Cherokee Inc., a leading global licensor and brand management company, today reported its highest ever second quarter revenue and earnings for its quarter ended July 30, 2005.
Net revenues for the three months ended July 30, 2005, rose 10.4%, or $1.1 million, to $11.3 million, compared to revenues of $10.2 million in the comparable period last year.
Net earnings for the three months ended July 30, 2005, increased by 5.5% to $4.6 million, or $0.52 per diluted share, compared to $4.3 million, or $0.50 per diluted share, in the year ago period. Adjusting for the $375,000 of non-recurring reimbursed legal costs from last year's earnings (which were included in other income), diluted EPS for last year's second quarter ended July 31, 2004, would have been $0.47 per share. The Company ended the quarter with cash and equivalents of $10.3 million, net receivables of $10.7 million and no debt.
Selling, general and administrative expenses for the three months ended July 30, 2005, were $3.7 million, up from $3.3 million in the comparable period last year. Interest and other income for the three months ended July 30, 2005, totaled $120,000 versus the $453,000 reported last year due to the inclusion of $375,000 of non-recurring reimbursement of legal costs pursuant to the settlement of the lawsuit last year. Excluding the $375,000 of reimbursed legal costs and also the interest charged on monies previously owed to us by Mossimo that was recorded last year, our interest income this year is trending higher due to larger cash balances.
Robert Margolis, Chairman and CEO, said, “Our growth in revenue and net income in the second quarter represented our 19th consecutive quarter of revenue and net income growth compared to the prior-year period. We are very pleased with these consistently strong financial results and are equally excited about the many growth opportunities we see ahead for the Cherokee Group.”
Howard Siegel, President, stated, “We are pleased to report another record quarter of results as we continue to successfully expand and diversify the business worldwide. Royalty revenues in the U.S. increased 3.8%, and international royalty revenues grew 24.6% due primarily to the continued growth in the U.K., Ireland and Canada. We expect continued organic growth with many of our existing accounts as well as from launches in several new territories with Tesco over the next 18-24 months. In addition, we expect some of our previously announced initiatives such as Latina at Sears and HouseBeautiful at May Company, which both recently launched, to begin generating royalty revenues for us in the second half of the year.”
Russell J. Riopelle, Chief Financial Officer, added, “Our record operating results during the second quarter continue to reflect the strength and diversity of our revenue streams and our ability to generate significant free cash flow. We finished the quarter with $10.3 million of cash, $10.7 million of receivables and no debt. In addition we will pay a dividend of $0.55 per share on September 15th, evidencing continued execution of our goal of returning profits to shareholders.”