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Cherokee Net Falls in 3rd Qtr.

Cherokee’s third-quarter profits weighed down by an increase to its tax provision, but the brand manager reported an improvement in its recent revenue trends.

Cherokee Inc.’s third-quarter profits were weighed down by an increase to its tax provision, but the brand manager reported an improvement in its recent revenue trends and unveiled two licenses for its Sideout label.

This story first appeared in the December 10, 2009 issue of WWD.  Subscribe Today.

The Van Nuys, Calif.-based firm’s profits fell 14.8 percent to $2.8 million, or 31 cents a share, from $3.3 million, or 37 cents, a year earlier. Its income tax provision for the quarter ended Oct. 31 rose to $1.9 million from $1.5 million a year ago.

Royalty revenues slid 1.4 percent in the U.S. and grew 1.5 percent internationally, making for an overall $5,000 rise in total revenues to $8 million. Although modest, the increase marked a turnaround from the first half’s 23.1 percent revenue drop after the liquidation of the Mervyns chain last year and declining sales at Target Corp.

“During the third quarter, we signed up two new licenses for our Sideout brand, and in November we announced our new licensing agreement for the Cherokee brand in China,” said Howard Siegel, president. “We look forward to additional revenue streams from our new licenses over time, while we continue to pursue new licensing opportunities with premier clients around the world.”

Cherokee signed an exclusive U.S. deal with ACI International to produce men’s, women’s and children’s footwear under the Sideout and Sideout Sports brands.

For the nine months, earnings fell 20.9 percent to $9.5 million, or $1.07 a share, from $12 million, or $1.34, a year earlier. Revenues declined 16.9 percent to $25 million from $30.1 million.