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Cherokee restructures brands

The retail climate has impacted growth across many of Cherokee’s brands. For the current fiscal, gross profit is now expected to be in the range of $36 to $38 million dollars, down from $39 to $41 million previously. Adjusted ebitda is expected to be in the range of $7 to $9 million versus a range of range of $10 to $12 million previously.

Cherokee’s updated guidance accounts for its year-to-date performance, specifically the retail headwinds encountered as it transitioned its namesake Cherokee brand from the Target chain to new licensing partners. Tony Hawk licensing revenue in Canada, while growing with the year-over-year increase of 20 per cent, is still behind original projections. The bankruptcy of Sears Canada combined with the overall retail environment also impacted its revenue forecast.

Hi-Tec’s transition from its legacy operating model to its new licensing model is also being affected by the challenging retail climate. Finally, the transition of the Flip Flop Shops business model is driving slower franchise shop openings as well as leading to the closing of underperforming franchise locations. In the US and Canada, Hi-Tec is in the midst of expanding the product offering with the launch of men’s and women’s apparel and accessories slated for late summer, early fall 2018.

 
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