Iconix Brand Group Slowly Manifests Its Turnaround

Sound Investment profile picture
Sound Investment


  • Iconix Brand Group is finally showing us signs of a turnaround. The secret lies in international revenue.
  • The main question troubling investors is whether there is enough time left for this company to execute its turnaround.
  • All is dependent on the 2020 debt refinancing now; we have reason to put hope in our new CEO, Bob Galvin.
  • I am extremely disappointed in the absence of Q&A at conference calls, and expect to see insider buying as soon as possible.

The past four years have not been easy for Iconix Brand Group (NASDAQ:ICON) shareholders, who have seen the stock plummet from $43-44 range in June 2014 to a mere $0.14 this week. If you are new to this company, Iconix is a brand management company with a portfolio of 28 brands, all active domestically, and some with international exposure, as well as a few other investments, most notably a hard-to-assess share in Marcy Media. Accounting irregularities, followed by the departure of the company's founder, Neil Cole, and ousting of a more recent CEO, John Haugh, as well as several lost DTR (Direct-to-Retail) contracts at Walmart (WMT) and Target (TGT) (mainly due to stores shifting to in-house brands) have been the main reasons for this drop.

ChartICON data by YCharts

In response to brick and mortar retailers shifting away from DTRs, Iconix has been moving to wholesale licenses. The wholesale contracts cause short-term weakness, as they often take much longer to return to DTR revenues. DTR licenses have often come with minimum guaranteed royalties for Iconix in the past, ensuring consistent licensing revenues regardless of performance.

Iconix Brand Group reported its third-quarter earnings on Nov. 10th, announcing and guiding numbers below market expectation, primarily due to Sears' (OTC:SHLDQ) bankruptcy. Following its competitors' lead, Iconix discounted Sears' revenue entirely from its numbers, resulting in a $20-30 mil drop in guaranteed licensing revenue in 2018 and going forward. Share price suffered little considering the significant sudden loss in revenue. As I have mentioned in previous articles, Iconix's share price has hit rock bottom. Sears' bankruptcy was priced in, and Iconix is very much trading as if bankrupt; I see little downside from these levels.

Why do I believe Iconix is trading as a bankrupt company? Current market cap stands at a little over $11 million. This

This article was written by

Sound Investment profile picture
Individual investor with over a decade of experience.

Disclosure: I am/we are long ICON. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (3,731)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.