CHEROKEE NET UP, BUT SALES PLUNGE
NEW YORK — After a $245,000 gain from the liquidation of its inventory and the sale of the uniform division, Cherokee Inc. reported second-quarter earnings of $336,000, or 5 cents a share, against a loss of $5.4 million a year ago. For the three months ended Dec. 2, sales at the firm, which has shifted its mode of operation, dropped 88.6 percent to $2.2 million from $18.9 million.
For the six months, the Van Nuys, Calif.-based Cherokee earned $3.2 million, or 49 cents, after a $3.7 million special gain. In the year-ago period the company lost $7.8 million.
Sales sank 71.4 percent to $12.9 million from $45.1 million.
The company has discontinued manufacturing and importing apparel and footwear and has sold most of its inventory. Cherokee has now become a licensing company, granting retailers the license to use the Cherokee trademark on certain categories of merchandise, including products it previously manufactured.
With this stripped-down operation, Cherokee has been able to reduce its overhead and operating costs. Cherokee has entered into licensing agreements with Target Stores that guarantee a minimum of $11.5 million in royalties through the year 2001. The company also has agreements with Mervyn’s, Modern Woman/Woman’s World and J. Byron. In November 1995, Cherokee signed a licensing agreement with Mondragon International, based in the Philippines.
“We are at various stages of completing a continuing stream of licensing agreements in the U.S., Australia, China and other countries in the Far East and Asia, as well as Europe, Mexico, South America and Canada,” Robert Margolis, president and chief executive, said in a statement. “Cherokee is strengthening its market position and is continuing to become a major factor in the apparel licensing marketplace,” Margolis continued.
As of Dec. 2, the company had repurchased 21,134 shares of its common stock, as part of its plan to repurchase up to 1 million shares. There are 6.7 million shares outstanding.
— Fairchild News Service