Lower trademark impairment charges allowed the Iconix Brands Group to reduce its net losses for the fourth quarter of 2020 as well as the full financial year, in spite of lower revenues from its licenses due to the Covid-19 pandemic. Another positive factor for the full year was a gain of $74.1 million from Iconix’ sale of its rights to the Umbro and Starter brands in China, which allowed the company to pay down more than half of its loans, although it still had a total net debt of $613 million on its balance sheet as of Dec. 31.

More in detail, Iconix suffered a net loss of $7,336,000 for the full 2020 financial year, way below the previous year’s loss of $109,522,000. Offsetting the extraordinary gains in China, the company booked trademark impairment charges of $35.5 million and investment impairments of $19.6 million last year, compared with impairments of $92.2 million in 2019. While revenues declined by 27 percent to $108.5 million, adjusted Ebitda fell by 32 percent to $55.1 million, leading to a drop in the operating margin for the year to 51 percent from 54 percent.

For the fourth quarter, Iconix booked a net loss of $14,144,000, against a loss of $93,029,000 in the prior year, on 22 percent lower revenues of $33.9 million. Impairment charges of $11.3 million, taken in the quarter for the Candies and Rampage trademarks, were down sharply from the $65.6 million impairment charges taken in the corresponding period a year earlier. Furthermore, Iconix managed to reduce its operating expenses by 27 percent in the latest quarter, allowing the adjusted Ebitda margin to improve to 54 percent from 49 percent

International revenues fell by 30 percent to $12.4 million in the quarter, with decreases in Latin America and Europe. Higher revenues for Umbro could not prevent a drop of 35 percent in the men’s segment, due to lower revenues for Buffalo and Ecko United. In the women’s segment, higher revenues from Danskin were offset by drops at Mudd and London Fog, leading to an overall decline of 21 percent. On the other hand, the group’s home segment recorded an increase of 62 percent.

The management was upbeat about the prospects for 2021, boasting that it signed 190 licensing deals during 2020 for minimum royalties of about $134 million over the life of those contracts.

Earlier this year, Iconix completed the sale of its Lee Cooper business in China. The proceeds of $15.8 million were partially used to pay back $11.8 million on its senior secured term loan, further reducing the projected interest charges for this year.