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 SUNLAND, Calif., Jan. 13 /PRNewswire/ -- Cherokee Inc. (NASDAQ: CHKE) today reported sales of $60,059,000, operating income of $4,289,000 before an operational restructuring charge of $6,052,000 and a net loss of $4,643,000, or $0.93 per share, for the six months ended Nov. 27, 1993. During the six months that ended Nov. 28, 1992, sales were $73,134,000, operating income was $357,000, and the net loss applicable to common stock was $9,328,000, or $1.07 per share.
 For its second quarter which ended Nov. 27, 1993, sales were $26,011,000, operating income was $838,000 before the operational restructuring charge of $6,052,000, and net loss was $4,940,000, or $0.98 per share. This compares with sales of $32,150,000, an operating loss of $747,000 and a net loss applicable to common stock of $5,045,000, or $.58 per share, for the quarter ended Nov. 28, 1992.
 The operational restructuring charge of $6,052,000 (after-tax $3,730,000, or $0.74 per share) includes approximately $1,075,000 in cash payments and non-cash charges of approximately $4,977,000. These charges cover the costs of restructuring the company's Apparel Division in order to implement the Division's new operating strategy.
 Explaining the restructuring charges, Bryan Marsal of Alvarez & Marsal, the company's interim chief executive officer since the resignation of Robert Margolis in October 1993, said, "Prior to the appointment of Joe Elles as president of the Apparel Division in August 1993, that Division was primarily a niche marketer of novelty fabrications and styles for both male and female consumers. Under Mr. Elles, Cherokee Apparel has adopted a strategy, which will first be implemented for the 1994 Back-to-School selling season, that is driven by fit, fabric and finish, for the female consumer. This focused core marketing strategy will significantly reduce SKUs, streamline sourcing and allow Cherokee to partner up with its most important suppliers and customers. The new Cherokee strategy is aimed at the moderate department store distribution channel.
 "The restructure charge includes severance payments, writedowns of inventory which will not be part of the company's new product line to estimated realizable values and writedowns to estimated realizable values of certain leases, equipment and other assets which will be sold because they are not essential in implementing the company's new operational strategy."
 Cherokee is a designer, manufacturer and marketer of moderately priced casual apparel and footwear under the Cherokee brand name. The company also licenses the Cherokee name to 24 domestic and international licensees for a variety of apparel, footwear, accessories and other products.
 Financial Summary
 (In thousands except per share data)
 Three Months Ended Six Months Ended
 11/27/93 11/28/92 11/27/93 11/28/92
 Successor Predecessor Successor Predecessor
 Company Company Company Company
 Net sales $26,011 $32,150 $60,059 $73,134
 Operating income (loss)
 before operational
 restructuring charge 838 (747) 4,289 357
 Operational restructuring
 charge(b) 6,052 --- 6,052 ---
 Operating loss (5,214) (747) (1,763) 357
 Net loss applicable to
 common stock(c) (4,940) (5,045) 4,643 9,328
 Net loss per share(c) ($0.98) ($.58) ($0.93) ($1.07)
 Average shares
 outstanding 5,016,298 8,743,013 5,016,298 8,699,747
 (a) On May 28, 1993, the company's Chapter 11 Plan of Reorganization was confirmed and it became effective on June 1, 1993. For financial reporting purposes, the effective date of the reorganization was assumed to be May 29, 1993, the last day of the company's fiscal year. Results of operations for the periods ended Nov. 27, 1993, represent that of the successor company and for the periods ended Nov. 28, 1992, represent that of the predecessor company.
 (b) The operational restructuring charge consists of approximately $1,075,000 of cash charges and $4,977,000 of non-cash charges. The after-tax charge is $3,730,000, or $0.74 per share. The operational restructuring charge covers the costs and charges of restructuring the company's Apparel Division in order to implement the division's new operating strategy.
 (c) After preferred dividends of $268,000 in the three months ended Nov. 28, 1992, and of $532,000 in the six months ended Nov. 28, 1992.
 Balance Sheet Data
 (In thousands)
 Nov. 27, 1993
 Successor Company
 Assets Liabilities and
 Stockholders' Equity
 Cash and cash equivalents $183 Short term revolving
 credit $2,968
 Receivables, net 19,908 Current maturities of
 long-term debt 4,197
 Inventories 25,227 Accounts payable and
 accrued expenses 9,686
 Long-term debt, net of
 current maturities 9,275
 Other current assets 2,619 Senior subordinated
 notes 71,556
 Property, plant & Other liabilities 12,594
 equipment, net 19,268
 Intangibles 50,314 Total liabilities $110,276
 Other assets 1,314 Stockholders' equity 8,557
 Total assets $118,833 Total liabilities and
 stockholders' equity $118,833
 -0- 1/13/94
 /CONTACT: Cary Cooper, CFO of Cherokee, 818-951-1002, ext. 200/

CO: Cherokee Inc. ST: California IN: TEX SU: ERN

JB-MF -- LA001 -- 1691 01/13/94 09:08 EST
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Publication:PR Newswire
Date:Jan 13, 1994

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