After co-founding Cherokee Inc. in 1981, Robert Margolis is leaving the company, stepping down as the executive chairman of the board of directors. Jess Ravich has been approved to succeed Margolis as non-executive chairman of the board. It also slashed its quarterly dividend in order to invest in the business.
“Mr. Margolis has worked closely with Chief Executive Officer Henry Stupp and the board to ensure an orderly transition process and to support Mr. Stupp as he further expands the company's global growth strategies,” the statement said.
“I am excited to witness the next dynamic phase of Cherokee's growth and spend much deserved time with my family and grandchildren,” Margolis said in a statement. “I would like to thank our shareholders, board members, and co-workers as it has been my privilege to serve as chairman and CEO for Cherokee for nearly two decades. This is the appropriate time for me to step aside in order for younger executives who are investing their money and their time to further build on the very successful international Cherokee brand platform and business model.”
Cherokee announced that the board of directors has approved a separation agreement for Margolis that allows for the acceleration of his compensation for the 2012 fiscal year. The company will purchase 400,000 shares of Cherokee's common stock valued at $18.15 each in a private transaction.
To pay for the buyout, “The company has accepted a commitment from U.S. Bank, N.A. to provide Cherokee, Inc. with a $10 million term loan facility to finance the transactions with Mr. Margolis,” the statement said.
Separately, Stupp and Ravich will buy 10,000 and 50,000 of Margolis' common shares, respectively, under the same terms.
“This transition is an important milestone for Cherokee. Having the support of the board in order to pursue prudent acquisitions and growth strategies to more fully capitalize on our global platform is gratifying,” Stupp said in the statement. “Our goal is to grow the company utilizing its financial strength, its global brand awareness, industry-leading retail partners and, of course, the hard work of my associates.”
Meanwhile, Cherokee Inc. cut its quarterly dividend in order to invest more resources in its various brands of clothing, footwear, fashion accessories and home furnishings.
The Van Nuys, Calif., company said it will nearly halve its dividend to 20 cents per share, to be paid on March 15 to shareholders of record on March 1. Last quarter, Cherokee paid investors a dividend of 38 cents per share.
“The board has decided to reduce the dividend from previous quarters in order to support its existing brands, as well as any newly acquired brands, and enable the company to execute on its growth strategy,” the company said in a statement
