With Snoopy film in the works, fund managers bet on Iconix

Thu Jun 26, 2014 3:59pm EDT
 
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By David Randall

NEW YORK (Reuters) - Fund managers are making a big bet on Snoopy, Lucy and Charlie Brown.

With a big-budget Peanuts film set to appear in theaters next year, an unusually high number of U.S. mutual funds have been buying shares of Iconix Brand Group Inc, the little-known company that owns 80 percent of the rights to the characters. The number of new funds owning shares swelled 36 percent last quarter, according to data from fund tracker Morningstar. That is a high number for a company with a market value of $1.9 billion and a slowing core business, fund experts say.

Few consumers have ever heard of the New York-based company, though they are likely familiar with its roster of 35 brands, ranging from mass-market staples like Joe Boxer and Ed Hardy to Cannon linens and Material Girl, the line of apparel and accessories from Madonna and her daughter. But with many of its U.S. retail partners, such as Target, Macy's and Sears Holdings Corp, struggling with falling traffic and weak consumer demand, Iconix is looking elsewhere to expand.

"With what is happening in America we don't see large growth there over the next couple of years but we do see stability," Chief Executive Neil Cole, the brother of fashion designer Kenneth Cole, told analysts after the company reported its quarterly results in April.

PEANUTS BRAND

Should the Peanuts movie prove to be a hit, it could help Iconix double its revenues, which hit $433 million in 2013, Cole told analysts. The company declined to comment for this story.

Already, the brand has paid some dividends: Walt Disney Co's ABC network renewed its long-standing contract to air the popular Peanuts holiday specials 18 months before it came due. Iconix recognized $17 million of the $21 million contract in the first quarter, which helped push revenue up 11 percent to $116.1 million and non-diluted adjusted earnings per share to 72 cents, a 33 percent increase from the same time last year.   Continued...