By David Gill
NEW YORK–The Iconix strategy of acquiring and marketing iconic brands in a variety of consumer-goods categories has borne fruit, especially in the home textiles arena.
Recently, the company announced two huge license agreements with major retailers for its Cannon and Royal Velvet brands. Under an agreement reached with Sears Holdings, Cannon-branded products will be offered at both Sears and Kmart stores, with the rollout beginning over the next six months. In a separate deal, the Royal Velvet brand will launch an exclusive product line at Bed Bath & Beyond, with April slated as the debut date.
The company’s strategy has produced strong results in another aspect as well: Iconix reported record earnings for the 2007 fiscal year of $63.8 million, up an enormous 96 percent over 2006 net income. In addition, the company’s revenues for the year—all from licensing its 16 total brands—reached $160 million, up 98 percent from 2006.
Although Iconix has been a home textiles presence for less than a year, these achievements have left a major impression on the industry. The company’s chairman and chief executive officer, Neil Cole, was honored with the Industry Leader of the Year award by the Home Fashion Products Association at its annual Home Products Development Fundraising Breakfast held during the February textiles market.
Speaking to financial analysts on a Webcast after the release of the company’s 2007 results, Cole attributed the company’s success to its “powerful brand-management platform through the U.S. and increasingly throughout the world.” He noted that products bearing all of Iconix’s brand names generate approximately $6 billion in retail sales throughout the world.
Iconix acquired the Cannon, Royal Velvet, Fieldcrest and Charisma brand names when it purchased Official Pillowtex, the licensing company that was the previous holder of these names, last September. In an interview with HFN, Cole said, “They’re powerful brands, and that’s the reason we bought Pillowtex. They had an amazing portfolio of brands, among the best in the industry, and we felt we could enhance the brands.”
Bed Bath & Beyond will introduce the Royal Velvet line at all of its stores in April. “Royal Velvet could be a $100 million business this year,” Cole said to the financial analysts. “Down the road, it could double, triple or even quadruple in sales on an annual basis being in a big-box retailer like Bed Bath & Beyond.”
Moves of this sort, along with more brand acquisitions and the hope that consumers will return to the stores in the second half of this year, should push Iconix’s revenues for 2008 to between $250 million and $260 million, according to David Kahn, the company’s executive vice president.
Explaining the Bed Bath & Beyond and Sears deals, Cole told HFN, “We think retailers like proprietary brands. If we can marry these brands with strong retailers that will focus their attention on them, they’ll get bigger.”
In fact, the Bed Bath & Beyond and Sears deals exemplify Iconix’s business model with brands. “With proprietary brands, you become partners with the retailers, and then you do direct marketing and advertising to drive consumers into their stores,” Cole said. “The retailers then get better margins from sales of these brands because they don’t have to worry about pricing, for which we set the strategy, or competition.”
Also down the road, Iconix is planning to boost the home business in other ways. “We’re in discussions right now to acquire more brands in both soft and hard home goods,” Cole said. “We intend to be a wide-ranging resource for home furnishings. We’re looking at other textiles brands, but also talking with furniture and dishware manufacturers. We are looking for brands with a broad appeal to create lifestyle opportunities.”