For the nine weeks ending August 1, 2015, sales at Cherokee Global Brands, a global brand marketing platform went down 3 per cent year over year. Revenues for the second quarter of fiscal 2016 dropped approximately 3 per cent to $8.5 million, compared with $8.8 million in the prior fiscal’s second quarter. In a press release, the company explained that the decrease in revenues versus the prior fiscal period was due to increased strength of the dollar and lower sales of Cherokee-branded products in UK and Canada. “The reduction in sales were due to the timing related to the termination of the Tesco relationship and the Argos launch in the UK this past July and in Canada due to the Target Canada bankruptcy,” it added. In the reporting quarter, SG&A expenses totaled $5.3 million, up 5.8 per cent from $5.1 million in the second quarter of fiscal 2015. According to Cherokee, the increase in SG&A was due to a rise in professional fees related to the protection of intellectual property, transaction costs related to potential acquisitions and stock based compensation. Operating income for the second quarter of fiscal 2016 amounted to $3.1 million, down 15 per cent as against $3.7 million in the earlier fiscal’s same period. Operating margin for the quarter was also down at 37 per cent versus 42 per cent, while for the six months ended August 1, 2015, operating margin was 48 per cent vis-à-vis 47 per cent in the same period of fiscal 2015. Net income for the quarter under review reached $1.9 million, or $0.22 per diluted share as against $2.3 million, or $0.27 per diluted share, in last fiscal’s second quarter. For the six months ended August 1, 2015 net income totaled $5.5 million, or $0.62 per diluted share, compared with $5.8 million, or $0.69 per diluted share, in the corresponding period of previous fiscal. “Cherokee Global Brands continues to focus on the development of our global brands, creating value for our licensing partners and generating strong financial returns for our shareholders,” CEO Henry Stupp said. As on August 1, 2015, the company had cash and cash equivalents of $9.8 million, compared to $7.6 million as of January 31, 2015. Cherokee Global Brands also announced that Target Corporation has elected not to renew the license of the Cherokee brand in the US, which will expire at the end of its current term on January 31, 2017. The Target license, including the existing royalty obligations, will remain in effect and continue to generate revenues to Cherokee in fiscal 2016 and 2017. The company does not expect the non-renewal to have any material impact on Cherokee Global Brands’ revenue in fiscal 2016. Cherokee Global Brands anticipates that it will establish new channels for Cherokee branded products in the US that will be available in fiscal 2018.
