Icon Energy Corp (ICON) 2010 Q2 法說會逐字稿

Good day, ladies and gentlemen and welcome to the Iconix Brand Group second quarter 2010 earnings conference call. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of today's conference. If at any time during the call you require assistance, please press star followed by zero and an operator will be happy to assist you.

Safe Harbor statement under the Private Securities Litigation Reform Act of 1995, the statements that are not historical facts contained in this conference call are forward-looking statements that involve a number of risks and uncertainties and other factors, all of which are difficult or impossible to predict and many of which are beyond the control of the company. This may cause the actual results, performance or achievements of the company to be materially different from the results, performance, or achievements expressed or implied by such forward-looking statements. The words believe, anticipate, expect, confident, and similar expressions identify forward-looking statements. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

On today's call, we have Mr. Yehuda Shmidman, Chief Operating Officer, and Neil Cole, Chief Executive Officer. I would now like to turn the presentation over to your host for today's call, Mr. Warren Clamen, Chief Financial Officer. Please proceed.

Good morning everyone. And welcome to the Iconix Brand Group second quarter 2010 earnings conference call. Today, we will review our quarterly performance, provide you with an update on the peanuts acquisition, and discuss our outlook for the full year. Reviewing our results for the second quarter ended June 30, 2010, our Company reported a record second quarter revenue and earnings. Total revenue was approximately $76 million, a 35% increase, as compared to approximately $56.4 million in the prior year quarter. The driving factors of the increase were strong organic growth from the existing portfolio, particularly the DTR brands.

For the second consecutive quarter, the majority of our direct to retail brands experienced double digit retail sales gains. Also included in our revenue gains, is approximately one month of the Peanuts revenue and a full quarter of the revenue for the echo portfolio of brands which we acquired in the fourth quarter of 2009. Our business continues to be very profitable and generate strong free cash flow. In the second quarter, our non-GAAP net income, which excludes noncash interest related to the convertible debt, increased 25% to approximately $26.7 million.

Our diluted non-GAAP earnings per share was $0.36, compared to $0.33 in the prior year quarter, our free cash flow increased 26%, to approximately $44.3 million, and our EBITDA increased 18%, to $49.4 million. Our EBITDA margin for the quarter was 65%. This is slightly lower than the level at which our company has been tracking, as it includes deal costs, and additional expenses associated with the Peanuts brand which is a lower margin business compared to our fashion and home brands.

With Peanuts fully incorporated into our business, we expect our company's EBITDA margins for the balance of this year to be in the mid-50's, which is consistent with the guidance we provided when we announced the transaction in April of this year. We anticipate EBITDA margins associated with the Peanuts business to be in the low 20's, as there is contractual revenue share with the Shultz Family Trust, which is separate from the family's 20% interest in our new partnership, as well as agent commissions, and additional administrative costs associated with managing over 1,200 contracts around the world.

Reviewing our results for the six months ended June 30, 2010, we achieved strong top and bottom line growth. Our revenue increased 38%, to approximately $147.7 million. Our EBITDA increased 26%, to approximately $98.9 million. Our non-GAAP net income, as previously defined, increased 38% to approximately $53.7 million. Our free cash flow attributable to Iconix for the six-month period increased 30%, to $84.4 million. Free cash flow per diluted share for the six months was $1.13.

We believe free cash flow is an important metric to look at for our company, because there is a large noncash component to our expense and our tax provision. We estimate the incremental free cash flow versus our net income for 2010 to be approximately $60 million, which includes the noncash taxes, noncash interest, amortization, and the noncash compensation.

EBITDA, free cash flow, non-GAAP net income, and non-GAAP diluted EPS are all non-GAAP metrics and reconciliation tables for each can be found in the press release that is earlier this morning and on our web side Iconixbrand.com. I will now turn the call over to Yehuda Shmidman, our Chief Operating Officer, who will provide you with an update on our organic business.

