Wednesday, September 30, 2009

Iconix getting "Ripped" by stockholders today (ICON)



"Wind-Ripped" indeed (what?).

This morning, Iconix Brand Group (ICON) lowered guidance for the full year. How does a $1billion company (in terms of market value) have only 82 employees? It's because they're a licensing company. They own 17 consumer brands, including Rocawear, Mossimo, AlphaNinja-favorite Ocean Pacific, and multiple others. They license their brands to retailers and manufacturers, and support these clients with focused advertising and marketing. Today they note that one of their licensees ran into financial difficulty, and the transition to a new manufacturer will result in a hit to revenue and earnings.

From the release:

The Company expects to achieve an increase of approximately 25% in its 2009 non-GAAP net income to approximately $80-$83 million from adjusted non-GAAP net income of approximately $64.8 million in 2008. The Company is also revising its 2009 non-GAAP diluted EPS guidance to a range of $1.17-$1.22 from its previous range of $1.30-$1.35

The Company's 2009 EPS estimate reflects approximately $0.12 of dilution related to the Company's June equity offering in which the Company issued an additional 10.7 million shares, increasing the September 30, 2009 weighted average diluted share count from approximately 62.8 million to 73.5 million shares. Further, the Company anticipates an approximate $0.04 negative impact to its previous EPS guidance related to the transition of the Rocawear women's license to a new licensee.

This doesn't even add up, as the combined 16cents cited above is more than the midpoint reduction in guidance. Worse is that management RAISED guidance back on August 4th, acknowledging the impact of the stock offering that took place in June.

This stock is down 22% today due to management's ineptitude and confusing/misleading statements -->> down far more than if it were simply announcing a tough period ahead.

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