Brand management company Cherokee Inc says it is “disappointed” after fourth quarter profits tumbled by 98% after being hit by lower sales and costs related to management restructuring and the departure of its former executive chairman.
Net income in the three months to January 29 fell to $44,000, down from $3.11 million in the same period last year. Net revenues were almost flat at $7.4 million, compared with $7.6 million a year ago, and were unable to offset a $5.1 million payment to the former executive chairman Robert Margolis.
For the fiscal year, net income dropped 39% to $7.7 million, or $0.87 per share, compared to $12.6 million, or $1.43 per share, the year before. Net revenues were down 5.5% to $30.8 million from $32.6 million.
The company’s Cherokee brand is licensed to retailers including Target, Tesco, Zellers, Pick N’ Play, Falabella and Arvind Mills and generated royalty revenues of $3.3 million and $27.4 million in the fourth quarter and full year respectively.
Licensing revenues from the Sideout brand rose 40% to $70,000 in the quarter; while the Carol Little brands saw royalty revenues fall 12.8% to $129,000.
“We finished the year on solid financial footing, despite an overall soft consumer market,” said CEO Henry Stupp.
“We expect 2012 to be a highly transformational year as we invest in all of our brands and position the Cherokee Group for future growth and profitability.”