Thank you, Warren. And good morning, everyone. We are seeing continued success with our organic growth strategy of driving category extensions, increased rack counts, and channel expansion for our portfolio. And as Warren mentioned, our second quarter organic growth led with the strong results of our direct to retail brand.

Here are the highlights from the direct to retail portfolio, starting with Walmart. Our three direct to retail brands at Walmart recorded substantial growth in the quarter. In fact, OP had its largest quarter to date and in June, OP reached its highest sales week ever, while being featured in the hot spots, for the second consecutive year. OP's category assortment also expanded this quarter, with the introduction of a new hard lines collection, featuring pool toys and other related outdoor gear.

Danskin Now and Starter, which have evolved into core athletic lifestyle brands at Walmart, continued to gain market share, with the launch of large basic businesses, including underwear, socks, and sneakers. Walmart has also grown the assortments to include relevant performance technologies, such as the Danskin Now toning shoe, which has been performing well. As all three of our Walmart brands continue to grow in both categories and shelf space, we are continuing to work closely with all levels of management, to support the businesses with both marketing and advertising support.

Our Kohl's businesses, in both Candie's and Mudd also shined this past quarter. Sales of our Candie's brand which is now in its sixth year at Kohl's were up substantially as Kohl's introduced more key items and fashion basics into the collection.

We expect the momentum to continue in the second half of 2010, and we will also benefit from the newly-launched Brittany for Candie's collection, which is incremental to the existing Candie's assortment. The Brittany collection is a natural extension of Britney Spears' partnership with Candie's and is her first-ever line of apparel and accessories. The initial delivery is showing early signs of success and new deliveries will be arriving in stores this September and November.

We are also pleased with the progress of our Mudd brand which continues to ramp up at Kohl's. Similar to Candie's, Kohl's has a strong internal merchandising team working on Mudd. Our DTR with Costco for our Charisma brand also experienced a strong quarter. Amazingly, Charisma is one of the rare brands whose strong heritage allows it to be successfully distributed across multiple distribution channels as evidenced by its outstanding performance at both Bloomingdale's through a wholesale licensee and through Costco as a DTR.

At Sears and K-Mart, we are excited about the future of our three bands, Joe Boxer, Congo and Cannon. The Joe Boxer contract, which was up at the end of this year, was renewed for an additional five years at the same terms and conditions. Our most recent DTR for our Bongo brand, launched in stores this month and is rolling out to all stores in both K-Mart and Sears. To create excitement around the launch, we enlisted Audriena Partridge of MTV fame to star in the fall 2010 marketing campaign.

We are also working with the Sears and Kmart teams to expand our Cannon brand and for the back to school season a new dorm line called Coexist by Cannon is being launched instore with a new national TV campaign being run by Sears Holdings. With this collection, we are branching out into new hard goods categories, such as futons and storage items. At Target, the growth we saw from Mossimo in the first quarter continued into the second quarter. Our Fieldcrest business was down. However,Target is in the process of transitioning this business to be the luxury home brand at Target and we expect to see sales improvements over time with the new positioning and instore presentation.

Performance of our nonDTR brands improved this quarter. Rocawear strength is being driven by its powerful kid's business. Rampage is seeing growth in the accessories category including sunglasses, intimates, and footwear. Echo sales are on plan with several new licensees preparing for launches later this year.

New York products have begun rolling out into the mid tier with new product lines for Kohl's and J.C. Penney's, through our new long-term license with Li & Fung. Badgley Mischka's overall sales were up as we promoted another collection with the Home Shopping Network in May and in June.

And last but not least, we are excited to expand Waverly's distribution further into grocery and national chains this fall with a newly signed paper goods license with Pactive. Pactive will be distributing a large variety of paper goods, including plates, cups and napkins and all co-branded as the Waverly Collection by Hefty.

Looking ahead, we see further opportunities for organic growth in our portfolio, especially when combined with our international platform. And with that, I will now turn the call over to Neil Cole, our Chairman and Chief Executive Officer.

Thank you, Yehuda and Warren. Good morning everybody. We are pleased with our second quarter results, as we reported another record quarter for our company. The strong revenue, and earnings growth driven by both organic initiatives, and recent acquisitions.

As Yehuda alluded to, the sales and royalty increases we saw in the first quarter carried into our second quarter. Our brands continued to gain market share, as we become more deeply penetrated in the Walmart stores and rollout programs with Kohl's, Sears Holding and Costco.

Including our recent acquisition of Peanuts, our brands now represent over $12 billion of retail sales on a pro forma annual basis. In the second quarter, we continued to make progress on our international strategy, by acquiring the Peanuts brand, which has a large international platform and footprint. Including the Peanuts acquisition, on a pro forma basis, our international business represents 18% of our total revenue, compared to only 6% in 2009.

With this acquisition, and the infrastructure that we have already put in place, via our joint ventures in China, Europe and Latin America, we are beginning to make progress on our goal of positioning our company to major international expansion. We are particularly optimistic about our China strategy and recently signed a deal for our Candie's brand, making our fifth brand in greater China. We are making good progress and between the five brands we have signed, our partners have committed to opening 1,000 stores for our brand over the next three years.

Right now, it is difficult to put a value on this business as it is very different from our normal licensing business. But we believe once we start monetizing our equity stakes in our operating partners, it will prove to be very lucrative for our company, in the long term.

We are hoping to see our first monetization event sometime in the next 12 to 18 months. We are also excited about our recent acquisition of Peanuts which we closed in early June. After two months of owning Peanuts, we believe now more than ever that we will be able to leverage the Peanuts platform, which includes over 1,200 licensees worldwide, including direct to retail licenses with such companies as Benniton, H & M, Mango, Marks and Spencer, and toys R us in Japan, for our existing -- the ability to leverage our existing portfolio of brands.

The Peanuts brand generates approximately $75 million in annual royalty revenue, which has been relatively steady over the last decade. With our brand management expertise, we see many opportunities to grow this business. In particular, a key goal of ours is to make the Peanuts characters more relevant for the next generation of today's youth.

To that end, we are excited to update you that we have two new initiatives. The first is an all-new 3D video game, called Snoopy Flying Aces, which debuted last month on X box live, and sold over 70,000 units in its first month. The game developers did an outstanding job of animating the Peanuts characters in this production. And we are in discussions with them to create several new projects.

The second initiative which we announced last week at coma-con is the fourth coming release of a 44-minute Peanuts special called Happiness is a Warm Blanket. Being produced in corroboration with Warner Brothers and the Shultz creative studio in Santa Rosa, California. This is the first all new Peanuts special made in over five years and the first of several projects we are in discussion with Warner Brothers about.

Moving to our newly-formed partnership with Madonna, a week from today, on August 3, we will be launching our first brand Material Girl at Macy's. We have been creating a lot of buzz and excitement, leading up to the launch, and have already a large consumer following for the brand.

In addition to the press we have been receiving, we have generated tremendous interest through the Material Girl website, that has daily posts on fashion, items for the collection, music and pop culture, and a weekly blog from Lordes, Madonna's daughter, which has been a powerful new media strategy that has resonated extremely well with the target consumer. In the first three weeks, the blog has received over 1 million hits.

As Yehuda Shmidman mentioned, we are pleased to announce that Sears K-Mart renewed the Joe Boxer agreement for an additional five years at the same terms. This marks our sixth consecutive renewal of the DTR license in the last year and a half, and further demonstrates the power of our direct to retail model, which offers our partners strong national brands at private label economics. In addition, the fact that our partners are investing in our brands and building strong equity gives us further confidence in the future of our renewals and long-term partnerships.

