neil Cole, chairman and chief executive officer, said in a call to Wall Street after posting first-quarter earnings results, “Ed Hardy is a brand with worldwide recognition and a strong and growing international business. Today it is sold in over 43 countries, over 39 product categories.…We also hope to leverage its broad licensing platform to extend some of our existing brands into new categories.”
In an interview, Cole said the brand has a diverse group of licensees such as in automotive, air fresheners, wine and vodka. And while international is where the growth opportunities are, Iconix’s initial focus will be on stabilizing the business and fine-tuning its distribution. For growth, he sees cosmetics as a possibility and a “huge opportunity in regular apparel, if it’s done tastefully and the brand is redirected.”
The company said first-quarter income spiked 26.9 percent to $31.4 million, or 42 cents a diluted share, from $24.8 million, or 33 cents, in the year-ago quarter. Total revenues, primarily from licensing income, gained 28.8 percent to $92.4 million from $71.7 million.
Cole said the firm continues to be acquisitive, and is eyeing intellectual properties worldwide. “We are looking to bring Iconix’s businesses around the world and bring [any acquired] brands worldwide, such as India, the Middle East and Russia,” he said.
He added business in general is showing signs of improvement.
The company increased its full-year 2011 diluted earnings per share guidance to between $1.50 and $1.55 from $1.40 to $1.45, reflecting first-quarter performance and the Ed Hardy transaction.
Shares of Iconix rose 3.4 percent, or 77 cents, to close at $23.28 in over-the-counter trading on Wednesday.