The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
Currently, the company owns 18 brands outright: Candie's, Bongo, Badgley Mischka, Joe Boxer, Rampage, Mudd, London Fog, Mossimo, Ocean Pacific (OP), Danskin, Rocawear, Cannon, Royal Velvet, Fieldcrest, Charisma, Starter, Ed Hardy, and Waverly.
The firm also recently entered an agreement to acquire 100% of the Zoo York brand (currently 51% owned). Additionally, Iconix owns an 80% stake in the Peanuts brand (yes, Snoopy and Charlie Brown -- probably its most valuable asset), and 50% stakes in joint ventures controlling Artful Dodger, Ecko, and Material Girl. This extensive portfolio makes Iconix one of the largest pure brand management firms in existence.This is a compelling business model. Iconix's operations consist of acquiring brands, signing licensees that want to use the brands, coordinating and ensuring a brand image, and handling marketing for the brands. There are no manufacturing operations -- manufacturing is done by licensees. This means Iconix has no inventory, extremely low capital requirements, and very little employee overhead. This leads to extreme profitability: The firm's five-year average operating margin is a lofty 67%, one of the highest I've ever seen! Also, most licensee agreements include minimum royalty stipulations, giving Iconix a near-certain baseline of revenue to plan around. Consumer brands are durable, versatile assets. Most of them have indefinite useful lives. London Fog has been around over 80 years, Cannon for 113 years, and Danskin is over 126 years old! For many, the brand can be extended to multiple merchandise categories. Candie's, for example, is slapped onto shoes, jeans, purses, and even perfumes. Peanuts has over 1,100 licensees, ranging from the MetLife blimp to filmed entertainment to amusement park rides to clothing. Iconix' primary external growth driver is going to be acquisition of additional brands. Most of the firm's portfolio has been acquired since 2004. Recently, the company expanded its ownership of Ed Hardy to 100%, from a previous 50% stake. Management has been very clear that the firm will continue to be acquisitive and is always on the lookout for new brands to acquire.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV