Cherokee Inc. remade itself about 15 years ago by getting its clothing in Target stores. But more recently, the Van Nuys apparel licensing company has remade itself again, this time into an international player.
In recent years, Cherokee got its products on the shelves in the United Kingdom, then the rest of Europe, South America, South Africa and India. More recently, it got into the promising market of China. Now, the company is hitting stores in the Middle East.
The company’s foreign sales have soared from 26 percent of total revenue in 2004 to 50 percent this year. That percentage could grow with the company’s latest moves.
“We think it’s a prime market for the Cherokee brand to be sold in,” Russell Riopelle, Cherokee’s chief financial officer, said of the Middle East.
The company arranged for Arvind Retail Ltd., an apparel maker and retail chain headquartered in India, to begin selling Cherokee items in eight Middle Eastern countries, including the United Arab Emirates, Kuwait, Saudi Arabia and Qatar. The agreement, announced April 26, amended a previous licensing agreement between Cherokee and Arvind that only covered India.
Cherokee started out making and selling bell bottoms and platform shoes in the 1970s, then hit hard times – including two rounds of bankruptcy – before coming up with a winning strategy in the 1990s. The company stopped manufacturing and started providing Target with Cherokee label clothing by licensing its brand to the retailer, which then contracts with apparel makers. Other Cherokee brands are in TJ Maxx stores. Cherokee collaborates with the chains; together, they pick fashions they think will sell.
Cherokee duplicated the Target model when it moved into the international market, licensing its name to major U.K. discount retailer Tesco PLC in 2001.
In November, Chinese retail chain RT Mart Stores agreed to sell Cherokee’s line of men’s, women’s, children’s clothing, footwear and accessories as well as home textiles.
How Cherokee will fare there remains to be seen.
“China is a big market,” Riopelle said. “No one has been able to crack it, but we think we’ve picked up the right licensee.”
Cherokee is not alone among apparel companies in exploring foreign markets. True Religion, for one, reported that its international sales for the fourth quarter 2009 grew 24 percent compared with the year before, with strong sales in Asia.
Jeffrey Van Sinderen, an apparel analyst for B. Riley & Co. in West Los Angeles who doesn’t follow the company, feels Cherokee isn’t overreaching by expanding its international presence.
“A lot of companies are expanding internationally, there is no question that there are areas of growth there,” Van Sinderen said. “Sometimes companies find the business internationally outperforms the U.S. market.”
