• Q2 profit down by 27.5%
  • Royalty revenues fall 22.9% to $8.1m
  • Eyes growth for Norma Kamali at Wal-Mart

Cherokee Inc, which owns and licenses brands like Cherokee, Sideout and Carole Little, has seen its second quarter profit fall by 27.5% after being hit by lower royalties from US retailers and the impact of a strong dollar on its international business.

But the Van Nuys, California-based firm said it expects sales to benefit from demand for the Cherokee brand in Brazil, Chile, Peru and India, and the growth of Norma Kamali at Wal-Mart.

For the three months to 1 August, net income dropped to $2.9m or $0.32 per share, from $4.0m, or $0.45 per share in the same period last year.

Total royalty revenues for the quarter fell 22.9% to $8.1m, from $10.5m last time.

President Howard Siegel said the decline in US royalty revenues was due to lower Cherokee brand sales at Target, and the demise of Mervyn's.

However, these decreases were partially offset by the growth in revenues of Norma Kamali at Wal-Mart, he said.

While "retail revenues may continue to be soft through the rest of this year," the company hopes "new accounts for Cherokee as well as our Sideout brand, will enhance our revenues beginning next year."