Cherokee Blazes a New Trail

NEW YORK -- Cherokee Inc. is out to get back some of its lost market share, and denim is a big part of that plan.

That's the strategy as drawn by Joe Elles, the relatively new president of Cherokee Apparel. Elles, a veteran of Lee Apparel, came to the struggling casual apparel and footwear company last September. Now, he's getting the focus clear. Cherokee, based in Sunland, Calif., a Los Angeles suburb, has dropped men's wear, and the apparel division now will produce and market only women's and girls' wear.

Cherokee had manufactured a mix of casual apparel, with only the occasional denim item. Now, with the line that starts shipping May 31, it will be about 40 percent denim, with the rest of the line filled out by other casual apparel such as knit and woven tops and other casual pants.

There have been some hard times at Cherokee lately. As reported, the corporation emerged from bankruptcy in June; sales in its second quarter ended Nov. 27 declined 19.1 percent, to $26 million from $32.2 million, while costs related to the dropping of men's wear and other restructuring moves pushed the company into the red with a net loss of $4.9 million. For the first half, the loss was $4.6 million, and sales declined 17.9 percent to $60.1 million.

But with new merchandise, newly designed tags and labels, and a new national advertising campaign, Elles said Cherokee is getting back on the growth road. He noted that "it would be a disappointment if we did not run substantial double-digit [sales] growth" in the next fiscal year, which starts June 1 and ends May 31, 1995.

First off, he said, the company plans to drop its prices about 15 percent so that most pieces will retail around $30. That will be accomplished, he said, via "a number of greater cost efficiencies and sourcing." Cherokee is currently sourced and manufactured domestically and offshore, Elles said.

However, he continued, "With the NAFTA, there's a tremendous opportunity in Mexico. Its proximity lends itself to our company in particular."

Another efficiency that Elles is working on is quick turnaround time. As stores gradually change the way they bring in merchandise to more and more of an immediate purchase, being able to replenish stock quickly is key."Back-to-school, for instance, doesn't kick off until the second week of August," he said. "It used to start around the Fourth of July."

With the new merchandise, which will start to ship May 30, Elles has instituted three core denim styles and six fashion styles, in three shades of indigo and three fashion colors that will change each season.

While he'll be looking to add newness to the line, Elles cautioned that Cherokee is staying away from trendiness.

"Sometimes newness can be a new finish or a new fabric," he said, noting that he won't mess with basics such as the ever-popular five-pocket jeans.

Cherokee also won't be timid with advertising. Elles just recently signed off on the creative campaign for fall, created by the Los Angeles-based Asher/Gould agency. That agency also created the current Cherokee campaign, whose tag line is "Relax. It's Cherokee."

The new campaign is scheduled to break in August magazines, and while Elles cautioned that he hadn't completed the media placement yet, he said he's looking at magazines from Seventeen to Redbook to Country Living. There will also be a national TV commercial that will debut in the fall season.

Cherokee is also planning to redirect its distribution, away from discount stores to moderate department stores such as J.C. Penney, Belk Stores, May Department Stores, Federated Department Stores and Mercantile Stores. The company also holds 22 domestic and international licenses in related apparel categories, such as men's shoes, children's apparel, some women's apparel categories and accessories. Elles noted that the company is encouraging those companies to adopt the new labeling and distribution plans as well.

Elles said that he's brought in some new sales and design staff, including a few of his cohorts from Lee Apparel. Recent additions to the staff include vice president of merchandising Elliot Forte, who had been at Liz Claiborne, and Karen Hobson, vice president of merchandising for juniors and youthwear. And Elles is hoping to continue bringing in new blood as the company grows.

"We're in a rebuilding mode here, and as we generate success, people will join," he said. "I would like to have more talent, because a great company is made by great people."