Profile of Iconix Brand Group: a unique business model for managing brands

Date: July 22, 2009
Pages: 19
Price:
US$ 520.00
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Publisher: Textiles Intelligence Ltd
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)
ID: P067D6CA263EN
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Profile of Iconix Brand Group: a unique business model for managing brands
Iconix Brand Group has grown rapidly since it began a transformation from a traditional clothing manufacturing firm to a brand management business. Speedy growth has come thanks to an aggressive strategy of brand acquisition and international expansion.

The brand management model which Iconix employs is unique. It allows the company to concentrate on value-adding services of licensing and marketing, leaving responsibility for design, production, inventory management, distribution and retail to the licensee. This model brings about many advantages. In particular, the licence agreements into which Iconix enters include guaranteed minimum levels of royalty payments. Also, the model eliminates the need for inventories, and requires minimal amounts of working capital.

From a financial perspective, these characteristics provide the company with plenty of free cash flow which it has reinvested in growth via the acquisition of more brands or international expansion of its existing portfolio. In particular, the guaranteed levels of royalty payments provide the company with an unusually low level of risk. Reflecting this, the company’s net income doubled in 2006 and 2007 and, despite the global slowdown, it still grew by a respectable 10% in 2008.

For 2009 the company has forecast that revenues will remain more or less static, at US$210 mn-US$220 mn, due to the challenging economic environment. On the other hand, executives have raised their expectations of earnings per share (EPS) for the year, which is a promising sign.

In the long term, growth is expected to continue through further acquisitions, international expansion and product diversification for each of its brands.
SUMMARY

INTRODUCTION

COMPANY DEVELOPMENT AND RECENT ACQUISITIONS

COMPANY BUSINESS MODEL


Value-added services
Licensing and business development
Marketing
Trend direction

BRAND PORTFOLIO

Pricing

KEY LICENSEES

Direct-to-retail licence agreements
Wholesale licence agreements

INTERNATIONAL EXPANSION

MARKETING

FINANCIAL PERFORMANCE

LIST OF TABLES


Table 1: Iconix brands and selected licensees, April 2009
Table 2: Iconix: financial summary, 2000/01-2008

LIST OF FIGURES

Figure 1: Iconix: revenues compared with selling, general and administrative expenses, 1 qtr 2005-1 qtr 2009
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