Yahoo Finance Iconix (ICON) Receives Non-Compliance Notice from NASDAQ
Iconix Brand Group, Inc. ICON has recently received a customary deficiency notice from the NASDAQ Listing Qualifications Staff due to the company’s delay in the filing of its Form 10-K for the year ended Dec 31, 2015.
As per the NASDAQ letter, the company is not currently in compliance with NASDAQ Marketplace Rule 5250(c)(1). It must submit a plan to regain compliance with respect to the NASDAQ's continued listing standards, no later than May 16, 2016, to remain listed in the NASDAQ stock exchange.
On Feb 18, the company had disclosed that it expects to restate its financial statements, and thus anticipates filing its 2015 Form 10-K by Mar 15, 2016. Following failure to meet the Mar 15 deadline, Iconix delayed the filing to Mar 30. The company however plans to report fourth quarter and full year 2015 financial results prior to Mar 30, 2016.
The company has concluded that the company will revise its historical financial statements from 2013 through 2015 to correct certain errors in accounting with respect to its Iconix Canada, Iconix Israel, Iconix Southeast Asia, Iconix MENA and LC Partners US joint ventures. The company will eliminate the previously reported gains on sale that were recorded at the time these transactions were consummated (including the subsequent Jun 2014 and Sep 2014 transactions with respect to Iconix Southeast Asia).
Iconix Brand had received a formal order of investigation from U.S. Securities and Exchange Commission (‘SEC’) about its accounting treatment for some joint ventures, last December. Iconix Brand had stated full cooperation with the SEC.
The company, which sells apparel brands such as Candie’s, Joe Boxer and Mossimo, has also formed a Special Committee of the Board of Directors to conduct a review of the accounting treatment related to some of the company's transactions.
Notably, Iconix’s shares have been losing value since the beginning of 2015. Many law firms have filed a class action lawsuit against Iconix alleging accounting irregularities concerning free-cash flow accounting, organic growth and gains on licensing fees.
Further, with the departure of CEO Neil Cole on Aug 7, 2015, soon after the exit of the CFO (Mar 2015) and COO (Apr 2015), investors, kind of, abandoned the stock. The lowered guidance for full-year 2015 signals serious problems within the company.
Iconix also reported weak results in the first nine months of 2015. Earnings and sales lagged the respective Zacks Consensus Estimate due to difficult year-over-year comparisons during the time frame. A persistent decline in licensing revenues and absence of “Other revenue” through the three quarters hurt results. Following the sluggish results, Iconix lowered its guidance for 2015 to account for weak performance in men's fashion, revenue decline and accounting issues.
Iconix currently has a Zacks Rank #4 (Sell).
A better-ranked stock in the shoes and apparel industry is Francesca's Holdings Corporation FRAN with a Zacks Rank #2 (Buy). Other stocks in the broader sector include American Eagle Outfitters, Inc. AEO and Express Inc. EXPR, both of which sport a Zacks Rank #1 (Strong Buy).
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