Cherokee Q4 Profit Up Despite Sales Decline

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Sherman Oaks, CA—Cherokee Inc, a brand management company, reported Thursday that its fourth quarter and full year sales were down, hurt by sales declines of its Cherokee branded merchandise at Tesco and the “non-renewal of the Norma Kamali license with Walmart.”

For the quarter ended Jan. 28, Cherokee said net income rose to $1.5 million or 18 cents a share, compared with $44,000 a year ago, mainly on lower operating expenses.

Total revenue dropped to $6 million from $7.4 million in the prior-year quarter. For its fiscal year, Cherokee said total sales fell to $25.6 million, from $30.8 million in the prior year.

While noting that the company saw declines based on sales decreases at Tesco of Cherokee branded products and Walmart’s decision not to renew its Norma Kamali license, Henry Stupp, Cherokee’s ceo, said, “I am pleased to note that Cherokee products are now available in more countries than they have been in prior years and, except for the declines that we have experienced in the United Kingdom and certain countries within Central Europe, we are seeing an increase in the sale of Cherokee products in most of our major markets.”

Although Stupp said that the company is well positioned globally with expanded sales and marketing teams, the best fourth quarter sales results were domestic. “Target Stores, our first Cherokee partner, generated a double-digit retail sales increase of about 26% over the prior year resulting in a corresponding royalty revenue increase of nearly 10%. After experiencing positive results for both back to school and holiday 2011, early indications bode well for this positive momentum continuing into our new fiscal year.”

Cherokee recently launched its branded products at Nishimatsuya in Japan and Magnit in Russia.

“We also look forward to our new collaboration with Tesco in fiscal 2013, representing a resurgence of our business in the U.K. and Central Europe with increased dedication from both the Cherokee Group and Tesco,” Stupp added.


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