Iconix cuts FY view; shares sink
Iconix Brand Group Inc slashed its 2009 view, hurt by the transition to a new licensee for one of its brands and dilution from its June share offer, sending its shares tumbling 23 percent.
Iconix, which owns and licenses several brands including Candie's, Joe Boxer and Rocawear, now expects full-year adjusted earnings of between $1.17 and $1.22 a share, down from an earlier forecast of $1.30 to $1.35 a share.
It also lowered its 2009 revenue view to $215 million to $220 million, from an earlier expectation of $223 million to $230 million.
Analysts were looking for earnings, before special items, of $1.30 a share, on revenue of $229.7 million, according to Reuters Estimates.
We find the company's reliance on the equity offering in June as the primary reason for the cut in guidance, Brean Murray Carpet and Co analyst Eric Beder said in a note to clients.
Iconix said its 2009 earnings outlook estimate reflects about 12 cents of dilution related to the equity offering in which it issued an additional 10.7 million shares.
Beder said while the cut in outlook is technically correct, it is somewhat incredible, given that in August the company had backed its full-year view and raised its sales outlook.
The company also expects a 4 cents-per-share negative impact to its earnings view related to the transition of the Rocawear women's license to a new licensee.
The 2009 earnings per share cut reflects the disruptions at the Rocawear juniors license, a lower-than-expected organic growth rate for the year and slightly higher-than-expected operating expenses, analyst Beder said.
The analyst cut his rating on Iconix's stock to hold from buy and eliminated his price target on it, saying that increased Street skepticism will not be offset until a number of positive quarters or compelling acquisitions occur.
Iconix Brand will continue to stand by its earlier projection of about 5 percent organic growth across its portfolio of brands, Chief Executive Neil Cole said earlier in a statement.
Iconix, several of whose brands are also sold at Target Corp and Kohl's Corp stores, forecast third-quarter adjusted earnings of between 26 and 28 cents a share, on revenue of $53 million to $56 million.
Analysts were expecting earnings of 35 cents a share, on revenue of 62.05 million. Shares of the New York-based company were down $3.14 at $12.66 Wednesday morning on Nasdaq. They plummeted to a low of $12.10 earlier in the session.
(Reporting by Viraj Nair and Shradhha Sharma in Bangalore; Editing by Aradhana Aravindan and Unnikrishnan Nair)
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