Iconix Brand Group, Inc. reported revenue was $23.6 million in the first quarter, a 15 percent decline, compared to $28.0 million in the first quarter of 2020.
The company’s brands include Mossimo, Ocean Pacific/OP, Danskin, Rampage, Joe Boxer, London Fog, Mudd, Candie’s, Buffalo, Starter, Rocawear, Zoo York, Ecko Unltd, Artful Dodger, Umbro, Lee Cooper, Ed Hardy, Pony. Royal Velvet, Canon, Fieldcrest, and Sharper Image.
The 41 percent decrease in revenue in its Women’s segment was largely a result of a decrease in licensing revenue from its Mudd, Candies and Joe Boxer brands partially offset by an increase in its Danskin brand. Revenue from the Men’s segment decreased 17 percent mainly due to a decrease in licensing revenue from its Buffalo brand. Sales in its Home segment decreased by 22 percent principally due to a decrease in licensing revenue from its Fieldcrest brand. International segment revenue improved 2 percent mainly due to an increase in licensing revenue in Europe.
Total SG&A expenses in the first quarter of 2021 were $13.1 million, a 24 percent decline compared to $17.2 million in the first quarter of 2020. The decline for the quarter was primarily driven by a decrease in bad debt expense.
The gain on the sale of trademarks in the first quarter of 2021 was $15.0 million, compared to zero in the first quarter of 2020. The gain for the quarter was as a result of the sale of the Lee Cooper trademark in China.
Trademark Impairment in the first quarter of 2021 was zero compared to $13.7 million in the first quarter of 2020, which was primarily based on the impact of the COVID-19 pandemic on the current and estimated future cash flows on the fair value of the Rampage, Joe Boxer, Waverly, Fieldcrest, and Umbro indefinite-lived trademarks.
Operating income for the first quarter of 2021 was $25.3 million, as compared to an operating loss of $4.9 million for the first quarter of 2020. The first quarter 2020 results include $13.7 million of charges related to impairments. Adjusted EBITDA in the first quarter of 2021 was $11.9 million, which represents an operating income of $25.3 million excluding net adjustments of $13.4 million. Adjusted EBITDA in the first quarter of 2020 was $11.6 million, which represents an operating loss of $4.9 million excluding net charges of $16.5 million. The change period over a period in Adjusted EBITDA was primarily as a result of reduced revenue largely driven by the impact of the COVID-19 pandemic on its business, offset by reduced expenses driven by the company’s cost reduction initiative resulting in a higher
Interest expense in the first quarter of 2021 was $14.7 million as compared to $17.1 million in the first quarter of 2020. The decrease in interest expense was primarily the result of the year-over-year reduction in debt as a result of repayments required upon the sale of certain trademarks of the company. In the first quarter of 2021, Other income (loss) was s loss of $2.8 million as compared to income of $0.8 million in the first quarter of 2020. This result is primarily from the company’s accounting for the 5.75 percent Convertible Notes, which requires recording the fair value of this debt at the end of each period with any change from the prior period accounted for as other income or loss in the respective period’s consolidated income statement.
The effective income tax rate for the first quarter of 2021 was 24.6 percent, which resulted in a $2.3 million income tax expense, as compared to an effective income tax rate of 0.0 percent in the first quarter of 2020, which resulted in a $0.0 million income tax benefit. The increase in income tax expense is a result of an increase in foreign taxes for the first quarter of 2021 and a tax benefit in the first quarter of 2020 related to the CARES Act.
GAAP net (income)loss attributable to Iconix for the first quarter of 2021 reflected a net income of $4.2 million, compared to a net loss of $21.8 million for the first quarter of 2020. GAAP diluted EPS for the first quarter of 2021 reflected income of $0.26 per share, compared to a loss of $1.89 per share for the first quarter of 2020.
Fiscal 2021 Outlook
Due to the impact that COVID-19 is having across the globe, and the rapid and continuous economic developments, the company is not providing guidance for fiscal year 2021 at this time. The impact of COVID-19 on its business could be material to its operating results, cash flows and financial condition. Due to the evolving and uncertain nature of this situation, the company is not able to estimate the full extent of the impact on Iconix’s operating results, cash flows and financial condition. It will provide additional updates as the situation warrants.
Photo courtesy Iconix Brand