On the acquisition front, our pipeline remains encouraging. We are actively working on a couple of great opportunities and are comfortable that if needed, we will be able to obtain the necessary financing. Today, we are also pleased to announce that we are promoting three well deserved executives from our Company that have greatly contributed to our success at Iconix, and have been integral in growing our brands and driving our business. Yehuda Shmidman has been promoted to our Chief Operating Officer, Mainy List has been promoted to Chief Merchandising Officer and Carolyn D'Angelo has been promoted to Senior Vice President of our home brands. These expanded roles we are confident that these three individuals will excel and help us to further grow our company.

Moving on to our 2010 financial outlook, we are reaffirming our 2010 revenue guidance of $305 million to $315 million of royalties. Our 2010 non-GAAP earnings per share guidance of $1.35 to $1.40, we expect to continue to generate strong free cash flow of approximately $150 to $155 million. Our revenue guidance represents an organic growth rate of approximately 7% for the full year. We feel good about the fall season as we have good visibility into the inventories of our direct retail brands. However, we remain a little conservative about holiday.

In closing, as we deliver another record quarter for our company and for our shareholders, we believe the advantages of our business model and the strengths of our brands, continue to prove themselves. Our portfolio continues to perform well, as we have built strong partnerships, and continue to expand into new categories and new geographies. We are working on so many exciting initiatives, as we launch new programs with major retailers, and expand our brand worldwide. Looking ahead as we continue to execute on our organic growth plan and add Iconic global lifestyle brands to the portfolio, we believe we will continue to achieve strong, profitable growth for our shareholders. I'd like to thank all of you for listening this morning and your continued support. With that, I'd like to now turn it over to a question and answer.

(Operator Instructions) Your first question comes from the line of Todd Slater of Lazard Capital Markets. Please proceed.

Hi, this is Diana Katz for Todd Slater. Good morning and excellent quarter. Yehuda, you touched on this point briefly but perhaps you could elaborate on your relationship with Walmart and how recent management changes have or have not affected the businesses there. And then also, if you could maybe discuss some of the opportunities for OP and back to school, given the records you're setting there today, as well as commenting on Danskin Now and how that license, it is expiring at the end of the year, and how likely it will to be to be renewed? And then my second question is, if it is possible to break out the core company EBITDA for the quarter. Thank you.

Well, Diane, actually this is Neil, that seems like more than just a second question. Let me try to remember the beginning. We've met with the whole new Walmart team over the last couple of weeks, and we're, you know, pretty confident that our business will continue to grow. We have had three great brands there today and really fits into their strategy, great brands at great prices, and we give them the ability to do direct sourcing, which is also major initiative of Walmart. So we're pretty comfortable with their, -- our business going forward there, and, and working with the new team as we have been talking to over the last few weeks. As far as Danskin Now, we have been notified that they are renewing so that is pretty comfortable there. And actually, I forgot the next couple of questions after that.

Oh, the opportunity with OP, for back to school, given the records you're setting there today.

Well, we think it is going to continue to grow. Last year our business was a lot smaller for back to school and they played it pretty heavy in the first two quarters but we have a pretty good inventory there today so we know we are going to be ahead of last year, and we're pretty confident, we also have a lot of new categories and a lot of new countries so between the new countries, new categories, and confidence in the inventory, we feel pretty good about OP in the back half.

And I think you had an EBITDA question, Diana. I mean the EBITDA margin in the quarter, 65%, which is the Iconix portion. I'm not sure what you meant. That's Iconix. I don't know what you meant with the core --

If we could break out Peanuts versus the rest of the business for the quarter?

We actually don't. We give -- we said that for the balance of the year, the second half, the EBITDA margins will be in the mid-50's for Iconix, and we know that the structure for peanuts was about 20% or 25%. But we are going to get the EBITDA margin for the company, was 65 in the quarter.

Okay, thanks very much.

You're welcome.

Thank you.

Your next question comes from the line of Robert Drbul of Barclays Capital.

Hi, good morning.

Hi, Bob.

