Cherokee Extends Licensing Agreement with Dayton Hudson Corp. Target Stores; Libra Investments Inc. Retained As Advisor on Possible Sale or Leveraged Recapitalization.

VAN NUYS, Calif.--(BUSINESS WIRE)--Nov. 13, 1997--Cherokee Inc. (NASDAQ: CHKE) Thursday announced that it has entered into a new licensing agreement with Dayton Hudson's (NYSE: DH) Target Stores that extends the term to the year 2004, broadens the categories and expands the degree of exclusivity of its previous licensing agreement with Target.

The licensing agreement now covers a broad range of categories of merchandise, including women's, men's and children's apparel and footwear, women's intimate apparel, fashion accessories, home textiles, cosmetics and others. Financial terms of the agreement were not disclosed.

Gregg Steinhafel, Target Stores executive vice president, merchandise, said: "The Cherokee brand has been an overwhelming success, fitting into our overall philosophy of offering our guests products with quality, fashion and dominance. We believe we have established a powerful Cherokee foundation thus far, and our new agreement will allow additional growth of category development in men's and boy's apparel, as well as other categories."

Robert Margolis, Cherokee chairman and chief executive officer, added: "We feel fortunate to have aligned the Cherokee brand with the aggressive and progressive retail skills of Target Stores. Our retail direct partnership has clearly been an outstanding success in marketing the Cherokee brand, providing the consumer with design, quality and value.

"This retail direct partnership has created such strong consumer demand that more units were sold last year over a broader range of merchandise than any year in the brand's three-decade history."

Retention of Libra Investments Inc.

Cherokee also announced that it has retained Libra Investments Inc. to act as its financial advisor in connection with a possible sale or leveraged recapitalization of Cherokee. The Board of Cherokee authorized the company to study the possibility of a leveraged recapitalization in which the company would borrow up to $50 million to make an extraordinary dividend of approximately $5.50 per share.

The company noted that such a leveraged transaction, if completed, would reduce the company's net income in the short term, due to the interest expense associated with such a transaction, but the overall earnings before interest and taxes (EBIT) will be the same as it otherwise would have been if such a transaction had not occurred.

Moreover, the company said that it has not yet received any financing commitment and that any such transaction is subject to market conditions and other contingencies.

Cherokee, based in Van Nuys, a worldwide marketer and licensor of brand products, including Cherokee, Sideout, King of the Beach, A-Smile, American Legends and Pacific Express, is continuing global negotiations for licensing contracts covering multiple categories of merchandise.

Cherokee currently has licensing agreements in many categories, including family apparel, fashion accessories, home textiles including linens, as well as luggage, cosmetics and footwear.

For more information on Cherokee by facsimile at no cost, call 800/-PRO-INFO and enter company code CHKE. -0-

Note: This release contains certain forward-looking statements regarding revenue and earnings trends and domestic and international expansion. Such statements are subject to risks and uncertainties. Actual results could vary materially from these statements or current trends. Investors should refer to Cherokee's filings with the Securities and Exchange Commission, including forms 10-K and 10-Q, for a fuller description of risk factors.

CONTACT: Cherokee Inc., Van Nuys

Carol Gratzke

818/908-9868

or

The Financial Relations Board, Los Angeles 

Moira Conlon (analyst contact)

Daniel Saks or Haris Tajyar (general information)

310/442-0599