Cherokee Q2 revenues down 10 percent, lowers full year outlook

Cherokee Global Brands posted 10 percent drop in its second quarter revenues, which the company said, reflected the continuing transition from the company’s direct-to-retail licenses in the United States to wholesale licenses, partially offset by growth in royalty revenues from the Cherokee brand and the Hi-Tec portfolio of brands. Narrowing its guidance for the fiscal year ending February 2, 2019, Cherokee said, it expects revenues in the range of 25 to 26.5 million dollars and adjusted EBITDA in the range of 8.5 dollars to 10 million dollars.

“It has been a very productive first-half of fiscal 2019,” said Henry Stupp, the company’s CEO in a statement, adding, “We restructured and realigned our business operations, converted our remaining indirect sales business to a licensing model, shored up our financial and liquidity position, divested non-core assets, and positioned our brands and licensees for future growth.”

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Review of Cherokee’s Q2 and H1 performance

Revenues for the first six months were 12.5 million dollars, compared to 14.7 million dollars in the prior year, a decrease of 2.2 million dollars. Revenues from ongoing and new licensees increased 37 percent in the first six months compared to the prior year.

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Revenues from ongoing and new licensees increased 42 percent in the second quarter compared to the prior year. Operating loss for the second quarter was 2.4 million dollars compared to 1.1 million dollars in the second quarter of the prior year. Operating loss during the first six months of fiscal 2019 was 2.6 million dollars compared to 3.4 million dollars in the prior year.

Net loss from continuing operations was 9.1 million dollars or 0.65 dollar per diluted share compared to 4.8 million dollars or 0.37 dollar per diluted share. Net loss from continuing operations for the first six months was 11.8 million dollars or 0.84 dollar per diluted share compared to 8.3 million dollars or 0.64 dollar per diluted share in the prior year first half period.

Adjusted EBITDA increased 97 percent to 3.1 million dollars compared to 1.6 million dollars in the second quarter of the prior year, while adjusted EBITDA during the first six months increased 70 percent to 4.1 million dollars, compared to 2.4 million dollars in the first six months of the prior year.

Picture:Facebook/Cherokee USA