Lower sales at Target Corp. and the liquidation of Mervyns cut into Cherokee Inc.’s second-quarter royalties and pushed profits down nearly 30 percent.
In the three months ended Aug. 1, net income was $2.9 million, or 32 cents a diluted share, 29.1 percent lower than the $4 million, or 45 cents, registered in the 2008 period. Revenues, all in the form of royalties, dropped 23.2 percent to $8.1 million from the year-ago level of $10.5 million.
Howard Siegel, president, said royalties in the U.S. dropped $1.1 million “as a result of lower retail sales of our Cherokee brand due to the reduction of categories at Target and the absence of Sideout revenues due to the liquidation of Mervyns.” Some of this decline was offset by growth of Norma Kamali volume at Wal-Mart Stores Inc., a licensing deal put together by Cherokee, and growth in smaller markets.
“Although we expect that retail revenues may continue to be soft through the rest of this year,” Siegel said, “we believe we will benefit from the growing revenue streams of our Cherokee brand in Brazil, Chile, Peru and India, as well as our upcoming launch in Spain, along with the continued growth of Norma Kamali at Wal-Mart.”
Those programs and new accounts for Cherokee and Sideout are expected to result in increased revenues beginning next year, he said.
The company also announced that it had licensed Jem Sportswear of San Fernando, Calif., to manufacture and market men’s and boys’ knit tops under its Sideout brand. Although Cherokee is best known for its retail direct licensing model, Robert Margolis, chairman and chief executive officer of Cherokee, said the firm would work with wholesalers like Jem to service retailers “that do not have the economies of scale to manufacture their own licensed lifestyle product.”
Cherokee will pay a dividend of 50 cents a share later this month. “Unless we see a prudent and compelling acquisition opportunity or some other growth opportunity, we expect to continue a dividend policy commensurate with our earnings and excess cash availability as conditions permit and at the direction of the board,” said Russell Riopelle, chief financial officer of Cherokee.
For the first half of the year, net income declined 23.2 percent to $6.7 million, or 76 cents a diluted share, as revenues dropped 23.1 percent to $17 million. The company’s cash and cash equivalents dropped to $8.9 million on Aug. 1 from $13.7 million on Jan. 31.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews