March 10, 2010 / 1:27 PM / 8 years ago

UPDATE 3-Iconix teams up with Madonna to launch fashion lines

* Iconix will have 50 pct stake in JV

* Juniors line to hit 200 Macy’s stores (Adds Iconix and Macy’s quotes)

By Nivedita Bhattacharjee

BANGALORE, March 10 (Reuters) - Iconix Brand Group Inc (ICON.O) said it formed a joint venture with pop diva Madonna to launch fashion brands globally, starting with a juniors collection to be sold at Macy’s Inc (M.N) this August.

MG Icon, which will be 50 percent owned by Iconix and 50 percent by Madonna and Guy Oseary, her long-time manager, has an exclusive license-and-services agreement with the singer to use her name for apparel, footwear and other products.

The fast-fashion juniors collection, aptly called “Material Girl,” will be launched in about 200 Macy’s stores and online in time for the back-to-school season.

Iconix owns and licenses brands including Candie‘s, Joe Boxer and Badgley Mischka, and already licenses its products to retailers like Target Corp (TGT.N), Wal-Mart Stores Inc (WMT.N) and Kohl’s Corp (KSS.N).

The new collection was designed by 51-year-old Madonna and her teenage daughter Lourdes Leon in collaboration with Iconix’s in-house fashion department.

Macy’s Chief Merchandising Officer Jeffrey Gennette said the line, which will sell apparel, jewelry and other accessories, with prices starting from about $12.

“We are building this brand to potentially be in every one of (Macy’s doors),” Gennette said, adding that the junior female customer group was currently underserved at Macy‘s.


The deal is not a game changer for Iconix as of now, though it gives the company a lot of opportunities to grow its portfolio.

    “We are hopefully going to soon announce another collaboration (at Macy‘s) ... on possible co-branding ideas where it could be Madonna’s name with another designer,” Iconix Chief Executive Neil Cole told Reuters on Wednesday.

    Cole also said the company is looking at international growth and is in negotiations to launch the brand in China.

    Analyst Nick Gibbons of Gradient Analytics said the new line was a good compliment to Iconix’s Ed Hardy joint venture, which chiefly caters to male urban customers.

    However, Gibbons added that the venture with Madonna would possibly be smaller than the earlier one.

    Lazard Capital analyst Todd Slater said, “If Material Girl expands to 500 doors and new categories in 2011, ... it could add a few million in net royalty revenue, which would be accretive only by about $0.03 per share.”

    “While this relationship is expected to open up other avenues of collaboration between Madonna ... and Iconix, with no guidance ..., we feel it is best to remain conservative with our accretion numbers at this time,” he added.

    Shares of New York-based Iconix were trading down slightly at $15.05 in afternoon trade Wednesday on Nasdaq, while Macy’s shares were up 2 percent at $21.02 on the New York Stock Exchange. (Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Anne Pallivathuckal)

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