Cherokee’s Earnings and Revenues Drop in Q4

Cherokee Inc.’s income and revenues dropped in its most recent fourth quarter and fiscal year of 2011 as the Van Nuys-based brand management company dealt costs from executive leadership changes. For the quarter that ended Jan. 29, the company had net income of $44,000, with no earnings per diluted share, on revenues of $7.4 million. For the same period last year, the company had net income of $3.1 million, or $0.35 per diluted share, on revenues of $7.6 million. Selling, general and administrative expenses incurred during the fourth quarter included costs related to the departure of the company’s former executive chairman, Robert Margolis. Management expects aggregate severance payments, aggregate bonus payments and aggregate non-cash stock compensation for the 2012 fiscal year to be materially lower than the 2011 fiscal year. For the 2011 fiscal year, Cherokee had net income of $7.7 million, or $0.87 per diluted share, on revenues of $30.8 million. For the previous year, the company had net income of $12.6 million, or $1.43 per diluted share, on revenues of $32.6 million. During the fiscal year, Cherokee received a new CEO, chief financial officer and executive chairman of the board. The company also announced seven new partnerships for the Cherokee brand and engaged Vita Foods as Laila Ali’s wholesale licensee for its consumer products. “While I was disappointed with our fourth quarter results, I believe that our recently enhanced brand marketing, creative and support services will stabilize and ultimately grow our existing business while we expand both our existing domestic and international business presence,” said Henry Stupp, CEO of Cherokee. “We finished the year on solid financial footing, despite an overall soft consumer market.” Stupp added that the company reported its 15th consecutive year of profit, after incurring some non-recurring costs related to management restructuring and executive team departures. The company also incurred non-cash expenses related to the acceleration of vesting of stock options. “We expect 2012 to be a highly transformational year as we invest in all our brands and position the Cherokee Group for future growth and profitability,” Stupp said. Jessica Vernabe