Skechers Striding Ahead With New Sock License Pact

Retail
by Deborah Belgum

Skechers U.S.A. Inc., the Manhattan Beach-based manufacturer and retailer of trendy shoes and casual footwear, has signed its first licensing agreement and is ready to sign more.

The agreement was made with Renfro Corp. in North Carolina, a major manufacturer of socks that acquired Fruit of the Loom's hosiery division in 1996.

Renfro will be making socks with the Skechers logos that will be in Skechers 80 retail stores next November, as well as department stores and sporting goods stores.

"We've been looking at licensing opportunities for some time but wanted to wait until the time was right and the product was right," said company spokeswoman Jennifer Clay.

Licensing agreements are a good way to boost revenues without investing any money or having any overhead costs. "It's a nice brand extension for them," said Michael Pachter, a Los Angeles analyst at Wedbush Morgan Securities. "It is pure profit for them."

Skechers, whose first quarter results were better than expected (strong orders, minimal backlogs), continues to struggle on Wall Street, trading at $22 a share, down almost half its value from a year ago.

"They were punished for over promising earnings and under delivering," Pachter said. "Investors should appreciate it costs nothing to license a product."

Cherokee World

Another company that learned the power of licensing is Cherokee Inc., the Van Nuys firm that once manufactured products under the Cherokee name but now only licenses the name for apparel, cosmetics and other products.

The company announced plans to launch its licensed products this fall at Tesco, a chain of department stores in the United Kingdom and Ireland. This is after launching the Cherokee trademark six weeks ago at Carrefour, a French-based chain of hyper-markets located in 26 countries.

"If this introductory year is successful, our revenue growth from these mega-retailers could provide material contributions to our earnings per share next year and thereafter," Cherokee President Howard Siegel said.

Cherokee's stock is trading near its one-year high of $23.40, reached on May 17.

Kohl's Plan

Kohl's Corp., the Midwest chain of discount department stores that announced it would open 30 stores next year in Southern California, has signed a deal to build a 98,000-square-foot store in Torrance. This makes the seventh known location the Wisconsin-based corporation has selected in Los Angeles County.

Kohl's signed a ground lease with La Caze Development Co., which recently bought Airport Plaza for $27 million. The 208,000-square-foot plaza at Crenshaw Boulevard and Pacific Coast Highway already has a Circuit City, Big 5 and Smart & Final. La Caze Development will make cosmetic changes to the stores' facades to improve the look of the shopping center.

Kohl's will build its own structure next to the existing mall. The department store is scheduled to open in May 2003.



Staff reporter Deborah Belgum can be reached at (323) 549-5225 ext. 228, or at dbelgum@labusinessjournal.com.

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