Iconix Brand Group: Q1 revenue declines 17 percent

For the first quarter of 2018, Iconix Brand Group, Inc. reported total revenue of 48.5 million dollars, a 17 percent decline compared to 58.7 million dollars in the prior year quarter. Adoption of the new revenue recognition accounting standard decreased Q1 revenue by approximately 1.9 million dollars but the company said, it is expected to increase full-year 2018 revenue by approximately 2.5 to 3 million dollars.

Commenting on the first quarter results, John Haugh, CEO of Iconix said in a media release: "Following intense focus on our balance sheet resulting in the successful resolution of all near term debt obligations, we are excited to speak with the investor community to discuss progress on our growth initiatives. During the quarter, we launched Umbro with Target. We have demonstrated our ability to successfully reposition some of our core brands. We are thus maintaining our revenue and free cash flow guidance for the year."

Review of Iconix’s first quarter results

The company said, decline in sales was expected principally as a result of the transition of Danskin, Ocean Pacific and Mossimo DTR's in the women's segment. And revenue in the first quarter of 2017 included approximately 1 million dollars of licensing revenue from the company's Southeast Asia joint venture, which was deconsolidated in the second quarter of 2017. Excluding Southeast Asia, revenue declined approximately 16% for the first quarter of 2018.

Operating income for the quarter was 20.5 million dollars compared to 33.6 million dollars last year’s first quarter. Operating margin was 42 percent compared to 58 percent in the first quarter 2017. However, when excluding special charges, operating income was 25.8 million dollars and 35.8 million dollars in 2018 and 2017, respectively, and operating margin was 53 percent and 61 percent in 2018 and 2017, respectively.

GAAP net income from continuing operations, the company added, reflects income of 32.7 million dollars compared to 4.4 million dollars in the first quarter of 2017. GAAP diluted EPS from continuing operations reflects income of 0.51 dollar compared to 0.06 dollar in the first quarter of 2017.

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Iconix reiterates 2018 guidance

Reaffirming its previously announced full year revenue guidance of 190 million dollars to 220 million dollars, Iconix said, the company is on track to deliver approximately 12 million dollars of full year cost-savings, aligning expenses with revenue base.

Previous GAAP net income guidance of approximately 7 million dollars to 17 million dollars, has been increased to 17 million dollars to 27 million dollars due to the Q1 gain on extinguishment of debt and the elimination of non-cash interest expense related to our 5.75 percent convertible notes. The company is reiterating non-GAAP net income guidance of 20 million dollars to 30 million dollars.

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