I just could I follow up on the Walmart question? Neil or Yehuda , can you just maybe give us an update in terms of your visibility and the direct sourcing and the relationship, and like your visibility in terms of any changes under way with your brands, how that is going, and maybe talk about that a little bit

Yes, I mean we've had an incredible growth over the last 12 months, and every week we continue to see, growth, and just a lot of new categories we added, for instance for Starter we added a whole new basic underwear package. Yehuda mentioned in OP we added all new pool toys and we also expanded into South America and a few new countries. So it has been pretty solid in all three brands. I think if you go into a store, you will see we pretty much are the whole athletic portion between Danskin and Starter Now, we are the key brand, and anchor, for both of those businesses, and OP has had a wonderful year. So we're hopeful in talking to the new team that they're pretty energized by what we do. We give them the ability of really high margins because they get the direct source, which is unique, and so far, it is business as usual, and both sides are feeling good about the future.

Okay. And Neil, can you talk a little bit about the Peanuts, I mean in terms of other opportunities that you see, or biggest , opportunities, mainly do you have any plans or initiatives under way that you're thinking about for the apparel business

Well, actually, the business has a pretty powerful worldwide apparel business. In the states, we have a business with Old Navy, and Europe, it is Benniton, and we've been in conversations, also H & M around the world, so we have been approached by a few big possibilities for brand expansion, whether we create a new brand, or whether it is a Snoopy offshoot, but we have been looking at a few opportunities to grow the business, especially in the United States. And have met with a couple of big DTR possibilities. So but we also want to make sure we're supplementing what we have, and not hurting the business worldwide.

Our big initiative is we really feel we need to make the brand fresh and exciting for the next generation for my 5-year-old daughter. So we're working on all sorts of new web ideas and we have a new video game that just came out that is doing great. We have Warner Brothers is introducing this new video next month. And so just trying to keep it exciting, working with the Shultz family, they have been wonderful so far, and pretty excited about the opportunities to both raise revenue and also maybe tighten the bottom line.

Great. And then just one final question that I have is on the international, the joint venture monetization potential, how much impact do you think that could have on your results over the next 12 months?

Well, we said it could be 13 months or 14 month there's a couple of projected IPO's of two of our businesses. We don't actually know the amount of what our share would do, nor how much we would sell at the time. So it is unfortunately it is a little fuzzy, which I know you guys don't like to hear. But when it happen, I think you will realize how powerful and important these deals are. And hopefully after we do one or two of them and we have another 15 or 20 in the hopper, we will get the proper valuation and get credit for everything we're doing over there.

Great. Thank you very much.

Thanks, Bob.

Your next question comes from the line of Robbie Holmes of Bank of America.

Good morning, Neil. Just a couple of quick questions. Can you remind us on Peanuts how you guys are thinking about the accretion of that acquisition for this year, and next year, and then the other question I had, I think you mentioned on the call, using the Peanuts platform, I guess, as an international platform for growth. Are there any -- is the structure with the Shultz family and everything, is there any limitations on using all of those people you acquired to sort of fold in other brands to that? Or is there any limitations given the joint venture structure with the Shultz family? And then the last question is, I was wondering if you guys could give out, before we wait for the Q, this sort of DTR revenue growth for this quarter versus the nonDTR growth. Thanks.

Okay. I will try to remember the three questions. Starting number one, annually, it is about $0.12 to $0.15 accretion on an annual basis for peanuts, and though there were some deal costs that we lost a little bit in this quarter, because of it. On an annual basis, it is about $0.12 to $0.15. Second question, no, there is no limitation, the Shultz family has been very open to new ideas, and possibly utilizing the platform to grow the revenue, and grow the business, and look at other opportunities utilizing the network, the third part, if I remember correctly, I don't think in the Q we break down exactly percent by DTR but I believe Yehuda said in our opening remarks that DTR has grown double digits, through the first six months and it's been very strong, especially, the Walmart, Kohl's and Costco businesses.

Got you. And then one quick follow-up. As you look into 2011, are any of your licensed partners, indicating issues related to sourcing costs that could affect their top lines, or their top line outlook for next year?

