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

Jun 18, 2019 • 04:30 pm ET

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

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Q & A
Operator
Operator

At this time, we will be conducting a question-and-answer session. (Operator Instructions) Our first question comes from the line of Eric Beder with SCC Research. Please proceed with your question.

Analyst
Eric Beder

Good afternoon.

Executive
Henry Stupp

Hi, Eric.

Analyst
Eric Beder

Hi. Could you talk a little bit about the expansion online? What are you seeing internationally and how are you going to leverage that going forward?

Executive
Henry Stupp

So, all of our major retailers have an online presence. So they're -- whether it's through Urban Outfitters, (inaudible) in Europe or Amazon and Walmart domestically, we have our brand online and in stores. So today, we're looking at as one channel of retail. In the past, people called it omni-channel, but today, we're viewing as retail with everybody having an online component.

Analyst
Eric Beder

And what -- when you look at the brands, you've taken a pretty conservative track in terms of Brexit and tariffs. Where do you think, looking kind of years ago, which brand has the biggest potential here going forward? Which brand should we be thinking about in terms of that?

Executive
Henry Stupp

In the near-term, we say both Hi-Tec and Magnum as part of the, what we refer to, as the Hi-Tec portfolio has the fastest growth with the introduction of both new categories and new markets.

Analyst
Eric Beder

And final question, when we look at the expansion prospects here with some of the brands you mentioned, Everyday California, Sideout and some of the Liz Lange, are those -- I would assume given where you are at those and some of the newer ones that we should start thinking about those as more 2020 potential revenue events, is that how should we focus them or can they have a chance to do something here in 2019?

Executive
Henry Stupp

With Everyday California, we will see revenue starting in Q2 this year and both Liz Lange and Sideout we're looking more at fiscal '21 budget. And just to get back to other question in terms of near-term, Eric, in addition to the Hi-Tec portfolio, we believe the design services will expand as we move into the future. We've already got a significant partnership in China and we're talking to other potential parties in both Europe and domestically. So we think that's an important part of our future business. We have the staff and the resources to manage it without a significant SG&A buildup, so we are looking at expanding that and we have been approached by numerous parties to tap into it. So we've had some good success so far and we think it's a good opportunity for us to balance out our revenue streams.

Analyst
Eric Beder

When you look at the China opportunity here, where do you think are you pretty much would you stay in the first one or two -- first innings of that and the potential to expand that across? Is it relatively seamless to be able to expand that to, to your point, Europe or other places in Asia?

Executive
Henry Stupp

Well, we've already been approached by affiliates of the existing partner in China, particularly