ICON already does business with every retailer in America, to grow further ICON must tap into other areas like retailers such as Home Depot and Petsmart. The acquisition of Peanuts, Snoopy and Dilbert (a hero to cynical office workers) helps move the company from just fashion to media, theme parks and financial institutions.
Peanuts the movie!
ICON formed a partnership with the Schulz family and bought into 80% of the business with the Schulz's owning the rest. No new Peanut comics have been drawn for a decade and as a brand Peanuts and Snoopy have stalled. The brand was acquired in 2010 and sales have flattened out at $80 million for the past two years ICON hopes to reboot the franchise with an upcoming movie in 2015. If all goes to plan ICON believes that sales of Peanuts products including box office could double to $160 million.
The movie in conjunction with Twentieth Century Fox is slated for release November 2015. While the contract details have not been disclosed ICON has hinted that it is similar to goods licenses in that they receive a royalty piece from every movie ticket sold. ICON is hopeful that the movie will create new licensing opportunities and box office sales that will drive new revenue streams. ICON is not putting any money down which is fortunate given the last Peanuts movie in 1980 earned just $2 million.
Snoopy the credit card?
Metlife has used Snoopy as their company ambassador since 1985. In 2006 Metlife acquired exclusive international rights to use Snoopy in financial services including credit and debit cards. These contracts are up for renewal in 2014. According to Forbes magazine the licensing deal brings in $12 million annually.
Growth getting harder to come by?
International is a key driver for growth at just 33% of business it can still grow. Whereas in America ICON's brands already take up a lot of shelf space with around 14% of Walmart soft goods, 15% of Target and 10% of Kmart. Their top 5 customers contribute 36% of revenue. ICON has always been able to renew contracts above $10m in value but due to the sliding scale royalty structure the % earned decreases as the brand grows.
ICON is a unique company given the licensing structure. However ICON is reliant on Peanuts to be a success as they are fully distributed within US fashion retail. Let's hope that Snoopy stays on top and does not end up inside the doghouse!
Jason
Disclosure: Decisive has no long position in Iconix Brand Group (ICON) stock
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