The Iconix Brand Group, which started off as a shoe brand for young girls called Candie’s, has continued its shopping spree. The U.S. firm has bought Danskin, an American brand of fitness and dance clothing (more on this in Sporting Goods Intelligence Europe) and Rocawear, an American apparel brand co-founded by the hip hop artist Jay-Z.
Iconix has agreed to pay $70 million for the Danskin brand, plus $15 million in cash or stock, for Danskin’s intellectual property. Following the deal, Iconix will operate Danskin’s wholesale business, its free-standing retail stores and its online business (www.danskin.com) under a license agreement.
Iconix has agreed to pay $204 million in cash for Rocawear, plus contingent payments of $35 million worth of Iconix shares if the brand surpasses certain performance targets over the next three to five years.
Rocawear is the largest acquisition that Iconix has ever made, and along with Danskin it is the fourth one in six months. Retailed through upper-mid market department stores and specialty stores in the USA, this brand makes annual sales of over $700 million. Iconix expects Rocawear to generate around $43 million in royalty revenues alone in its first year in the Iconix stable.
Jay-Z will continue to be in charge of product development, marketing and licensing for the brand, and will keep his senior management team, which is joining Iconix. Jay-Z will also retain his stake in the operating company that manufactures Rocawear men’s apparel. The operating company will enter into a long-term license agreement with Iconix for the core young men’s apparel category.
As part of the deal, Iconix will create a separate, equal joint venture with Jay-Z (real name Shawn Corey Carter) to found a brand management and licensing company to identify other brands that Iconix could acquire and develop. The first will be a signature, luxury brand involving Jay-Z called “Shawn Carter Collection” and will launch in 2008.
The Iconix Brand Group’s turnover, which is now completely based on the royalties that it gets from the brands it owns, grew to $80.7 million in 2006, as compared to $30.2 million in 2005, generating earnings before interest, tax, depreciation and amortization of $56.1 million, up from $16.7 million. The company’s operating income rose to $53.7 million from $15.4 million in 2005, while net income doubled to $32.5 million from $15.9 million. It is forecasting licensing revenues of $150-160 million for 2007.