Cherokee Inc. reported net revenues for the three months ended May 1, 2004 rose 1.4% to $12.2 million, compared to revenues of $12.0 million in the comparable period last year.
Selling, general and administrative expenses for the three months ended May 1, 2004 were $3.0 million, up slightly from $2.9 million in the comparable period last year.
Net earnings for the three months ended May 1, 2004 increased to $5.5 million or 64 cents per diluted share, compared to $5.3 million or 63 cents per diluted share in the year ago period. The Company ended the quarter with cash and equivalents of $11.7 million and no debt. Net cash provided by operations during the quarter totaled $8.8 million.
Howard Siegel, President of Cherokee, stated, “We continue to be pleased by the strength and diversity of our worldwide revenue stream. Our overall revenues from Cherokee branded products worldwide grew by over 4.6% during our first quarter as compared to last year. On a mature base, our Cherokee brand revenues from Target were down approximately 6.5% from the first quarter of last year, while our international revenues grew in excess of 50%, which does not yet include any revenues from our new licensee in Mexico, Grupo Aviara. However, we currently believe the decline in royalty revenues from Target and Zellers may continue throughout the year. Domestic revenues from our Sideout brand continue to be strong, and our licensee in China, Bolderway, recently began retailing Sideout branded products in stores in China. In addition, we expect some of our previously announced initiatives (such as our Carole Little brand at TJX, and HouseBeautiful at May Company department stores) to ramp up throughout the rest of 2004 and 2005 and, in turn, enhance our revenues. Furthermore, we continue to be very excited by the growth opportunities in our brand representation business, as we seek worldwide licensing agreements for the brands we represent.”
Russell J. Riopelle, Chief Financial Officer, added, “Our operating results during the first quarter resulted in the continued strengthening of our balance sheet and an improvement in cash flow. Additionally, on June 15th we will pay a dividend of $0.42 per share, our third consecutive quarterly dividend and an increase from our previous quarter's dividend of $0.375 per share, evidencing our continued goal of returning profits to our shareholders. Furthermore, on May 26th we paid out a $0.50 per share 'special dividend' from a majority of the proceeds received from the Mossimo litigation. And on May 21st we settled with Mossimo on the reimbursement of our legal fees, and received an additional payment of $375,000 from Mossimo in this regard. This payment represents the reimbursement of about 90% of our remaining legal expenses in this matter, and will be recognized in our second quarter ending July 31, 2004.”
Robert Margolis, Chairman and CEO, said, “The ongoing growth in our revenues and earnings continues to validate our business model, expense controls, and most importantly, reflects the dedication and focus of our lean and talented group of professionals. We are very excited about the team we have in place, and the potential growth opportunities available to us. We look forward to continuing to execute our strategy in an effort to continue to increase value for our shareholders.”
