Clothing brand licensing company Iconix Brand Group Inc (ICON) has acquired the remaining 49% interest in IP Holdings Unltd LLC ("IPHU") for $45 million in cash. IP Holding, through its subsidiary, manufactures and markets fashion and lifestyle products in the United States and internationally and owns brands such as Ecko Unltd. and Marc Ecko Cut & Sew. Iconix had previously acquired a 51% stake in IP Holdings Unltd LLC in 2009.
Marc Ecko Enterprises will continue to remain the core apparel licensee for the brands. In addition, the sellers will no longer be obligated to pay about $52 million in IP Holdings debt.
Besides acquisition of the Ecko portfolio of brands, New York-based Iconix has made a number of accretive acquisitions in the recent past, which helped the company deliver solid first quarter results and an upbeat guidance. Iconix first quarter 2013 earnings of 54 cents per share beat last year’s result by 26% and the Zacks Consensus Estimate by 5.9%. Iconix’s revenues in the quarter surged 19% year over year and also surpassed the Zacks Consensus Estimate by 4%. Following solid first quarter 2013 earnings, Iconix raised its 2013 adjusted earnings guidance to $2.10–$2.20 per share from the previously announced range of $2.05–$2.15 per share.
Iconix successfully completed three acquisitions in the past five months. In late-Feb 2013, Iconix acquired the renowned lifestyle brand Lee Cooper, which includes multiple lifestyle categories including men’s and women’s casual wear, footwear and accessories. In early-Feb 2013, Iconix formed a joint venture with Buffalo International ULC to acquire a 51% interest in the latter’s Buffalo David Bitton brand and expand its retail footprint in the U.S. and Canada. In early-Dec 2012, Iconix acquired the renowned football brand Umbro from Nike, Inc. (NKE) to further strengthen its portfolio with an iconic brand that focuses on the fashion, athletics, electronics, entertainment and home industries.
We remain impressed with Iconix’s strategic acquisitions and consistent expansion of licensing agreements. Iconix expects to explore additional opportunities and enhance its portfolio with more iconic brands in the upcoming quarters. Iconix expects to deliver over 20% revenue and earnings per share growth for 2013. Iconix holds a Zacks Rank #1 (Strong Buy).
Other Stocks to Consider
Other stocks in the consumer discretionary sector that are performing well and are therefore worth considering include Hanesbrands Inc (HBI) which holds a Zacks Rank #1 (Strong Buy) and Joes Jeans Inc (JOEZ) which carries a Zacks Rank #2 (Buy).
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