| Published August 29, 2024
Salt Life is likely to be the next industry brand to move to a licensing model after Iconix International Inc. and Hilco Merchant Resources made the winning bid to buy Salt Life’s assets at a bankruptcy auction on Tuesday, court documents show.
Iconix and Hilco successfully bid $38.7 million for the assets of Salt Life, beating stalking horse bidder FCM’s offer of $37 million. Other brands in Iconix’s portfolio include Zoo York, Mossimo, Candies, Op and Umbro.
Salt Life has been a high-performing Delta Apparel asset with a solid growth story as it expanded beyond its Southeast Coast roots. In the fiscal year ended Sept. 30, 2023, Salt Life generated revenue of $59 million and operating income of $6.1 million, according to Delta financial filings. The brand’s gross margins were 54.6%.
However, the parent company Delta Apparel entered a downward spiral that put the future of Salt Life in jeopardy.
Among the challenges Delta faced were the loss of its largest customer, suppliers refusing to lend to the company, a series of board and executive resignations, and a failed plan to sell and lease back its headquarters to generate cash. Ultimately, the company had trouble sourcing raw materials, which exacerbated the liquidity crisis and eventually led to a bankruptcy filing.
In addition to its wholesale and e-commerce business, Salt Life operates 28 Salt Life stores, an important growth tool for the brand.
At the bankruptcy auction, the leases for two Salt Life stores in Huntington Beach and San Clemente, California, were sold for $150,000 to L&L Wings, Inc., owner of the coastal retail chain Breeza Beachwear. The company operates 30 stores in five states, according to Breeza Beachwear’s website.
The final sale of Salt Life’s assets to Iconix and Hilco, as well as other Delta assets to successful bidders, must be approved by a bankruptcy judge, a hearing scheduled for September 5.
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