Cherokee Global Brands announced first-quarter net income higher than expectations, causing shares to jump more than 10 percent on Friday.
The Sherman Oaks apparel brand licensing company reported net income of $3.57 million (41 cents a share) for the fiscal first quarter ended May 2, compared to $3.59 million (43 cents) for the same quarter a year earlier. Revenue increased 2.7 percent to $10 million
Analysts on average expected earnings of 36 cents a share on revenue of $10 million, according to Thomson Financial Network.
The company explained its results as a combination of lower sales and administrative expenses – which decreased 7.4 percent – and a tax provision. The company’s effective tax rate dropped to 27 percent compared to 36 percent for the same quarter last year.
Chief Executive Henry Stupp said the quarter presented some challenges, including the closing of Target Corp. stores in Canada and the slowdown at the ports in Los Angeles. But new brands, including Everyday California and Sports Direct, helped drive sales.
“Throughout the remainder of fiscal 2016 we will continue to promote the organic growth of our brands through additional category expansion and further international expansion,” he said in a statement.
Cherokee announced its first-quarter results after market close on Thursday. Shares ended Friday up $2.51 or 10.6 percent to $26.10 on the Nasdaq.