Cherokee Inc. saw its royalties and profits decline in the second quarter as it continued to experience lower sales of its namesake brand at Tesco stores in western and central Europe.
For the three months ended July 28, net income slipped 3.8 percent to $1.6 million, or 19 cents a diluted share, from $1.7 million, or 20 cents, in the year-ago quarter. With selling, general and administrative expenses reduced 7.8 percent to $6.3 million from $6.7 million in the 2011 period, operating income receded 1.6 percent to $2.7 million.
Royalties, the firm’s sole source of revenue, fell 5.3 percent to $6.3 million from $6.7 million. Royalties attributable to Tesco, which holds the Cherokee direct-to-retail license in the U.K., Ireland and certain central European markets, dropped to $200,000 from $1.2 million in last year’s second quarter, while those from Target increased to $3.1 million from $2.8 million. With the drop in Tesco-related revenues, royalties from Target made up 49 percent of the quarterly total, up from 42 percent in the 2011 period, according to the company.
Henry Stupp, chief executive officer of Cherokee, told WWD he was optimistic that the company’s business with Tesco would gain momentum in coming months. “I just returned from meetings at Tesco’s London headquarters and look forward to the relaunch of Cherokee men’s, women’s, girls’ and boys’ clothing at Tesco in spring 2013,” he said, adding that growth had been strong “in Asia, Latin America and of course domestically with our largest retail partner, Target. The positive progress with Target has continued into the third quarter.”
Cherokee on Wednesday acquired the Liz Lange Maternity and Completely Me businesses from an affiliate of Bluestar Alliance LLC for $14 million. The Lange maternity business has been distributed in Target Corp. stores for more than 10 years. Stupp said Cherokee intends to expand the Lange business into international markets. Completely Me is carried by HSN Inc. in the U.S. and by The Shopping Channel in Canada.
In the six months, Cherokee’s profits declined 25.3 percent to $3.7 million on a 1.6 percent increase in royalties to $13.8 million.
A room full of toiles at the haute couture atelier in the Dior exhibition at Les Arts Décoratifs, open in Paris since July 5. This is just one of three major exhibitions that have been timed to coincide with the house's 70th anniversary. See the rest of the exhibits, plus read WWD's look into the iconic brand's history. Link in bio. #wwdfashion (📷: @dominiquemaitre)
For spring, Pamplemousse's Danica Zheng presented her signature slip dresses attached to a white T-shirt along with floral windbreakers, off-the-shoulder cotton blouses and more. For more highlights from the New York trade shows, go to WWD.com. #wwdfashion
The Green Carpet Fashion Awards closed out Milan Fashion Week yesterday. The fashion industry flocked to the event, showing its efforts to support and spread the message of sustainability. Supermodel Gisele Bündchen said "if each one of us took at least one step is this direction, there is no saying how much could be done." #wwdeye #wwdfashion #mfw (📷: Lodovico Colli di Felizzano)
Etro’s show, titled “The Tree of Life,” was a celebration of the house’s 50th anniversary. “My father founded the company in 1968, which was the year of counterculture and psychedelia. It’s really a show that celebrates that and the paisley design of India and its origin,” said Veronica Etro. #wwdfashion #mfw #ss18 (📷: @delphineachard)
For @msgm’s spring 2018 show, creative director @massimogiorgetti said “Words, sounds, colors. Synthesis and therapy of a collection,” were the inspirations behind the collection, showing today. Read the rest of Milan spring 2018 inspirations on WWD.com. #mfw #wwdfashion #ss18
For her first solo album in over 10 years, Fergie tapped Carine Roitfeld, Mert and Marcus, Giovanni Bianco and more to create a fashion-focused video approach for the record, Double Dutchess. "Giovanni really helped me get back in touch with my tomboy side, my hardside," said the singer. #wwdeye #wwdfashion ( : @slovekinpics)