What: Shares of brand management company Iconix (NASDAQ:ICON) slumped on Friday after the company announced that Neil Cole is stepping down from his positions as CEO, chairman, president, and a member of the board of directors. At 2:20 p.m., the stock was down about 24%.
So what: Cole has served as CEO since he founded the company in 2005, and his departure follows the exit of both the CFO and COO earlier this year. Questions regarding Iconix's accounting methods arose in April, and the stock has been tumbling since the beginning of this year. After the decline today, the stock is down nearly two-thirds from its 52-week high.
Cole will serve as a special advisor to the company through Sept. 30 to aid the transition. Board member Peter Cuneo has been appointed interim CEO, and the board of directors has formed a search committee to evaluate candidates. Cuneo had this to say about Cole's departure: "Neil Cole is a pioneer in our industry and as founder of this company has overseen its significant growth for the past 10 years. Under Neil's leadership, Iconix has acquired over 35 iconic consumer brands creating a diversified and powerful portfolio. On behalf of the Board we want to thank Neil for his vision, dedication and the countless other contributions he has made to Iconix. We wish him well as he pursues new endeavors."
Now what: Investors have essentially abandoned Iconix stock, and the departure of the founder is another sign that there may be severe problems at the company. When it reported earnings in April, Iconix guided for full-year non-GAAP EPS between $3.00 and $3.15. With the stock now trading at less than five times the low end of this range, investors appear to have completely lost confidence in the company.
Iconix is set to report its fiscal-second-quarter earnings on Aug. 10, and investors should certainly tune into the conference call to listen for hints of what's going on at the company.