Robbie, unfortunately, we don't really have those discussions so much. I read about them in the newspapers, but I've not heard specifically about anyone who is concerned about -- there could be some margin concern, but I think as far as us getting the revenue we need to grow our business, we're pretty confident we will continue to be able to do that.

Great. Thanks a lot, Neil.

Thanks, Robbie.

Your next question comes from the line of Omar Saad of Credit Suisse.

Thanks, good morning.

Good morning, Omar.

Neil, and Yehuda and Warren, chip in, too, if you feel the need. Iconix is a unique business model. Have you so many different brands across billions of dollars of sale at retail and different channels and becoming more global every day. What's your sense of what is going on out there in the world from a macro economic perspective and how both the license partners you work with, whether it is DTR or not, and then the retailers that some of your licensing, your traditional licensing partners are selling into, what's your sense of how they're planning the world into the fall and holiday and beyond and what's baked into kind of your underlying assumptions for your guidance?

On a short-term basis, we're seeing that we think third quarter is going to be pretty good. And maybe a lot of that has to do with you have to buy the goods around first quarter, when things are pretty good in February, March and April so we're seeing inventories are pretty strong. Whether that's maybe good for Iconix, bad for our partners, but we do see a strong third quarter, as far as looking at the levels of visibility for our partners. I think everyone is a little cautious, Omar. Everyone is reading, and obviously what is happening in Europe and what is happening with housing and unemployment, and maybe the exuberance we felt in February, March and April, everybody is getting a little cautious for holiday and might be backing off. I think retailers move in kind of herds and overreact to both sides. So I think holiday everybody is looking and waiting, and maybe going to pull back a little bit from the strength as far as inventories in the third quarter. And as far as long-term and what's happening around the globe, I think we believe it is a very slow recovery. And it is not going to go back to what it was in 2006, 2007, those dates so quickly, it is going to take a couple of years. But we're very confident because we offer a business model where the retailer gets high margins, gets to control their own destiny and gets great brands and we've just been able to, over the last five years, I think our growth rate is 25% keger every year for five years which I think is pretty strong, better than almost every company I know, and I see it continuing. I think we have the ability to continue, because of the unique business model that you mentioned, giving the retailer great private label economics, giving them a great brand that they don't have to worry about the competition, and so we're feeling pretty good here, we think we have a great future with continuing to acquire great brands but I definitely feel a long slow recovery as I think we already know.

And thanks for that. And could you also maybe highlight, obviously some of the parts of your portfolio are doing really well. Maybe you could take a couple of minutes to highlight some of the areas of the portfolio that might be underperforming a little bit and how you're looking at it, and what is on the opportunities to improve some of the underperformers are?

Hi, Omar. This is Yehuda. In terms of the other side of the portfolio, we have two brands that are still in transition from the old wholesale model into the DTR's and those would be the Mudd and Bongo brands and we're still seeing those ramp up in terms of numbers from this year let's say into next year. And just in terms of general softness, we've spoken about some softness in Waverly generally. We are excited to balance that softness. We have some new licenses at work including the new deal we mentioned today with Packtive, which we're excited about, and Packtive will have a whole new paper, disposable goods collection throughout grocery and national chains. We're trying to balance that softness. And one other would be Fieldcrest which we talked about and again there too we're trying to solve it in conjunction with Target with the new repositioning. But those would be the generals.

And going to the first part of the question, that one is doing well, it is a lot of the DTR's, the Kohl's brands, are both strong and double digits this year, and the Walmart brands are strong, and you mentioned Charisma with Costco. And the other one we're getting really excited about, just based on an early read we've had in the last two weeks and based on the excitement of what Macy's is doing with Material Girl, we really believe that could be a worldwide brand. We're in the process of working on deals, in three or four new countries on top of what Macy's is doing in the US. So those are some bright spots. Also believe there is a lot of upside in both Bongo and Mudd for 2011 in that they were repositioning really this year and Mudd was a long first year. And so we have some good growth there coming and going forward.

