Tags: Iconix | Brand | breaks | ICON

Iconix Brand Group Breaks the Mold

By    |   Tuesday, 13 Dec 2011 12:55 PM

The Iconix Brand Group (ICON) owns a stable of well-known consumer brands, yet manufactures nothing. The company breaks the traditional mold, profiting from its brands through a non-traditional business model. The result has been an impressive record of growth.

As of the end of 2011, Iconix owned 28 retail brands, primarily in fashion but including household and character brands. Owned brands include Danskin, London Fog, Bongo, Mossimo and Joe Boxer. Iconix does not design, manufacture, distribute or sell any products under the brand names it owns. The company licenses the use of the brands to other companies and focuses on the marketing and PR of the brands, plus trend directions. Iconix brands are licensed by companies at all levels of retail, from Walmart to Bloomingdale's.

For the first nine months of 2011, Iconix reported revenue of $274 million, up 12 percent from $244 million. On the amount of revenue year-to-date, the company generated free cash flow of $134 million.

Non-GAAP net income for the three quarters was $1.27 per share, up from $1.12. For the full year 2011, Iconix is forecast to earn $1.66 per share, compared to $1.44 in 2010. The estimated earnings for 2012 is $1.85. The royalty-based business model gives a very high level of visibility to future earnings, up to one year or longer into the future.

Acquisitions

Iconix has increased annual revenue almost tenfold and net income by a factor of four since 2005 through a strategy of buying up brands and generating growth in those brands through promotion. Sixteen brands have been acquired since 2005. The most recent purchases are the Peanuts brand in 2010 and the Sharper Image brand in the third quarter of 2011, the company's first foray into consumer electronics.

Future growth is based on how well the company applies its marketing model to the new brands plus continued acquisitions into the portfolio. At just over a $1 billion market cap, Iconix remains in the small cap category, with plenty of room for growth.

Only a half dozen Wall Street firms follow ICON and recently the analysts at Citigroup initiated coverage on the stock with a buy rating.

The company reports next on Jan. 26.

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The Iconix Brand Group (ICON) owns a stable of well-known consumer brands, yet manufactures nothing. The company breaks the traditional mold, profiting from its brands through a non-traditional business model. The result has been an impressive record of growth. As of the...
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Tuesday, 13 Dec 2011 12:55 PM
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