Cherokee Global Brands: Q4 and full year revenues decline

Cherokee Global Brands, for its fourth quarter and fiscal year ended February 2, 2019, reported revenues of 6.1 million dollars, a decrease of 11 percent, which the company said, largely reflects the expiration or non-renewal of several licensing agreements. These declines were partially offset by revenues from the company’s new multi-year product development and design agreement with a major retailer in China, as well as a 12 percent improvement in revenues from the Hi-Tec brand portfolio. The company also announced its intention to rebrand as Apex Global Brands following the company’s June annual shareholder meeting.

"Fiscal 2019 was a year of significant milestones for Cherokee Global Brands. We delivered on three strategic priorities, including restructuring our business operations, shoring up our financial and liquidity positions and aligning our brand portfolio for future growth," said Henry Stupp, the company’s CEO in a statement, adding, "Through our strategic acquisitions, we realized our vision to evolve from a mono-brand licensor to a true house of brands. Apex reflects this more expansive vision."

Review of Cherokee’s Q4 and full year results

Revenues for fiscal year 2019 were 24.4 million dollars, a decrease of 17 percent. Consistent with the fourth quarter, the decline in full-year revenues, the company added, reflects the expiration or non-renewal of several licensing agreements and the divestiture of Flip Flop Shops in June 2018. These declines were partially offset by a 20 percent increase in revenues from the Hi-Tec brand portfolio. Excluding expired and non-renewed licensees, revenues from relationships that existed in fiscal 2019 increased 4.5 million dollars or 23 percent, year over year.

Operating income was 2.4 million dollars for the fourth quarter and 1.9 million dollars for the full year. Net loss from continuing operations was 0.6 million dollars in the fourth quarter or a loss of 4 cents per diluted share, and 12.3 million dollars or a loss of 87 cents per diluted share, for the full year. The previous year’s net loss from continuing operations was 45.2 million dollars or 3.23 dollars per diluted share and 55.9 million dollars or 4.16 dollars per diluted share, for the fourth quarter and full year, respectively.

Adjusted EBITDA increased significantly to 3.1 million dollars for the fourth quarter, compared to a loss of 0.1 million dollars in the prior year. Adjusted EBITDA for fiscal year 2019 increased 150 percent to 9.8 million dollars compared to 3.9 million dollars in fiscal 2018.

For the fiscal year ending February 1, 2020, the company expects revenues to be in the range of 26 million dollars to 28.5 million dollars and adjusted EBITDA to be in the range of 11 million dollars to 12.5 million dollars.