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Iconix Brand (ICON) Sells Badgley Mischka Rights for $16M

Iconix Brand Group, Inc.ICON recently sold its rights to the Badgley Mischka IP in partnership with the brand's founders, Mark Badgley and James Mischka, and the apparel licensee MJCLK LLC. The brand was sold to Titan Industries, Inc. for $16 million in cash. Badgley Mischka was acquired by Iconix in 2004.

Iconix had to divest the brand as it did not have sufficient time or resources to support it. The company expects to allocate the proceeds to other brands with larger volume and higher margin. The company expects to continue to evaluate opportunities to further enhance the portfolio with value-generating brands.

The New York-based company has a portfolio of over 30 brands and expects to continue forming joint ventures to expand it further. This clothing brand licensing company remains optimistic on its Peanuts brand, new promotional partnerships and retail programs.

Notably, Iconix's shares have been losing value since the beginning of 2015. Many law firms have filed a class action lawsuit against Iconix alleging accounting irregularities concerning free-cash flow accounting, organic growth, and gains on licensing fees.

Further, with the departure of Neil Cole, the CEO of the company on Aug 7, soon after the exit of the CFO (Mar 2015) and COO (Apr 2015), investors have, kind of, abandoned the stock. The lowered guidance for the full year signals some serious problems within the company.

In Dec 2015, Iconix Brand announced the receipt of a formal order of investigation from U.S. Securities and Exchange Commission ('SEC') into its accounting treatment for some joint ventures.

The company has also formed a Special Committee of the Board of Directors to conduct a review of the accounting treatment related to certain transactions.

Additionally, as part of the review process, the company would restate its historical financial statements from 2013 through 2016 to correct the accounting errors.

Iconix also reported weak results in the first nine months of 2015. Earnings and sales lagged the respective Zacks Consensus Estimate due to difficult year-over-year comparisons during the time frame. A persistent decline in licensing revenues and absence of "Other revenue" in the quarters hurt results. Following the sluggish results, Iconix lowered the guidance for 2015 due to weak performance in men's fashion, revenue decline and the accounting issues.

Iconix currently has a Zacks Rank #3 (Hold).

A couple of better-ranked stocks in the shoes and apparel industry are Francesca's Holdings Corp. FRAN and Nike, Inc. NKE . Another stock in the broader retail sector is Foot Locker, Inc. FL . All the three stocks hold a Zacks Rank #2 (Buy).

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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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