The challenges continue for Iconix Brand Group as the plunge of the company’s stock extends into Friday, following CEO Neil Cole’s resignation announcement.
At 10:20 a.m. EDT shares were down more than 24 percent for the brand management firm whose licenses and brands include Candie’s, Bagdley Mischka and Bongo.
Iconix has been in the spotlight with a string of law firms announcing class action suits as well as other investigations into the company’s accounting practices.
Among the claims against the company are allegations that Iconix underreported the cost basis of its brands; overstated its earnings and revenues; and engaged in irregular accounting practices related to the booking of its joint venture revenues and profits, free-cash flow and organic growth.
On Aug. 7, Nomura Holdings Inc. and Wunderlich Securities Inc. both downgraded the firm’s stock with Wunderlich giving the stock a “hold” rating.
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“After covering the company for a long period of time, we admired the leadership and strategy implemented under Neil Cole,” Nomura Securities International Inc. analyst Robert Drbul wrote in a note on Aug. 7. “Given this development, we think a ‘neutral’ rating is warranted. We are disappointed by his departure.”
In addition to downgrading the stock, Wunderlich Securities analyst Eric Beder lowered his price target from $36 to $16.
Meanwhile CL King & Associates analyst Steven Marotta maintained a ‘buy’ rating on the depressed stock noting that he remains constructive on the plummeting shares “though [the stock] is not for the faint of heart.”
Iconix has named existing board member Peter Cuneo as interim CEO and chairman of the board while the search for a new CEO commences. But Marotta said he suspects that Cuneo’s impact on the company will extend beyond his “interim” role.
“We are led to believe that Cuneo will be more than a placeholder CEO and will take a highly active role in not only operations but also, and along with new CFO David Jones, investor relations,” Marotta wrote on Aug. 7.
Back in April, Iconix Brand Group’s shares fell more than 20 percent following the announcement of COO Seth Horowitz’s resignation, which came just two weeks after CFO Jeff Lupinacci’s departure on March 24.
On June 17, Iconix quelled some industry chatter when it tapped veteran Penske Automotive Group CFO and EVP David Jones for its CFO and EVP slot.
Marotta had said back in June that he was “thrilled that an executive with Jones’ experience level joined Iconix as CFO.”
“It stands to reason that someone with a successful track record, depth of experience and high-profile position similar to Jones would not have joined Iconix without first completing (and being comfortable with) a deep-dive of the internal accounting practices and reported results,” Marotta wrote in a June 17 note.
For now, Marotta and Drbul both say they’ll remain on the sidelines until the company posts its second quarter earnings and updated FY15 guidance on Aug. 10.
