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CHEROKEE NET RISES 15.6% IN 4TH QUARTER

Byline: Jennifer Weitzman

NEW YORK — Taking advantage of its insulation from the wholesale business, brand management and licensing company Cherokee Inc. posted double-digit earnings growth in both its fourth quarter and fiscal year.
For the three months ended Feb. 2, the Van Nuys, Calif.-based firm reported net income of $2.3 million, or 28 cents a diluted share, up 15.6 percent from the year-ago quarter when it posted net income of $2 million, or 25 cents.
Net revenues, all in the form of royalties, grew 4.7 percent to $6.3 million from $6 million in the 2000 quarter.
Robert Margolis, chief executive, said in a statement: “We believe our ability to grow during a challenging economic period is a testament to the strength of the Cherokee brand and our business model.”
Margolis noted Cherokee will roll out this spring in certain European countries with France’s Carrefour SA, the international distribution giant. Cherokee inked a retail license agreement with Carrefour for its Cherokee brand in October 2000.
“This spring, we launch in certain European countries with Carrefour, and in the fall, we introduce Cherokee in the U.K. and Ireland with Tesco PLC,” Margolis said. “We are very fortunate to have partnered with the premier retailers in their respective marketplaces. If these partners successfully launch this year, they could provide dramatic earnings growth in the subsequent years.”
Howard Siegel, president, added that the company will grow revenues from Sideout, an acquired brand. He said he believes the company can expand its template into other industries outside of apparel. Currently, Cherokee is representing Mrs. Fields and DIC Entertainment.
Cherokee applied its business model in helping to put together Mossimo Inc.’s licensing arrangement with Target Stores. Cherokee receives 15 percent of the royalties paid to Mossimo by Target. Last year, Cherokee received $2.2 million in revenues from Mossimo, which suggests that Mossimo received about $14.7 million from Target. Those figures are consistent with Mossimo’s earlier statement that it “nearly tripled” its $300 million guaranteed sales minimum with the discount chain.
For the year, income grew 12 percent to $12.1 million, or $1.46 a diluted share, versus year-ago earnings of $10.8 million, or $1.29. Net revenues jumped 8.5 percent to $30.7 million from $28.3 million.
Cherokee licenses its Cherokee and Sideout brands directly to retailers, which raked in worldwide retail sales exceeding $2 billion with the two brands.

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