Iconix Brand Group’s 3Q profit drops 5.1%

Iconix Brand Group Inc., which owns clothing brands such as London Fog, Mossimo and Danskin, said revenue fell 4 percent to $92.7 million from $96.9 million last year. Analysts expected revenue of $88.3 million. Nevertheles,

the owner and licensor of brands like Candie's, Bongo, Badgley Mischka, Joe Boxer and Mossimo, has reaffirmed its full-year guidance after posting a 5.1% drop in third quarter profit.
 
Net income fell to $26 million, or 34 cents per share, from $27.4 million, or 37 cents per share last year. Excluding one-time items, net income was 40 cents per share. Analysts expected net income of 39 cents per share, according to FactSet. It introduced 2012 guidance in line with expectations. Iconix expects adjusted net income of $1.77 to $1.84 per share in the third quarter on revenue of $370 million to $385 million. Analysts expect net income of $1.81 per share on revenue of $384.9 million.

Iconix has been working to diversify its business. The company said recently that it will offer its Royal Velvet brand exclusively with J.C. Penney. In a similar movement, the group revealed it is acquiring the Sharper Image brand for $65.6 million in cash, in an effort to expand into the electronics sector. They also announced that its Board of Directors has authorized a program to repurchase up to $200 million of its common stock. See separate press release for additional details.

"As we look to 2012, we are excited about the many opportunities ahead as we continue to grow our platform through new retail partners, new categories and new geographies. This week we announced two new exciting initiatives including our first DTR with JC Penney for our Royal Velvet brand and our first entry into the consumer electronics market with our acquisition of Sharper Image. With now 28 diverse consumer brands in our portfolio that represent approximately $12 billion in annual retail sales we have come a long way, and looking ahead we are very focused on delivering continued value to our shareholders," summed up Neil Cole, Chairman and CEO of Iconix Brand Group, Inc.  

Third quarter 2010 revenue included approximately $12.5 million related to a contract the Company signed with ABC Network for the Peanuts holiday television specials.

EBITDA attributable to Iconix for the third quarter was approximately $55.3 million, a 6% increase over the prior year quarter. Free cash flow attributable to Iconix for the third quarter was approximately $44.9 million, a 9% increase over the prior year quarter. On a non-GAAP basis, which excludes non-cash interest related to the Company's two convertible notes, net income attributable to Iconix was $30.1 million, a 1% increase over the prior year quarter. Non-GAAP diluted EPS for the third quarter was $0.40 compared to $0.40 in the prior year quarter. GAAP net income attributable to Iconix for the third quarter was approximately $26.0 million compared to $27.4 million in the prior year quarter and GAAP diluted EPS was $0.34 compared to $0.37 in the prior year quarter.

On a GAAP basis, net income attributable to Iconix for the nine month period increased 29% to approximately $98.9 million as compared to the prior year period and GAAP diluted earnings per share was $1.31 versus $1.03 for the prior year period. The company is also reaffirming its full year 2011 revenue guidance of $355-$365 million, its full year 2011 non-GAAP diluted EPS guidance of $1.63-$1.68, its full year 2011 GAAP diluted EPS guidance of $1.61-$1.66 and its full year 2011 free cash flow guidance of $167-$172 million. In the same vein, the group expects Sharper Image to be earnings neutral in 2011 due to timing of the close and transaction costs.