Apparel maker Cherokee Inc. reported fourth-quarter earnings plummeted 86.4 percent, because of a onetime payment that boosted last year’s results.
For the three months ended Feb. 2, earnings fell to $2.8 million, or 31 cents a diluted share, from $20.7 million, or $2.33, in the year-ago period. Last year’s results were helped by a $33 million payment in connection with a so-called finders agreement. In that transaction, Iconix Brand Group Inc. agreed to pay the $33 million to Cherokee in exchange for Cherokee dropping its offer to purchase Mossimo. That paved the way for Iconix to later acquire Mossimo. Total revenues, which predominantly come from royalties, fell 79 percent to $8.7 million from $42.2 million.
International royalties in the quarter grew 25 percent to $5.5 million from a year ago. The company expects international royalties to continue to increase, as its new global licensees begin to sell Cherokee branded products over the next two years.
For the full-year period, earnings sank 52.8 percent to $16.4 million, or $1.84 a diluted share, from $34.8 million, or $3.93, last year. Total revenues dropped 45.7 percent to $41.6 million from $76.6 million.
“We plan to build our brand representation business internationally utilizing the retail partnerships and relationships we have cultivated over the past several years,” said Robert Margolis, chairman and chief executive officer. “We believe that this will be a meaningful way for many brand owners to profitably build their presence outside the U.S.”
Cherokee is also anticipating the launch of Norma Kamali at Wal-Mart Stores Inc.
During the quarter, the company extended its licensing agreement with Target Corp. through Jan. 31, 2012, despite sales for the year falling 10.2 percent at the discounter.
Separately, the company approved the extension of its share repurchase plan to Jan. 31, 2010, for up to 800,000 shares.