Cherokee Announces $0.50 Per Share Dividend for September; Ends Strategic Alternatives Process.

VAN NUYS, Calif. -- Cherokee Inc. (NASDAQ: CHKE), a leading licensor and global brand management company, announced today that its Board of Directors approved the distribution of a quarterly dividend to shareholders of $0.50 per share. The dividend will be payable on or about September 16, 2008 to shareholders of record on September 2, 2008. In addition, Cherokee has ended its strategic alternatives process with Goldman Sachs.

Robert Margolis, Chairman and CEO, stated, "We are pleased to announce our 20th consecutive quarter of providing dividends to our shareholders. With our unlevered balance sheet, and as a result of continually accumulating retained earnings, from time to time we have distributed dividends in excess of our annual free cash flows. We believe a $0.50 per share quarterly dividend is in line with, and sustainable from, our anticipated free cash flows from operations. We currently believe that our excess cash and unlevered balance sheet can be better used to invest in the further development of our brands, staff and/or to acquire equities at opportunistic prices."

"Fortunately, our international growth, now representing 55% of our total revenues, has helped buttress the revenue declines in North America, which we expect will be 10-15% lower this year while domestic soft goods sales decline and consumers adjust to the price increases in food and oil."

Russell J. Riopelle, CFO of Cherokee, added, "As a result of the general slowdown in M&A activity, and the recent decline in our stock price, although inquiries still continue, we have ended our strategic alternatives process with Goldman Sachs. During that process the Company was advised not to, and did not, repurchase any shares under its existing share repurchase plan. Now with the strategic alternatives process ended, we can once again repurchase stock under our previously authorized stock buyback program, subject to applicable legal requirements."

The payment of any future dividends will be at the discretion of Cherokee's Board of Directors and will be dependent upon Cherokee's financial condition, results of operations, available cash, cash flow, capital requirements and other factors deemed relevant by Cherokee's Board of Directors.

About Cherokee Inc.

Cherokee Inc., based in Van Nuys, is a marketer, licensor and manager of a variety of brands it owns (Cherokee, Sideout, Carole Little and others) and represents. Currently, Cherokee has licensing agreements in a number of categories, including family apparel, fashion accessories and footwear, as well as home furnishings and recreational products. Premier clients for the Cherokee brand around the world include Target Stores (U.S.), Tesco (U.K., Ireland and certain other European and Asian countries), Zellers (Canada), Pick 'n Pay (South Africa), Fawaz Al Hokair (Middle East), Grupo Pao de Acucar (Brazil), S.A.C.I. Falabella (Chile and Peru), Arvind Mills (India), Shufersal LTD. (Israel), Comercial Mexicana (Mexico) and Grupo Eroski (Spain). Premier clients for Cherokee's Sideout brand include Mervyn's (U.S.) and Shanghai Bolderway (China), and for Cherokee's Carole Little brands include TJX Companies (U.S., Canada and Europe). Cherokee also recently placed the Norma Kamali brand with Wal-Mart.

Statements included within this news release that are not historical in nature constitute forward-looking statements for the 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 future dividend payments, anticipated free cash flows and 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, the effect of national, international and regional economic conditions, the financial condition of the apparel industry and the retail industry, the overall level of consumer spending domestically and internationally, the effect of intense competition in the industry in which the Company operates, adverse changes in licensee or consumer acceptance of products bearing the Company's brands as a result of fashion trends or otherwise, the ability and/or commitment of the Company's licensees to design, manufacture and market Cherokee and Sideout branded products, the Company's dependence on a select group of licensees for most of the Company's revenues, the Company's dependence on its key management personnel and adverse determinations of claims, liabilities or litigations. A further list and description of these risk, uncertainties and other matters can be found in the Company's Annual Report on Forms 10-K for Fiscal Year 2008, and in its periodic reports on Forms 10-Q and 8-K (if any). Undue reliance should not be placed on the forward-looking statements contained herein because some or all of them may turn out to be wrong. The Company disclaims any intent or obligation to update any of the forward-looking statements contained herein to reflect future events and developments.