In their first comments since closing the acquisition last December, Iconix Brand Group management said they see the potential for Starter to become a billion dollar brand for Wal-Mart. Starter currently does about $400 million at the discounter.
“We think there is a void for a powerful athletic apparel and footwear brand for the value-oriented customer,” said EVP David Conn during the Iconix Q4 conference call with analysts. “No retailer has greater reach and serves that customer better than Wal-Mart and we think Starter has the potential to be a $1 billion brand at Wal-Mart covering all the major athletic apparel and footwear categories. We are currently working with Wal-Mart on a number of exciting initiatives including licensed team sports and professional athlete endorsements.”
Company CEO Neil Cole said 95% of Starter's business is at Wal-Mart, sold through about 17 different licenses. Iconix is in discussions on whether to work more directly with Wal-Mart. He said one of Iconix's “biggest organic growth opportunities” is expanding at Wal-Mart with not only Starter, but Danskin Now and OP.
In Q4, revenues for Danskin Now, a long-time Wal-Mart exclusive, were down slightly as the brand was repositioned. Its new OP exclusive deal is launching in coming weeks in the U.S. in what Wal-Mart promises will be a “broad and year-round program.” Plans are being finalized to launch OP with Wal-Mart Canada and Wal-Mart Mexico.
Overall, Iconix Q4 licensing revenues jumped 76% to $47.4 million from $26.9 million. Earnings jumped 117% to $19.2 million, or 31 cents a share, from $8.9 million, or 18 cents, a year ago. Results included a gain of about $4.3 million related to litigation.
Iconix, which also owns brands including Mossimo, London Fog, Joe Boxer, Rocawear, Cannon and Badgley Mischka, also affirmed its 2008 profit outlook and raised its revenue guidance. It now estimates revenue of $250 million to $260 million, up from previous guidance of $240 million to $250 million.
