Iconix Takes Controlling Stake In Ecko Brands

NEW YORK (AP) — Iconix Brand Group Inc., which owns apparel brands including Candie's, Joe Boxer, Mossimo and London Fog, said Tuesday it agreed to take a controlling interest in the Ecko portfolio of brands.

Iconix plans to have a 51 percent stake in a joint venture with an affiliate of Ecko. Marc Ecko, who founded the brands, will remain chief creative officer.

Iconix will pay $63.5 million for its stake, and the joint venture will get $90 million of financing.

The company expects the joint venture to make about $42 million to $44 million in annual royalty revenue.

Iconix CEO Neil Cole said the deal is "consistent with our strategy to opportunistically acquire leading consumer brands that offer long-term growth potential when integrated into our business model."

Ecko has a European platform Iconix could use for the rest of its portfolio, Cole added.

The news came as Iconix reported third-quarter profit rose 25 percent and the company offered 2010 earnings guidance below analyst expectations.

Shares fell on the guidance, down $1.05, or 7.9 percent, to $12.32 during morning trading. The stock has traded between $5.11 and $18.30 over the past year.

But Lazard Capital Markets analyst Todd Slater in a note to investors reiterated his "Buy" rating.

"We believe the most important news today is the fact that Iconix put a deal on the board, and is well positioned to rebuild investor confidence in the power of the licensing model over the next several quarters," he wrote.