Bad news from Cherokee Brands on two fronts, Thursday. Target, which accounts for 43% of its total revenues, has decided not to renew its …
Bad news from Cherokee Brands on two fronts, Thursday. Target, which accounts for 43% of its total revenues, has decided not to renew its US license with the brand after it expires in January 2017. Its profits and revenues for Q2 also fell. Result? In after-hours trading, Cherokee shares plummeted 31.5% to $16.51.
Despite the loss, Cherokee remained positive. “Target Corporation has been a great partner for nearly 20 years. Moving forward, Cherokee Global Brands is in a strong position to enter into new platform partnerships that will expand Cherokee’s presence in the US,” said CEO Henry Stupp.
He added: “Large-scale retailers and wholesalers have frequently expressed interest in the Cherokee brand based on its multi-category relevance and high consumer awareness. In the end, though, consumers make brands successful, and we know that Cherokee has a unique connection with many millions of consumers in the US and around the globe.”
Cherokee reassured the market that an agreement with Target for the Liz Lange brand remains in place at this time.
Explaining the move to ditch Cherokee Target Corp, said it is ending the deal to make way for newer children’s clothing labels.
Cherokee also reported profits slipped to $1.9m/22 cents a share, for the quarter ended August 1, from $2.3m/27 cents a year ago. Analysts had expected 24 cents a share.
Revenue fell 3% to $8.5m, just short of analysts’ $8.6m prediction.