Store Closures Hurt Cherokee’s Quarter

Cherokee Global Brands reported quarterly earnings that missed Wall Street expectations, and attributed the loss in part to the removal of brand presence in Canada and the United Kingdom. The Sherman Oaks fashion licensing company on Thursday reported net income of $1.5 million (17 cents) for the fiscal third quarter ending Oct. 31, compared to net income of $2.3 million (27 cents) for the same quarter a year ago. Revenue fell 7 percent to $8.1 million. Analysts on average expected net income of 22 cents on revenue of $8.63 million, according to Thomson Financial Network. The revenue miss comes after Target Canada dropped two Cherokee brands from its stores due to closures. The retailer filed bankruptcy and will be exiting the Canadian market. Cherokee’s United Kingdom business has also been replaced with a direct-to-retail license agreement with Argos, a British retail operator, as announced last quarter. “Over the long term, we believe transitioning our business away from legacy relationships will provide us the opportunity to establish new, more profitable partnerships,” Henry Stupp, Cherokee chief executive, said in a statement. “Our acquisition of Flip Flop Shops Stores and Everyday California promise to further accelerate our global reach and relevance with today’s consumers. The transitions in our business are teeing Cherokee Global Brands up for a very bright future.” Results were announced after market close. Shares closed up 3 cents or a fraction of a percent to $16.93 on the Nasdaq.