Cherokee Inc. exceeded analysts’ expectations for both earnings and revenues as sales of Cherokee-brand products rebounded in international markets and other brands registered increases.
In the three months ended May 2, the Sherman Oaks, Calif.-based owner of Cherokee, Tony Hawk and Liz Lange registered net income of $3.57 million, 0.6 percent below the $3.59 million, or 43 cents, recorded in the first quarter of 2014.
Revenues, virtually all in the form of royalty income, increased 2.7 percent to $10.2 million from $10 million a year ago.
On average, analysts covering the firm expected earnings of 36 cents on revenues of $10 million.
“While the first quarter posed some challenges relating to the residual impact of the Los Angeles port closures, the end of our partnership with Tesco in the U.K. and Target Canada closing its doors, we have exited the quarter stronger than before,” said Henry Stupp, chief executive officer. “We recently entered into new retail partnerships with Sears Canada, Argos and Sports Direct while also welcoming lifestyle brand Everyday California into our portfolio.”
Sears Canada now has rights to the Cherokee and Liz Lange brands, previously assigned to Target, while the Argos subsidiary of Home Retail Group plc will carry the Cherokee brand online and in stores in the U.K. and Ireland. The relationship with Argos replaces much of the territory previously handled by Tesco. Cherokee and Tesco ended a 14-year relationship late last year.
Earlier this year, Cherokee licensed Sports Direct International to carry the Tony Hawk brand in Europe. Cherokee acquired the apparel and accessories business of Everyday California for undisclosed terms last month.
“Throughout the remainder of fiscal 2016, we will continue to promote the organic growth of our brands through additional category expansion and further international expansion,” Stupp said. “We will simultaneously and aggressively look for additional acquisitions that fit our specific requirements and add value to our company, our retailers and of course our shareholders.”