Cherokee Inc. Reports Strong Second Quarter 2014 Revenue and Earnings Growth

Cherokee Inc. Reports Strong Second Quarter 2014 Revenue and Earnings Growth

• Earnings per share increase approximately 21% year-over-year to $0.23

• Revenues increase approximately 19% year-over-year to $7.5 million

• Launches at Max Stores, the largest value fashion brand chain in the Middle East

• Subsequent to quarter-end launches in Indonesia with leading lifestyle retailer MAP/SOGO

SHERMAN OAKS, Calif.--(BUSINESS WIRE)-- Cherokee Inc. (NAS: CHKE) , a global marketer of style-focused lifestyle brands, today reported financial results for the second quarter ended August 3, 2013.

Net revenues for the second quarter were $7.5 million, an increase of approximately 19% from $6.3 million in the prior-year period. The increase in revenues was primarily the result of higher revenues from the retail sales of Cherokee-branded products at Target and the addition of the Liz Lange brand to our portfolio. In addition, the Company experienced solid increases with its international licensees partially offset by a year-over-year decrease of Cherokee royalty revenues at Zellers Canada of approximately $0.7 million due to the retailer's closing during Cherokee's first quarter of Fiscal 2014.

The Company's international business also continued to see growth during the quarter, marked by further global expansion into the Middle East and Indonesia, the recent six-year extension of the Company's partnership in South America with Tottus, and a 47% revenue increase with Tesco on a year-over-year basis. Cherokee saw similarly strong progress in North America, including a 32% increase in Cherokee brand royalty revenue with its exclusive U.S. retail partner Target and early success with the launch of the Cherokee brand with Target Canada.

Additionally, during the second quarter, the devaluation of several foreign currencies, including the Japanese Yen, Indian Rupee, and South African Rand, resulted in an approximately $131,000 unfavorable impact to revenues.

Selling, general and administrative expenses for the second quarter were $4.2 million, or 57% of sales, compared with $3.6 million, or 58% of sales, in the prior-year period. This increase is related to personnel costs that are provided to enhance the Company's 360˚ approach with its partners including Tesco and increased amortization costs related to the acquisition of the Liz Lange and Cherokee Uniform brands.

Net income for the second quarter was $1.9 million, or $0.23 per diluted share, an increase of 19% compared with $1.6 million, or $0.19 per diluted share, in the prior-year period

"The first-half of Fiscal 2014 has been very productive for the Cherokee Group," said Cherokee Chief Executive Officer, Henry Stupp. "Revenues for the quarter increased nearly 19% despite the early closing of Zellers Canada and foreign currency devaluations."

Mr. Stupp continued, "Our successes over the past six months have positioned the Cherokee Group for continued growth throughout the remainder of Fiscal 2014 and into the future. We are pleased with our ongoing refinement of our operating model, and going forward we will continue to execute against our long-term strategic growth plan as well as evaluate new acquisition opportunities to generate value for both our shareholders and retail partners."

At August 3, 2013, the Company had cash and cash equivalents of $2.8 million, compared to $2.4 million at February 2, 2013.

Conference Call

The Company will host a conference call today at 1:30 p.m. PT / 4:30 p.m. ET. To participate in the call, please dial (877) 407-0784 (U.S.) or (201) 689-8560 (International) ten minutes prior to the start time and use conference ID: 417961. The earnings call will also be broadcast live over the Internet and can be accessed on the Investor Relations section of the Company's Web site at http://www.cherokeegroup.com. A slide presentation will accompany the prepared remarks and has been posted along with the webcast link on Cherokee's website.

For those unable to participate during the live broadcast, a replay will be available through Thursday, September 19, 2013, at 8:59 p.m. PT / 11:59 p.m. ET. To access the replay, dial (877) 870-5176 (U.S.) or (858) 384-5517 (International) and use conference ID: 417961.

About Cherokee Inc.

Cherokee Inc. is a global marketer and manager of a portfolio of Fashion and Lifestyle brands including Cherokee^®, Carole Little^®, Liz Lange^® and Sideout^®, in multiple consumer product categories and sectors around the world. The Company has license agreements with premier retailers and manufacturers covering over 40 countries around the world including Target Stores (U.S. and Canada), Tesco (U.K., Ireland and certain Central European countries), RT-Mart (People's Republic of China), Pick 'n Pay (South Africa), Falabella (Chile, Peru and Colombia), Arvind Mills (India and certain Middle Eastern countries), Shufersal LTD. (Israel), Comercial Mexicana (Mexico), Eroski (Spain), Nishimatsuya (Japan), Magnit (Russia), Landmark Group's Max Stores (certain Middle East and North Africa countries), and the TJX Companies (U.S., Canada and Europe).

Statements included within this news release may contain forward-looking statements for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995.When used, the words "anticipates," "believes," "expects,""may,""should," and similar expressions are intended to identify such forward-looking statements.Forward-looking statements included in this press release (including, without limitation, express or implied statements regarding potential future business development) involve known and unknown risk and uncertainties that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.Such risks and uncertainties, include, but are not limited to,theeffect of global economic conditions, the financial condition of the apparel and retail industry, adverse changes in licensee or consumer acceptance of products bearing the Company's brands, the ability and/or commitment of the Company's licensees to design, manufacture and market Cherokee, Liz Lange, Completely Me, Sideout and Carole Little branded products, the Company's dependence on Target for most of the Company's revenues and the Company's dependence on its key management personnel.The risks included here are not exhaustive. A further list and description of these risks, uncertainties and other matters can be found in the Company's Annual Report on Form 10-K/A for Fiscal Year 2013, and in its periodic reports on Forms 10-Q and 8-K. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results. The Company disclaims any intent or obligation to update any of the forward-looking statements contained herein to reflect future events and developments.