Lower Royalties Pulls Down Cherokee’s 2Q

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Cherokee Inc. said on Thursday its second-quarter net income fell 18 percent on lower sales and licensee royalties of its clothing brands, disappointing analysts.

Net income for the Van Nuys clothing brands licensor dropped to $4 million, or 45 cents per share, for the quarter ended Aug. 2, compared to $4.9 million, or 55 cents, in the same period a year ago. Revenue fell 12 percent to $10.5 million.

Analysts surveyed by Thomson First Call had expected earnings per share of 55 cents. The company said royalties from its U.S. licensee, Target Stores, were down by 21 percent. Royalties from overseas licensee Tesco were down 3.3 percent.

The company, whose brands include Cherokee and Carole Little, last month signed Todd Rogers of the U.S. men’s beach volleyball team to endorse its Sideout men’s casual brand.

Cherokee’s share price was down $1.10, or 5 percent, to $21.95 in morning trading on the Nasdaq.

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