2012 to be a highly transformational year, Cherokee CEO
Cherokee Inc, a global brand management company, reported financial results for the fourth quarter and fiscal year ended January 29, 2011.
Fourth Quarter 2011 Highlights
• Net revenues of $7.4 million, compared with $7.6 million a year ago
• SG&A expenses were $7.3 million, compared to $2.4 million a year ago, which included approximately $5.1 million in payments made to the former Executive Chairman, Robert Margolis, comprised of a bonus of $1.8 million and a severance payment of $2.3 million, as well as expenses related to accelerating vesting of remaining stock options held by the former Executive Chairman and to the issuance following Mr. Margolis' departure of fully vested stock options to the incoming non-Executive Chairman, Jess Ravich, totaling approximately $1.1 million. Cherokee does not have any further payment obligations to Mr. Margolis. In addition, management expects aggregate severance payments, aggregate bonus payments and aggregate non-cash stock compensation for Fiscal 2012 to be materially lower than Fiscal 2011. Management anticipates a material and significant reduction to selling, general and administrative expenses in Fiscal 2012 in comparison to Fiscal 2011 due to certain expenses incurred in Fiscal 2011, which approximated $5.9 million.
• Net income of $44,000, or $0.00 per diluted share
• Cash and cash equivalents of $9.6 million at January 29, 2011
• Signed an exclusive international agreement with CJSC Tander ("Magnit") for the Cherokee brand in Russia through April 30, 2015
• Signed an exclusive international agreement with Nishimatsuya for the Cherokee brand in Japan through January 31, 2017
Fiscal Year 2011 Highlights
• Net revenues of $30.8 million, compared with $32.6 million a year ago
• Worldwide retail sales of Cherokee-branded merchandise exceeded $1.4 billion
• SG&A expenses were $17.9 million, which, as discussed above, included $5.9 million of severance, bonuses, and non-cash compensation to the former and current Chairman, compared with $12.2 million a year ago
• Net income of $7.7 million, or $0.87 per diluted share, compared to $12.6 million, or $1.43 per diluted share for Fiscal 2010
• Henry Stupp named new Chief Executive Officer and member of Board of Directors
• Mark DiSiena named new Chief Financial Officer
• Jess Ravich, an independent director of Cherokee, named non-Executive Chairman of the Board
• Announced seven new partnerships for the Cherokee and Sideout brands and engaged Vita Foods as Laila Ali's wholesale licensee for its consumer products
"While I am disappointed with our fourth quarter results, I believe that our recently enhanced brand marketing, creative and support services will stabilize and ultimately grow our existing business while we expand both our existing domestic and international business presence," said Henry Stupp, Chief Executive Officer of Cherokee Inc. "We finished the year on solid financial footing, despite an overall soft consumer market. We reported our 15th consecutive year of profit, after incurring some non-recurring severance costs related to management restructuring and executive departures, as well as non-cash expenses related to the acceleration of vesting of stock options."