Iconix Brand Group (NASDAQ:ICON) has agreed to sell the Sharper Image brand to California-based ThreeSixty Group for $100 million in cash. Iconix Chief Executive Officer John Haugh commented on the deal, saying, “Sharper Image is a strong and widely recognized brand, however, consistent with the vision we outlined during our recent investor day, Sharper Image did not fit into our go-forward strategy.” The deal is expected to close on Friday.
Iconix Brand Group said it would use proceeds from the deal to pay down debt. Haugh said, “This transaction generates a significant return on investment, and allows us to make progress on de-levering the balance sheet, which is a top priority.” Sharper Image is the second brand that Iconix has sold this year.
Sharper Image is well known across the country. The brand was founded in 1977 as a catalog retailer. Over the years, it grew until it encompassed more than 300 retail locations, including space in 180 malls. In 2008, it filed for bankruptcy protection and began closing its last U.S. stores
The Sharper Image brand continued to operate as an online retailer after the bankruptcy. Most of the best sellers on Sharper Image’s website these days are electronics. The company also sells Sharper Image-branded goods through major retailers like Best Buy and Bed Bath & Beyond. Iconix Brand bought the brand and intellectual property assets in 2011 for $65.6 million in cash.
ThreeSixty Group has licensed the Sharper Image brand since 2008, becoming the largest licensee of the brand. The company manufactures and distributes toys and other consumer products for over 70,000 retail stores across the country. The manufacturer makes a number of items under the brand, including radio controlled drones, slippers, and home décor.
Kirk McLean, co-founder of ThreeSixty Group, said in a statement that the company plans to invest in the Sharper Image brand by bolstering product development and expanding into new geographies and product categories. ThreeSixty Group also acquired the FAO Schwarz brand from Toys “R” Us back in October. The company has hinted that more deals could be on the way.
Iconix reduced its guidance for the current and next fiscal year during its third quarter 2016 conference call. The company reduced its estimate for 2016 by 1.7 percent to $1.11 per share and reduced its 2017 estimate by 1.8 percent to $1.08 per share. The company expects earnings to decline 16.5 percent for 2016 and 3.2 percent for 2017 on a year-over-year basis. For 2017, Iconix expects the net impact of the sale of the Sharper Image brand and the repayment of debt to be neutral to earnings.