NEW YORK — Recently acquired brands such as Joe Boxer and Mudd helped drive triple-digit earnings and revenue gains for Iconix Brand Group in the second quarter.
For the three months ended June 30, the New York-based licensing firm reported a 232.3 percent rise in earnings to $8.3 million, or 19 cents a diluted share, compared with earnings of $2.5 million, or 8 cents, in the same period a year ago.
Revenues increased 329.4 percent to $18.4 million from $4.3 million, fueled by strong sales of the Candie’s, Joe Boxer and Mudd brands.
“I am more optimistic than ever about our prospects,” said Neil Cole, chairman and chief executive officer, during a conference call, citing strong sales from most of the company’s brands and the potential for acquisitions in an array of markets. “Our core business is healthy and growing, our deal flow is stronger and more diverse than ever and is gaining momentum.”
Mudd, acquired in April, and Joe Boxer, acquired in July 2005, have become the largest contributors to Iconix’s revenues. According to Warren Clamen, chief financial officer, the Joe Boxer brand accounted for approximately $5 million in revenue, while Mudd contributed approximately $4.5 million. Candie’s is the third major contributor, accounting for about $4 million in revenue. Joe Boxer is exclusive to Kmart until the end of 2007, while Candie’s will be exclusive to Kohl’s from next year.
Cole pointed to the early success of Mudd during the call. “Top-line revenue in the quarter was helped by better-than-anticipated results in our newly acquired Mudd division, which showed a lot of strength, especially in the core denim business,” said Cole.
The Candie’s business has benefited from expansion with Kohl’s, and the retailer’s plans to increase its store count in the coming years is expected to build momentum. “As we enter our second year with Kohl’s, we are anticipating continued growth from comparable-store increases in existing categories, as well as growth from a larger store base as Kohl’s continues to aggressively open new stores,” said Cole.
The lone weak spot for the company has been the Bongo brand. Management expects to reveal a new licensee for the brand within the next 30 to 60 days. The current Bongo licensee, said Cole, “was definitely not performing and not doing a good job.” The Bongo jeans license was held by Bongo Apparel Inc., an affiliate of TKO Apparel Licensing.
Iconix had intended to close on its acquisition of Mossimo by July, but has experienced delays as the Securities and Exchange Commission reviews the sale. Management now expects the deal to close by September and is optimistic that it will complete another acquisition this year. “We’re really seeing a lot of very interesting, exciting deals, more than we ever have,” said Cole. Management is looking beyond traditional fashion and apparel brands to brands in the home and sporting goods market. In fact, half of the potential acquisitions being looked at are “outside of fashion,” according to Cole.
For the first half of the year, earnings spiked 376.1 percent to $15.7 million, or 37 cents a share, from $3.3 million, or 11 cents, in the year-ago period. Revenues increased 268.9 percent to $31.7 million from $8.6 million.
Despite the robust results, shares took a hit on Wall Street, falling 8 percent to close at $13.23 on Thursday.