Cherokee Global Brands has signed new U.S. master licenses for its Tony Hawk and Liz Lange labels as it moves to build back business lost with the ending of DTRs with Kohl’s and Target, CEO Henry Stupp said in releasing Q3 earnings.

Tony Hawk U.S. Licensee M. Hidary & Co. has introduced men’s and boys’ apparel, expanding on an agreement it signed for the Cherokee label in 2016. The pact marks a significant shift for the Tony Hawk brand, which had a DTR at Kohl’s that Cherokee inherited in buying the label from Quicksilver in 2014.  In addition to M. Hidary, Batra Group has signed a pact for Europe and plans to open a Tony Hawk Signature store in Paris by year-end.

Batra’s Tony Hawk collection will focus on higher-end retailers at the start as part of a strategy to gradually broaden the brand’s distribution, Stupp said. M. Hidary has done “a good job seeding” new Tony Hawk product with retailers and while there have been “some soft spots” in the line’s initial sales, the brand’s business is expected to improve in 2019, Stupp said. Cherokee’s Tony Hawk-related revenue fell to $145,000 in Q3 ended Nov. 3 from $1.38 million a year earlier due to the loss of the Kohl’s business, accounting for 2.5% of Cherokee’s total Q3 sales, down from 17.8%.

“This halo program that we will launch in Europe is really going to speak to the highest tier of retail to position the brand,” Stupp said. “We believe these halo strategies and collaborations will drive the mid-tier and ultimately the mass-market business globally. We definitely view next year as being a brighter spot after what can only be described as a poor performance this year through the transition” from Kohl’s.

Meanwhile, E.S. Sutton Inc. is the new master licensee for the Liz Lange maternity brand, which Cherokee acquired from Bluestar Alliance in 2012 and had exclusively at Target. Cherokee’s other brand revenue, which includes Liz Lange, rose 25.4% to $774,000.

Overall, Cherokee posted a $63,000 profit in Q3, reversing a year-earlier $2.5 million loss as selling, general and administrative expenses dropped to $3.2 million $6.2 million due. The lower costs were partly tied to Cherokee’s sale of its Flip Flop Shops chain to Bearclaw Holdings.

Cherokee’s revenue fell 25.5% to $5.8 million as royalty revenue from the Cherokee brand decreased 27.4% to $1.93 million, mainly due to the loss of the Target DTR (school uniforms) and the ending of an agreement with a Chinese licensee. After the close of the quarter in November, South African retailer Pick n Pay also said it wouldn’t be renewing a Cherokee brand agreement when it expires in June 2019, Cherokee said. The Pick n Pay pact generated $1 million in revenue in the nine-month period ended Nov. 3, Cherokee said.

Cherokee’s nine-month earnings also included $600,000 in revenue from a new product design and development pact  with a “major” Chinese retailer, the identity of whom wasn’t disclosed. The pact is a multi-year agreement that will generate “multi-million (dollar) revenue streams,” Stupp said.

Cherokee’s revenue from the Hi Tec brands (Hi Tec, Magnum, Intercept, 50 Peaks) decreased 4.4% to $2.98 million. Cherokee has shifted the Hi Tec business from wholesale to licensing in extending it from roots in footwear to apparel. Batra is Hi Tec licensee for Europe.

Contact:

Cherokee Global Brands, Henry Stupp, CEO, henrys@cherokeeglobalbrands.com