Okay, great. Thanks. Good luck.

Thank you.

Your next question comes from the line of Eric Beder of Brean Murray.

Good morning, congratulations.

Good morning, Eric.

Could you talk a little bit about where you are in terms of your cash balances, and your -- what you're seeing in terms of M&A? Would you potentially -- are still actively looking for deals?

Hey, Eric, it is Warren. The cash balance is close to $65 million today. And I will let Neil, you want to talk about the acquisition pipeline.

If you look at our history, what we've done over the past five years, we're always looking for great iconic brands that we can add to the portfolio. Pretty excited about a couple of opportunities that we hope to get done in the near term. As far as the ability to finance them, there is a lot of capital in the markets, and we have a lot of -- a few different banks competing to get our deals. So we're pretty comfortable that we will be able to finance, and some of these new exciting acquisitions that we're going to be working on.

In terms of the Macy's deal with Madonna, I know you've talked before that have potentially to other transactions, an obviously it looks like it will have somewhat of a nice start and what is your thought in terms of expanding the relationship with Macy's even further?

Well, we have a really strong expanded relationship with Macy's right now. In that when you add up all of the businesses we do with Rocawear, Echo, and Rampage and London Fog an Ed Hardy, it could be pretty close to Walmart as our second largest vendor. So and good opportunity there. We're also working on possibly a second Madonna brand with them. And they are so enthralled with what is happening with the first Material Girl that they're looking at a different opportunity. So we look at Macy's as a great partner going forward in a few different opportunities but also in our -- just in our general portfolio, they're pretty important.

Great. Congratulations. Thank you.

Thanks, Eric.

Your next question comes from the line of Jim Chutia of Mona, Break and Hart.

Good morning. The first question, I'm curious, do your JV's in Europe and Latin America and China limit your ability to leverage the Peanuts infrastructure overseas?

No, those businesses are excluded from the Peanuts joint venture.

So can you launch Candie's business in Europe through your Peanuts international platform? Or is that -- would you have to do that through the European JV?

We can do a Candie's deal in Europe, which we're actually working on, through our JV, with people that happen to have Peanuts abilities and that we've met through Peanuts, but it would not be through, with the Shultz's, if we do a fashion brand, through our Europe JV.

Okay. But every brand that you do in Europe would be run through the P&L through the JV? Is that the right way to think about it?

Yes. And the same thing in south America and in China.

But having Peanuts allows to you leverage existing relationships and makes it more likely that you would get a deal done in Europe? Is that the right way to think about it?

Yes, that's the right way to think about it.

And then Fieldcrest, when do you think it would be repositioned at Target? And when will that relaunch?

I think, as we speak, for this fall, and it looks really good, it is called Fieldcrest Luxury and Spa, and it looks wonderful in the store today. So we're thinking we should have a good back half.

Jim, we just came off a long-term renewal with Fieldcrest so we know Target is committed to the brand and the position.

Right. And then finally, Joe Boxer, any plans there, any indications from Sears to get that expanded to additional categories in Sears stores?

Yes, Jim, the Joe Boxer business has actually been expanded nicely into this year and we see that continuing. We had a juniors collection that came out through this year's back to school. Sears was really only recently coming to the table in terms of their dedication to the brand. So that brand, Joe box ser a strong anchor brand throughout both K-Mart and now into Sears looking ahead. In addition looking at this year, we came off of a new footwear business, so that business has been performing well.

Great. Thank you.

Thanks, Jim.

There are no further questions. And I would like to turn the call back over to Neil Cole, CEO.

Okay, well, thank you, everyone, for joining us today, and for your interest in Iconix. As always, our team will be available for further questions throughout the day. Talk to you soon. Thank you.

Ladies and gentlemen, that concludes the presentation. Thank you for your participation. You may now disconnect. Have a great day.