Cherokee Inc. (NASDAQ: CHKE), a global brand management company, today reported financial results for the third quarter ended October 29, 2011. Net revenues were $6.0 million compared with $7.7 million for the prior year, SG&A expenses were $4.2 million, compared with $3.9 million for the prior year and net income was $1.0 million or $0.12 per diluted share, compared with $2.3 million, or $0.26 per diluted share, for the prior year.
“While we look forward to the holiday season, our results for the third quarter of FY 2012 were mixed,” said Cherokee Chief Executive Officer Henry Stupp. “For our Cherokee brand, in the third quarter, Target Stores U.S. retail sales and royalty revenues were each up 15.4%. We are both gratified and optimistic by these results as they continue to validate all of our efforts and strategic direction. Internationally, our retail sales and royalty revenues were down 47.6% and 43.2%, respectively, over the prior year’s quarter, almost entirely due to a decline in the sales of Cherokee products at Tesco. Conversely, overall sales and royalty revenues for our other international retailer partners were up almost 2%. We continue to diligently work with Tesco to develop a framework for success going forward, as well as introducing the Cherokee brand into new markets to offset any revenue erosion as we work on a correction with our Tesco business. Specifically, we look forward to launching in both Japan later this month and the Russian Federation in the coming months, and we continue to pursue new opportunities for all our brands, both owned and represented.
“Moving forward, we will focus on executing on our strategic vision and are already making strong progress in several areas. Our first annual ‘Cherokee Experience’ in Minneapolis in September was very successful and well attended by over 120 people. During this event, we introduced our retail partners and the investment community to a comprehensive, proprietary 360° approach to our global brand vision that incorporates consumer insights, product and marketing concepts and new in-store presentation innovations to enhance the consumer shopping experience. We believe that several of the new initiatives unveiled at ‘The Experience’ will continue to develop traction in the coming year. Although we remain confident in our strategic direction, we will continue to monitor our investments in marketing and infrastructure to ensure that we maintain a strong financial position going forward.”