Iconix Brand Group Inc. (ICON), a brand management company, delivered robust second quarter results and maintains its revenue and earnings projection for fiscal 2010.
New York-based Iconix’s earnings jumped 9.1% in the quarter to 36 cents a share from 33 cents a share in the year-ago period, demonstrating steady organic growth in its core businesses and potential opportunities in its recently acquired “Peanuts” (Charlie Brown, Snoopy, etc.) brand. Earnings also outpaced the Zacks Consensus Estimate of 34 cents.
On a reported basis, including one-time items, earnings came in at 33 cents a share versus 30 cents delivered in the prior-year quarter.
Iconix has reiterated its fiscal 2010 adjusted earnings forecast of $1.35−$1.40 per share. The Zacks Consensus Estimate of $1.39 per share for the fiscal is at the higher end of the company’s guidance. On a reported basis, the company projects earnings of $1.23−$1.28 per share for fiscal 2010.
Total revenue for the quarter jumped 35% to $76.0 million from $56.4 million in the year-ago period, reflecting double-digit sales growth in the direct-to-retail segment. The company experienced strength at Wal-Mart Stores Inc. (WMT), Kohl’s Corp. (KSS) and Costco Wholesale Corporation (COST), offset by poor performance at Mudd, Bongo, Waverly and Fieldcrest stores.
Iconix has re-affirmed its revenue target of $305−$315 million for fiscal 2010. On a year-ago basis, operating profit increased 27% to $49.4 million and EBITDA spiked 18% to $49.4 million in the quarter.
The company exited the quarter with cash and cash equivalents of $65 million. At the end of the quarter, Iconix’s free cash flow shot up 26% year over year to $44.3 million. For fiscal 2010, the company projects free cash flow of $150−$155 million.
Iconix shares maintain a Zacks #3 Rank, which translates into a short-term Hold rating. Our long-term recommendation for the stock remains Underperform.
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