Iconix returns to profit despite 31% decline in revenues

By

Robin Driver

Published
Nov 17, 2020

Iconix Brand Group, Inc., the New York-based owner of brands including Umbro, Lee Cooper and Ecko Unltd, reported Q3 net income of $45.7 million, or $1.51 per share, on Monday, swinging back into profit despite the negative impact of the Covid-19 pandemic on its revenues. In the prior-year period, Iconix posted a net loss of $35.7 million, or $3.07 per share.

 
The company’s revenues in the third quarter ended September 30, 2020, suffered a 31% year-over-year decline, falling from $35.5 million to $24.5 million. According to Iconix, this decrease was largely due to the effects of the coronavirus crisis on the global economy.
 
The group’s women’s segment posted the largest quarterly decline in revenues, reporting a 43% year-over-year decrease from $10.3 million to $5.9 million. This decline primarily reflected falling licensing revenue from the company’s Mudd and Joe Boxer brands.

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Revenues in Iconix’s men’s segment decreased 28% to $5.7 million, dragged down by falling licensing revenues from the Buffalo and Umbro brands, while the company’s international segment had particular issues in Latin America and Europe, ultimately reporting a 32% decline in its revenues, which totaled $9.4 million.
 
Driven by an increase in licensing revenues from the Charisma brand, the group’s home segment actually posted a 2% increase in its quarterly revenues, which came to $3.5 million, compared to $3.4 million in the same period in the previous year.
 
Over the course of the third quarter, Iconix also completed the sales of its Chinese subsidiaries, Umbro China Ltd. and Starter China Ltd., which resulted in gains of $59.6 million and $14.5 million, respectively.
 
On top of this, the company successfully cut its quarterly selling, general and administrative expenses by 62% year over year, having achieved reductions in professional fees, advertising costs and compensation expense.
 
“As we continue to navigate through the pandemic and the resulting economic conditions, the well-being of our employees, licensees and communities remains at the forefront,” commented Iconix CEO Bob Galvin in a release.
 
“We have remained focused on building our pipeline of future business, as a result, we have signed 148 deals during 2020 for aggregate guaranteed minimum royalties of approximately $90 million,” he added. “Moving forward, we will remain flexible to respond to changes in the economic and retail environments.”
 
Year to date, Iconix reported revenues of $74.7 million, down 29% from $105.8 million in the same period in the previous year.
 
Due to the ongoing uncertainty surrounding the Covid-19 pandemic, Iconix did not provide financial guidance for the fourth quarter or the full fiscal year.