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Cherokee, Target Extend License to 2017

Amendment of arrangement calls for Target to renew for two-year terms.

Cherokee Inc.’s licensing agreement with Target Corp. has been extended into 2017.

Target exercised its right to renew its license with Cherokee through Jan. 31, 2017. In a modification of the previous arrangement, Target now will have the right to renew the agreement for two-year periods, rather than the one-year periods previously covered, provided that Target has met the minimum royalty payment of $10.5 million for the preceding year.

As before, Target is required to provide written notice of renewal at least one year prior to the end of the current term.

In a recent modification of the pact between the two companies, Target’s minimum annual royalty payment rose to $10.5 million from $9 million and was reworked to apply to sales of Target’s growing roster of stores in Canada as well as its units in the U.S.

The two firms have a separate agreement covering Target’s license for Cherokee branded school uniforms and another that applies to Target’s rights to the Liz Lange and Completely Me by Liz Lange brands, which Cherokee acquired in September 2012.

In the three months ended Aug. 3, royalties from Target accounted for $4.1 million, or 54.6 percent of Cherokee’s total revenues of $7.5 million.

“It’s gratifying to receive recognition for the great strides the Cherokee brand has made with Target,” Henry Stupp, chief executive officer of Cherokee, told WWD. “Target is a fantastic partner that provides great product for its guests. The changes in our agreement show Target’s commitment to the brand, and we think our decision to open an office to better service Target shows how we’re dedicated to better servicing the relationship.”

The revised terms of the Cherokee-Target deal were disclosed in a Form 8-K filed by Cherokee with the Securities and Exchange Commission.

Stupp said Cherokee was pleased with its acquisition of Liz Lange and that its recent licensing deal with Mahindra Retail Pvt. Ltd. to introduce the brand in India through Mahindra’s Mom & Me stores and its Web site was “the start of what will be an international rollout for the brand.”