Profile of Iconix Brand Group: A Unique Business Model for Maximising Brand Value

Textiles Intelligence, April 2008, Pages: 16

Iconix Brand Group has grown substantially in the past four years through an aggressive strategy of brand acquisition and a change in direction from operating company to brand management business. Up until 2004 the company operated two brands—Candie’s and Bongo—and almost all production took place in-house.

By the end of 2004 Iconix had licensed out all production of its brands, and by 2005 all income was in the form of licence revenues. Over the three years between November 2004 and November 2007, the company acquired a further 14 brand names and licensed out all production.

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

As a result, Iconix has built up a large cash flow, which it has used to acquire more brands in order to increase its revenues and profits. Indeed, its net income doubled in both 2006 and 2007.

Growth is expected to continue in the short to medium term—through further acquisitions, international expansion and product category expansion for each of its brands. Not surprisingly, revenue forecasts for 2008 show a 60% increase on 2007, and sustained long-term growth of 15%-20% per annum.

SUMMARY
INTRODUCTION
COMPANY DEVELOPMENT AND RECENT ACQUISITIONS
COMPANY BUSINESS MODEL
Value-added services
Licensing and business development
Marketing
Trend direction
BRAND PORTFOLIO
Pricing
LICENSEES, LICENCE AGREEMENTS AND DISTRIBUTION CHANNELS
Direct-to-retail fashion brands
Wholesale fashion brands
MARKETING
FINANCIAL PERFORMANCE
OUTLOOK
Long-term growth strategy
Organic growth
Inorganic growth

List of tables
Table 1: Iconix: key licensees by brand
Table 2: Iconix: financial summary, 2000/01-2007

List of figures
Figure 1: Iconix: revenue compared with selling, general and administrative expenses, 1 qtr 2005-4 qtr 2007

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