Cherokee Acquires Carol Little, Chorus Line Brands
Van Nuys, Calif.–based Cherokee Inc. has acquired the trademarks of CL Fashions, which includes Carole Little, CLII, St. Tropez West, Chorus Line, All That Jazz, Tickets and Molly Malloy, from California Fashion Industries and Chorus Line Corp. for about $2 million.
Cherokee chief financial officer Kyle Wescoat declined to give financial projections for the brands, but offered this: “One of our strategies is to look for high brand equity that we can add to our portfolio and can be acquired at a reasonable cost.”
Cherokee has struck a distribution arrangement for the Carole Little label with Framingham, Mass.–based TJX Companies Inc., parent company of retailers TJ Maxx and Marshalls, among others. Previously, Carole Little apparel was sold at better department stores, including Dillard’s, Saks and Bloomingdale’s.
In a recent press statement, Cherokee chairman and chief executive officer Robert Margolis said: “We are pleased to have completed these transactions, and we are hopeful we can finalize other license arrangements for the Chorus Line, All That Jazz, Tickets and Molly Malloy brands that were also part of this acquisition.”
Cherokee purchased the CL Fashions brands from a court-appointed trustee handling the reorganization of CL Fashions.
Carole Little, which saw its wholesale apparel sales peak at $375 million in the mid- 1990s, was acquired by Levine Leichtman Capital Partners in 2000. Levine Leichtman acquired Chorus Line around 1997; CL Fashions was formed from the merger of Carole Little and Chorus Line in 2000.
The company’s creditors filed for Chapter 11 bankruptcy protection in November 2000, one month before CL Fashions converted to Chapter 7.
“Even after the company filed for bankruptcy, sales were about $200 million for wholesale,” said Carole Little co-owner Leonard Rabinowitz.
Rabinowitz and Carole Little, who cofounded and designed the Carole Little label in 1974, last year formed a small design firm, Studio CL, which designs women’s apparel for private label divisions of major retailers nationwide.
Cherokee said it is still determining whether Studio CL will continue designing and merchandising the collections.
“We have a good relationship with the principals at Cherokee. We believe they will work to maintain and enhance the integrity of the brand,” said Rabinowitz. “We are hopeful that we can continue to some way be involved with the brand.”
The CL Fashions brands join Cherokee’s other brands, Cherokee and Sideout.
Cherokee changed tack six years ago, when it closed down its wholesale manufacturing and distribution operations and began a retail-direct licensing business. The company brokered an exclusive licensing deal between Mossimo Inc. and Target two years ago and serves as consultant to brand owners and retailers looking to enhance their profits through licensing. Cherokee receives royalties on sales of $3 billion annually. The company has 14 license agreements, covering both domestic and international markets.
Earlier this month, Cherokee signed an international licensing agreement for its Sideout brand with Shanghai Bolderway Fashions Co. Inc., a division of Guangdong Leaderway, a Chinese retailer and marketing company. The 10-year agreement calls for the Chinese retail group to market women’s, men’s and children’s apparel and accessories; it will also open a minimum of 150 retail doors, both company-owned and franchised.
For the 39 weeks ended Nov. 2, Cherokee revenues rose 7 percent to $26.1 million. Net income rose 8 percent to $10.5 million.