Cherokee Inc. (NASDAQ:CHKE) Q1 2020 Earnings Conference Call - Final Transcript

Jun 18, 2019 • 04:30 pm ET


Cherokee Inc. (NASDAQ:CHKE) Q1 2020 Earnings Conference Call - Final Transcript


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Henry Stupp

the economic uncertainty related to Brexit, we're today marketing an expanded range of apparel, footwear and accessories sold by department stores and major sporting goods and specialty retailers globally. Outside of Europe, distribution of Hi-Tec branded footwear, apparel and accessories in Latin America and Asia are in the early stages, but growing. We look forward to exploring category expansion opportunities as we scale the brands in these regions. Through our licensees efforts, we've recently expanded our footwear in Asia with major distribution partners in China and South Korea. And we will continue to expand the Hi-Tec portfolio in Asia, Latin American and India in the coming months.

We're also seeing positive results with Magnum branded footwear and we added new product categories, such as apparel and accessories to expand our product assortment. Magnum is one of the world's fastest growing military, technical and service industry brands. We will continue to increase awareness for Magnum for marketing activations and new licenses in the coming months.

Our exclusive distribution agreement with Walmart North America continues to drive success for Interceptor and here too category expansion will be key to growth. As I noted last quarter, we are in discussions to expand the Interceptor globally in footwear, apparel and accessories in early fiscal 2021.

And now, I'll turn to the Cherokee brand, where sales of $1.5 million were down approximately $0.6 million year-over-year, largely due to non-renewal or expiration of legacy partners, along with our transition from direct-to-retail to a wholesale licensing model. As legacy relationships are replaced and business models shift, we know that a sustainable growth plan exists for the Cherokee brand domestically. Nevertheless, this will take time and we, along with our best-in-class licensees, are committed to making this happen.

Today, we offer a wide assortment of Cherokee men's, women's and children's products across multiple channels, retailers and licensees. Our licensees expertise and commitment to the Cherokee brand will be key to our growth strategy and the efforts are progressing, particularly for Cherokee Kids and School Uniforms. As we expand distribution to new channels and with new partners and leverage our new Apex platform, we look forward to realizing positive comps for the Cherokee brand in the future.

On the global front, we continue to identify additional licensees to build upon our European base. We continue to pursue multi-category, multi-channel approach for our global retail partnerships, including new licensee partnerships in Japan, China and continued expansion in Europe. Partnering with best-in-class licensees will remain a key aspect of our growth strategy. Our sales and marketing efforts are gaining traction for our portfolio brands, including new licenses and distribution for Everyday California. Recently, we have signed a long-term license with Chedraui in Mexico and our domestic licensees secured placement with key retailers. We're also in discussions to secure new licensees for both Liz Lange and Sideout.

And lastly, I'll review Tony Hawk brand, which now includes our street-wear lifestyle brand Tony Hawk Signature. With the transition from our legacy direct-to-retail model