Iconix Completes Purchase of Strawberry Shortcake Brand - Analyst Blog
Clothing brand licensing company Iconix Brand Group Inc. ICON has completed the acquisition of the Strawberry Shortcake brand from Cleveland-based American Greetings for $105 million in cash. American Greetings sells cards and wrapping paper and also owns characters like Care Bears and Holly Hobbie.
The iconic Strawberry Shortcake character first showed up on greeting cards in 1980 and subsequently featured on products as varied as pajamas, cosmetics and food. Strawberry Shortcake is now a global brand with over 350 licensees and generates approximately 50% of its revenues from international markets.
The acquisition of the Strawberry Shortcake brand, announced in early-Feb, is a strategic fit to Iconix, which is keen on expanding its presence in the entertainment business. Iconix entered the entertainment industry in 2010 with the acquisition of the Peanuts brand, which has been growing strongly since its acquisition. Iconix has signed over 180 Peanuts licenses around the world in the first nine months of 2014, positioning the brand well for strong growth in 2015 and 2016. An animated film, "The Peanuts Movie," will be released by 20th Century Fox later this year.
Like Peanuts, the Strawberry Shortcake brand is also expected to help in expanding the Iconix entertainment platform with possible clothing, toys, TV shows and movie deals. Last month, other than the purchase announcement of Strawberry Shortcake, Iconix Brand also announced the acquisition of the North American rights to the athletic brand PONY from Symphony Holdings, Limited for $37 million This will boost its existing sports platform, which includes the Danskin, Starter and Umbro brands.
Following the recent PONY and Strawberry Shortcake purchase deals, Iconix also raised its earnings and revenue guidance for 2015, when it announced its fourth-quarter and full-year 2014 results on Feb 26. Iconix anticipates improved top and bottom lines in 2015 on the back of steady expansion in the domestic licensing business, rapid growth in the international business, upcoming Peanuts movies and the benefits of the recent acquisitions. (Read: Does Iconix Q4 Earnings Beat Indicate 2015 Outperformance?).
Iconix holds a Zacks Rank #2 (Buy).
Other Stocks to Consider
Other stocks that are well-placed in the consumer discretionary sector include Skechers USA Inc. SKX and Rocky Brands, Inc. RCKY with a Zacks Rank #1 (Strong Buy). Investors can also consider a retail stock, Citi Trends, Inc. CTRN, sporting a Zacks Rank #1.
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