Iconix Brand Group, the New York-based company known for its ownership of popular brands such as Umbro, Lee Cooper, and Ecko Unltd, has announced a return to profitability in the third quarter of 2020. This comes as a surprise given a significant decline in revenues. The company reported a net income of $45.7 million, or $1.51 per share, which marks a turnaround from the net loss of $35.7 million, or $3.07 per share, in the same period last year.

The decline in revenues for Iconix can be attributed to the impact of the Covid-19 pandemic on the global economy. Year-over-year, the company’s revenues saw a 31% decline, dropping from $35.5 million to $24.5 million. The hardest hit segment was the women’s category, with a decline of 43%, from $10.3 million to $5.9 million. This decrease was primarily due to falling licensing revenue from the Mudd and Joe Boxer brands. The men’s segment also experienced a decrease in revenues, falling 28% to $5.7 million, due to declining licensing revenues from the Buffalo and Umbro brands. The international segment faced challenges in Latin America and Europe, with a 32% decline in revenues amounting to $9.4 million. However, the home segment of the company saw a 2% increase in quarterly revenues, reaching $3.5 million, driven by higher licensing revenues from the Charisma brand.

During the third quarter, Iconix made the strategic decision to sell its Chinese subsidiaries, Umbro China Ltd. and Starter China Ltd., resulting in gains of $59.6 million and $14.5 million, respectively. Additionally, the company was able to achieve a significant reduction in selling, general, and administrative expenses by cutting them by 62% compared to the same period last year. This reduction was primarily attributed to decreases in professional fees, advertising costs, and compensation expenses.

CEO Bob Galvin highlighted the company’s focus on employee well-being and its ability to adapt to the changing economic and retail environments brought about by the pandemic. Despite the challenges faced, Iconix signed 148 deals in 2020, amounting to approximately $90 million in guaranteed minimum royalties. This showcases the company’s effort to build a strong pipeline of future business.

Year-to-date, Iconix reported revenues of $74.7 million, which is a 29% decline from the $105.8 million reported in the same period last year. Due to ongoing uncertainties surrounding the Covid-19 pandemic, the company did not provide financial guidance for the fourth quarter or the full fiscal year.

Despite the challenges posed by the pandemic, Iconix’s ability to achieve profitability and implement cost-cutting measures demonstrates its resilience and commitment to navigating these difficult times. Looking ahead, the company’s flexibility in response to changing economic conditions will be crucial in ensuring its continued success.

Useful links:
1. Iconix Brand Group Official Website
2. Iconix Brand Group Announces Third Quarter 2020 Financial Results