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.