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Iconix Brand Group, Inc. (NASDAQ: ICON) Has a New Offering: Letdown

Contributed by: Justice Sirikah
Date: Oct 1, 2009

Iconix Brand Group, Inc. (NASDAQ: ICON, ICON message board) on Wednesday disappointed consensus expectations with a downward revision of its full year 2009 guidance, prompting a deflationary trend on its stock which then closed 21.08 percent in early trading, down to the level last seen in April. The apparel maker that owns, licences and markets consumer brands such as Cannon and Rocawear – co-founded by rapper Shawn “Jay-Z” Carter – said the setback had been necessitated by an earlier transition of one of its labels to a new licensee along with a June offering of 10.7 million shares.

In Latest approximation for the full year adjusted earnings, the company moved the figures to between $1.17 and $1.22 a share, from earlier target of $1.30 up to $1.35 per share. Besides a gloomy reflection of $0.04 per share due to the transition and $0.12 per share negative effect of the equity offering, the 2009 earnings would still be a record high, the company said. Average analysts’ expectations were close to the top end of the firm’s previous range at $1.34 per share, excluding one-time items.

Iconix also slashed its full-year sales view to between $215 million and $220 million, sliding from $223 million to $230 million range that it had forecast earlier. The latest figures are still coming short of Wall Street’s revenue estimate of $229.8 on average.

“We have completed the transition of the Rocawear women’s license from a licensee experiencing financial difficulties to a new licensee with a proven track record...”, explained Iconix’ chairman and CEO, Neil Cole. “While we’re disappointed that the strong performance of our brands has not been enough to completely offset the dilution from the equity offering and the Rocawear women’s transition, we believe our company is well positioned for future growth”.

On the news, shares of Iconix took a notable beating to a close of $12.47, from $15.80 in the day before trading. In the morning’s trade on Thursday, the stock was swinging in the range of between $12.30 and $12.35, with no signs of an immediate rebound in sight.