Not just yet. That was the answer from Iconix Brand Group Inc. chief executive officer John Haugh, who said the company has identified opportunities for growth but that Wall Street will have to wait until the fall to find out what they are.
Haugh gave a hint of what’s to come as the brand management firm posted second-quarter results that bested Wall Street’s consensus EPS estimates.
For the three months ended June 30, net income fell 15.7 percent to $11.6 million, or 23 cents a diluted share, from $13.7 million, or 28 cents, a year ago. On an adjusted basis, EPS was 27 cents, three cents better than Wall Street’s estimate. Licensing revenues slipped 1.7 percent to $95.7 million from $97.4 million. The year-ago quarter included $1.5 million of licensing revenue from Badgley Mischka, which the firm sold in the first quarter of 2016. Wall Street was expecting EPS of 23 cents on revenues of $95.2 million.
By segment, licensing revenue in its women’s brands slipped 3.3 percent to $36.5 million, while men’s decreased by 15.6 percent to $22.1 million.
For the six months, net income fell 61.8 percent to $30.2 million, or 60 cents a diluted share, on a 1.5 percent decline in licensing revenues to $190.4 million.
Haugh said in a conference call to Wall Street, “Our primary goal is to position ourselves to achieve growth while at the same time improving the balance sheet, and we are making progress on both of those fronts.”
Haugh, who joined the company in February as president and ascended to the ceo post in April, said that since the company’s last call when it posted first-quarter results, “we have conducted a broad strategic review of our company, our brands and the overall market. We have identified a number of opportunities that we believe will drive long-term growth, both in the U.S. and around the world. This will include creating new revenue opportunities as well as building on our existing partnerships.”
He added that “strong relationships are critical to our success,” and that the company is “committed to being active brand managers and supporting our brands with the necessary tools to drive growth. You can expect to hear much more detail about these plans at our Investor Day in the fall.”
The ceo noted that the balance sheet is in a “better position than it was a few months ago,” due to the refinancing of the 2016 convertible notes and the repurchasing of a portion of its 2018 convertible notes.
On the call, Haugh also noted that Danskin “has been a standout for us with a strong activewear business at Wal-Mart across all categories including women’s, girls’, footwear and intimates.” He also said Material Girl has a strong and growing activewear business at Macy’s that will be expanding to include plus sizes this fall. In men’s, the ceo told analysts the company continues with its work turning around the business and that “we still have much work to do.” The new men’s core Ecko license is expected to achieve a 30 percent year-over-year increase in U.S. net sales for 2016, he said.
The company updated its 2016 guidance to reflect certain recent transactions, such as its sale of the company’s stake in the Ed Hardy brand in China. The company now expects diluted EPS of between 93 cents and $1.08, on a licensing revenue range of $370 million to $390 million. That compares with prior guidance of EPS at between 71 cents to 86 cents, on licensing revenue expectations of $370 million to $390 million.
Shares of Iconix fell 3.9 percent to close at $6.58 in Nasdaq trading. The company reported second-quarter results after the equity markets ended their trading sessions.