Iconix Brands Group Inc. is cutting costs and signing dozens of new deals to boost its business but is still digging out from under its debt load.
“We have finalized our review of business and operational goals and objectives and we have put our plan into effect,” said Bob Galvin, chief executive officer since October. “As a result, we have reduced our operational cost structure by approximately $30 million to align with our plan. On the business front, the quarter was negatively impacted by the Sears bankruptcy, while our international business continued to demonstrate strong growth. We continue to build the pipeline of our future business, as we have signed 83 deals over the last six months for aggregate guaranteed minimum royalties of approximately $45 million through the life of the agreements for the next several years.”
But Iconix ended the year with total debt of $764.6 million and last year paid interest expense of $59.2 million — meaning that nearly one of every three dollars coming in from licensing revenues went to creditors to maintain loans.
For the fourth quarter, Iconix’s net losses tallied $69.1 million, down from earnings of $24.1 million a year earlier. Licensing revenues fell 18.3 percent to $42.7 million for the quarter ended Dec. 31. For the full year, Iconix posted net losses totaled $100.5 million, an improvement from 2017 losses of $489.3 million, while revenues fell 16.9 percent to $187.7 million.
The revenue decline was expected and principally due to transition of the firm’s Danskin, OP and Mossimo licenses.
Also hitting the top line last year was the impact of Sears Holdings Corp.’s bankruptcy on its Joe Boxer and Bongo brands in women’s and the Cannon brand in home.
The men’s business was a bright spot for the fourth quarter, with revenues rising 38 percent on the back of the Umbro, Ecko and Buffalo brands, although the segment’s revenues dropped 2 percent for the year as Starter switched from Walmart to Amazon.
Shares of Iconix fell 12.6 percent to $1.73 Wednesday morning, chipping away at the stock price that this month was readjusted with a one-for-10 reverse stock split.