Iconix Puts Itself Up For Sale
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Joe Boxer, London Fog, Ocean Pacific, Rocawear, Zoo York, Danskin and the rest of Iconix Brand Group Inc. are now officially on the block.
The New York-based brand house was already selling off businesses, including a $62.5 million deal to sell the Umbro China business and a $16 million agreement for Starter China.
But now it’s considering going all the way.
The company’s board “authorized management and its external advisers to consider a broader range of strategic alternatives, including a potential sale of the company,” according to a filing with the Securities and Exchange Commission on Monday. Iconix could also pursue a merger, a recapitalization, a refinancing, stock sales and more.
“We are confident in the company’s strategy to continue to delever its balance sheet and rationalize our cost structure,” said Bob Galvin, chief executive officer and board member. “While we have undertaken a number of actions toward positioning the company to drive growth and preserve operating leverage to achieve sustainable market leadership in the brand management sector, including recent asset sales, after careful consideration, our board has determined that it is prudent at this time to undertake a broader strategic review.”
Iconix ended the first quarter on March 31 with total debt of $645 million, on annual revenues of $141 million and earnings before interest, taxes, depreciation and amortization of $64 million, according to S&P Capital IQ.
That debt load is mismatched with the firm’s market capitalization, which stood at $9.3 million on Monday, as the stock fell 7.5 percent to 78 cents.
Investors, though, clearly think they can get their money’s worth in a sale and the stock traded up 41 percent to $1.10 following the aftermarket news of a sale process. Iconix retained Ducera Partners as a financial adviser, which will work with the company’s legal counsel Dechert on the review.
The firm plans to continue to operate its day-to-day operations as usual.
Iconix pioneered the brand management game, buying well-known names and collecting royalties as others made and sold the looks.
If Iconix fell into a funk, the business model is alive and well and going through a kind of golden age right now as competitors, such as Authentic Brands Group, seek to grab more and more brands as companies flail amid the coronavirus slowdown. Authentic, which last year bought Barneys New York and Forever 21, is in the midst of trying to buy Lucky Brand and Brooks Brothers out of bankruptcy.
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