Salt Life will likely be the next industry brand to switch to a licensing model after Iconix International Inc. and Hilco Merchant Resources submitted the winning bid to buy Salt Life’s assets at a bankruptcy auction Tuesday, according to court documents.

Iconix and Hilco successfully bid $38.7 million for Salt Life’s assets, besting stalking horse bidder FCM’s offer of $37 million. Other brands in the Iconix portfolio include Zoo York, Mossimo, Candies, Op, and Umbro.

Salt Life had been a top-performing asset of Delta Apparel with a solid growth story as it expanded beyond its Southeast coastal roots. In the fiscal year ended Sept. 30, 2023, Salt Life generated $59 million in revenue and $6.1 million in operating income, according to Delta financial filings. The brand’s gross margins totaled 54.6%.

However, parent company Delta Apparel experienced a downward spiral that put the future of Salt Life in jeopardy.

Delta’s challenges included a business unit losing its largest customer, suppliers cutting off the company’s credit, a rash of board and executive resignations, and a failed plan to sell and lease back its corporate campus to generate cash. At the end, the company was struggling to obtain raw materials, deepening its liquidity crunch and leading to a subsequent bankruptcy filing.

In addition to its wholesale and e-commerce business, Salt Life operates 28 Salt Life stores, a key growth vehicle 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 Breeza Beachwear coastal retail chain. The company operates 30 stores in five states, according to the Breeza Beachwear website.

The final sale of Salt Life assets to Iconix and Hilco, and other Delta assets to successful bidders, must be approved by a bankruptcy court judge. That hearing is scheduled for Sept. 5.

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