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Iconix Brand (ICON) Buys Remaining 50% Stake in China JV - Analyst Blog

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Iconix Brand Group Inc.ICON recently acquired the remaining 50% interest in Iconix China from its joint venture partner Novel Fashion Brands Limited, owned by the Chou family, for $56.4 million. The acquisition was financed with $40.4 million cash and $16 million through the company's common stock.

Iconix China was formed in Sep 2008 and has successfully launched nine brands with more than 900 standalone stores, shop-in-shops and counters throughout China.

China has significant growth opportunities. Besides the above joint venture, Iconix's business strengthened in China through its three global brands, Peanuts, Umbro and Lee Cooper. The Peanuts brand has a strong diversified global licensing platform with over 700 licensing agreements, which position it well for strong growth in 2015 and 2016.

Additionally, in 2014, the company signed a joint venture with Global Brands Group (which is a spin-off of Li & Fung) and is experiencing solid gains in both the top line and equity earnings. In fact, Iconix is expected to get significant revenues from this joint venture in China through its brands Lee Cooper (acquired in Feb 2013) and Umbro (acquired in Dec 2012).

Overall, Iconix's overall growth story looks compelling as this clothing brand company has been aggressively acquiring brands and entering into joint ventures to expand its portfolio. Last month, the company acquired the remaining 50% interest in Iconix Latin America. With this acquisition, Iconix's royalty revenues increased fourfold in the Latin American region, particularly in Brazil, Mexico, Chile and across Central America.

Besides Latin America, the company has formed seven international joint ventures since 2008. The company expects the international business to grow in double-digits and over 40% of the total business in 2015 as it continues to leverage its existing joint ventures, pursue new direct-to-retail ('DTR') opportunities and establish new partnerships.

Iconix holds a Zacks Rank #2 (Buy).

Other better-ranked stocks in the same apparel industry include Rocky Brands, Inc. RCKY and Skechers USA Inc. SKX , both of them sporting a Zacks Rank #1 (Strong Buy). Another retailer Citi Trends, Inc. CTRN holds a Zacks Rank #2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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