VAN NUYS, Calif. — The conversion of Cherokee Inc. to licensing from manufacturing appears to be working.
The company reported third-quarter earnings climbed to $1.2 million, or 15 cents a share, from $212,000, or 3 cents a share, a year earlier.
Revenues for the three months ended March 1 rose to $1.9 million from $387,000. Royalties represented 93 percent of revenues. The remaining 7 percent came from sales of terminated businesses.
In 1995, Cherokee ceased manufacturing and distribution to focus on licensing the Cherokee brand; some deals gave retailers the right to use the Cherokee brand on products they sourced directly.
Among the latest developments, Brylane during the third quarter launched Cherokee products in its Roaman’s catalog and added a Cherokee line to the Sears Shop-at-Home catalog. Caldor introduced Cherokee men’s wear and women’s intimate apparel, including daywear, sleepwear and robes.
The company announced this month that it had signed a master licensing agreement with Vantex Inc. for further development of the Cherokee brand in Japan. Cherokee formerly had a licensing agreement in Japan with Suzuya.
For the nine months, earnings were $3.98 million, or 49 cents a share. In the year-ago period, a gain of $3.84 million from the sale of Cherokee’s uniform division and some other assets resulted in a net profit of $3.39 million, or 52 cents a share, on fewer shares outstanding.
Revenues fell to $5.6 million from $13.3 million; licensing contributed 95 percent of the latest period’s revenues. In the latest nine months, the company had product sales of only $367,000 against $12.4 million in the year-ago period, but royalty revenues rose to $5.2 million from $940,000 last year.
Chairman and chief executive officer Robert Margolis said the company plans to expand its global position “and expand category development in our existing licensees as we pursue new agreements.”
Cherokee reported it had sold its Wentworth Street facility in Sunland, Calif. The 105,000-square-foot facility was Cherokee’s main headquarters from August 1988 to October 1995. The escrow was closed Tuesday, adding $3.6 million to Cherokee’s cash position, for a total of approximately $7 million.
A Cherokee spokeswoman declined to reveal the buyer, but said it was not in the apparel business.

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