Stung by the loss of two of its licensing accounts, Cherokee Inc. reported net earnings decreased by 15.2 percent to $5 million or $0.56 per share for the first quarter ended May 5 as revenues slid by 9 percent. Van Nuys-based Cherokee reported revenues of $12 million for the first quarter, compared to $13.2 million for the comparable period in the prior year. Earnings for the first quarter of 2006 were $5.9 million or $0.67 per diluted share. Cherokee noted that in addition to the earlier sale and termination of its licensing agreement with Mossimo, the company’s contract with Carrefour expired on Dec. 31, 2006. Mossimo royalties accounted for $800,000 in the first quarter of last year and Carrefour licensing revenues accounted for $200,000 in royalties in the first quarter of last year. “As a result of the sale/termination of our Mossimo finders agreement last October, along with our termination of the Carrefour agreement, lower royalty revenues are to be expected until we can replace those royalty streams with new licensing agreements,” said Robert Margolis, chairman and CEO of Cherokee in a statement. ” The company added that it is working “diligently” to replace those agreements.
