Iconix Brand Group Inc. is paying $55 million for the worldwide rights of the Ed Hardy brand, known for its flashy T-shirts emblazoned with tattoo-style artwork.
The brand licensing company also reported Wednesday that it net income rose 27 percent in the first quarter, driven by the strength of its direct-to-retail brands. The acquisition and better-than-expected quarterly results prompted Iconix to raise its full-year adjusted earnings and revenue forecasts.
The company's stock gained 46 cents, or 2 percent, to $22.97 in afternoon trading. The shares set a 52-week high of $23.56 earlier in the day.
Iconix is buying the worldwide master license for the Ed Hardy brand from Nervous Tattoo for $55 million. The deal also includes a $7 million milestone payment.
The transaction boosts the company's stake in the brand to 85 percent.
Iconix did not disclose how much it previously owned but said it was a "small investment" through a joint venture with Don Ed Hardy. The former tattoo artist's imagery serves as the inspiration for the Ed Hardy clothing line.
The acquisition gives Iconix control of the brand's licensing and marketing functions. Nervous Tattoo will remain a licensee for Ed Hardy T-shirts, hats and hoodies and will prepay $7 million in royalties under its license.
In the first quarter, Iconix earned $31.4 million, or 42 cents per share. That compares with $24.8 million, or 33 cents per share, a year earlier.
Excluding non-cash interest related to convertible debt, adjusted earnings increased to 45 cents per share from 36 cents per share.
Analysts polled by FactSet expected earnings of 36 cents per share.
Revenue for the three months ended March 31 climbed 29 percent to $92.4 million from $71.7 million. This surpassed Wall Street's estimate of $88.3 million.
Iconix, based in New York, now foresees full-year adjusted earnings of $1.63 to $1.68 per share on revenue of $355 million to $365 million. The New York company previously predicted adjusted earnings of $1.53 to $1.58 per share on revenue of $340 million to $350 million.
Analysts expect earnings of $1.42 per share on revenue of $350 million for the year.