• Q4 profit tumbled by 98% to $44,000
  • Revenues flat at $7.4m
  • Hurt by severance costs

Brand management company Cherokee Inc says it is "disappointed" after fourth quarter profits tumbled by 98% after being hit by lower sales and costs related to management restructuring and the departure of its former executive chairman.

Net income in the three months to 29 January fell to $44,000, down from $3.11m in the same period last year. Net revenues were almost flat at $7.4m, compared with $7.6m a year ago, and were unable to offset a $5.1m payment to the former executive chairman Robert Margolis.  

For the fiscal year, net income dropped 39% to $7.7m, or $0.87 per share, compared to $12.6m, or $1.43 per share, the year before. Net revenues were down 5.5% to $30.8m from $32.6m.

The company's Cherokee brand is licensed to retailers including Target, Tesco, Zellers, Pick N' Play, Falabella and Arvind Mills and generated royalty revenues of $3.3m and $27.4m in the fourth quarter and full year respectively.

Licensing revenues from the Sideout brand rose 40% to $70,000 in the quarter; while the Carol Little brands saw royalty revenues fall 12.8% to $129,000.

"We finished the year on solid financial footing, despite an overall soft consumer market," said CEO Henry Stupp.

"We expect 2012 to be a highly transformational year as we invest in all of our brands and position the Cherokee Group for future growth and profitability."