US: Cherokee Q1 profit falls on investment costs
- Q1 net income fell 36.4% to $2.1m from $3.3m
- Revenues rose 8.7% to $7.5m from $6.9m
- SG&A expenses up to $4.2m from $3.3m
Global brand management business Cherokee Inc has seen its first quarter profit fall 36.4% after investments in its brands and partnerships offset higher sales of its namesake line.
"Our first quarter marked a strong quarter for the Cherokee Group and a solid start to the fiscal year," said CEO Henry Stupp.
"Consistent with the long-term strategic plan introduced last quarter, we have continued to make investments in our brands and partnerships; we have begun to see meaningful increases with some of our key partners as well as further global brand recognition."
The company said it saw sales fall at UK supermarket retailer Tesco and Norma Kamali during the three months to 28 April, but that the rest of its business saw sales growth of nearly 35%.
"This significant growth is emblematic of the emphasis we have placed on improving our product and brand penetration, developing our partnerships, and refining our direct-to-retail model," Stupp added.
"Particularly gratifying this quarter is the success we have achieved both domestically and abroad for our namesake Cherokee brand," he continued.
"Domestically, Cherokee branded sales at Target made notable strides, with US retail sales up 38% year-over-year. Internationally, we continue to develop, refine, and strengthen our relationship with Tesco in the UK."
Tesco in April agreed to relaunch the Cherokee brand, with a redesigned collection of Cherokee men, women, kids, and baby launching in its stores later this year. This will be followed by an even larger offering at Tesco stores in spring 2013.
"Globally we have seen growth from all of our larger partners including Russia, China, Canada, Latin America, Mexico and Japan," Stupp added.
"Fiscal 2013 will be a year of further development for the Cherokee Group as we continue to make investments and improvements to generate the highest quality product while simultaneously promoting long-term sustainable value for our shareholders."
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