LOS ANGELES — A California appellate court has denied Mossimo Inc.’s appeal of a June 17 arbitration award and judgment entered in Cherokee Inc.’s favor.
The Jan. 2 decision by the Court of Appeals for the 2nd District reaffirmed the earlier ruling by the Los Angeles Superior Court confirming the award, finder’s fees, interest and attorney costs due to Van Nuys, Calif.-based brand licensor Cherokee, along with its original finder’s fee agreement between Target and Mossimo.
Since July 2002, the two firms have been in dispute over $2.7 million in finder’s fees related to the Target-Mossimo license brokered by Cherokee in 2000. In a filing with the Securities and Exchange Commission, Cherokee said Mossimo owes it $5.8 million in outstanding accounts receivable as of the third quarter ended Nov. 1, 2003.
In a statement, Cherokee president Howard Siegel said, “We hope with this ruling that Mossimo Inc. will see the merits in [its] legal effort, paying us what they owe us and avoiding further interest cost.”
Calls to Santa Monica, Calif.-based Mossimo weren’t returned.
Cherokee’s stable of brands has kept its top line heading north. Third-quarter revenues rose 11.3 percent to $6.7 million, compared with revenues of $6.1 million in the year-ago period. Earnings rose to $2.5 million, or 29 cents a diluted share, compared with $2.1 million, or 25 cents, in the year-ago period.
For the third quarter and nine months ended Nov. 1, Cherokee said revenues generated from the Mossimo deal totaled $308,000 and $2.2 million, respectively, compared to $431,000 and $2.4 million for the periods prior. Revenues from Mossimo for fiscal 2003 rose to $2.7 million against $2.2 million for fiscal 2002.
Higher royalty rates contributed to greater revenues last year, the company said.
Still, sales softened for some brands. Sales of its Cherokee brand at Target were off 3 percent for the quarter and 6 percent year-to-date.