Iconix Brand Group reports 13 percent drop in Q1 sales

For the first quarter of 2017, licensing revenue at Iconix Brand Group was 58.7 million dollars, a 13 percent decline compared to 67.7 million dollars in the prior year quarter. Revenue in the prior year's first quarter included approximately 1.4 million dollars of licensing revenue from the Sharper Image brand and 0.2 million dollars from the Badgley Mischka brand, both of which were sold in 2016. Excluding revenues of these two brands, revenue declined approximately 11 percent.

"I am pleased to say that with the strategic sale of our entertainment segment, we can significantly reduce our debt and pay down a term loan that is expensive and highly restrictive. Further, we believe we can generate the most value and growth for our company with a portfolio that is focused on businesses where we believe we have a leadership position- fashion, active and home,” said John Haugh, CEO of Iconix in a press release.

Operating income drops 27 percent

Operating income in the first quarter was 33.6 million dollars, a 27 percent decline from 46.3 million dollars in the first quarter of 2016. It included 11 million dollars in gains on sales of trademarks primarily related to the sale of the Badgley Mischka brand and approximately 1.3 million dollars of operating income related to the Sharper Image brand for which there was no comparable operating income in 2017. Excluding these items, operating income was down approximately 2 percent.

The company recognized a 5.5 million dollars loss related to the early extinguishment of a portion of the company's term loan that was paid with the proceeds from the sale of the Sharper Image brand. GAAP net income from continuing operations was 4.4 million dollars compared to 14.6 million dollars in the first quarter of 2016. GAAP diluted EPS from continuing operations was 0.06 dollars against approximately 0.29 dollar in the first quarter of 2016.

Non-GAAP net income from continuing operations was 12.3 million dollars, as compared to 23.5 million dollars in the first quarter of 2016. Non-GAAP diluted EPS from continuing operations was 0.21 dollar compared to 0.47 dollar in the first quarter of 2016.

Iconix downgrade FY17 EPS guidance

The company expects full year 2017 revenue to be in a range of approximately 235 million dollars to 245 million dollars. This compares to revenue of approximately 245 dollars million in 2016, when excluding 113 million dollars of revenue from the entertainment segment, and 9.9 million dollars of revenue from other divested brands including Sharper Image.

The company is revising its 2017 GAAP EPS to 0.29 dollar to 0.44 dollar from 0.43 dollar to 0.58 dollar to reflect an additional anticipated loss related to the early extinguisment of debt with existing cash on the balance sheet. Non-GAAP EPS guidance is maintained at 0.70 dollar to 0.85 dollar.

Picture:Iconix Brand Group website