An analyst at Brean Murray recently put out a report estimating that the Kamali relationship will bring in between 150 and 200k per quarter in topline revenue this year and the next.
Does this sound surpisingly low to anyone else? It certainly does to me, especially considering that management has repeatedly implied that the relationship will be far more significant than that. I don't know whether the analyst was just making things up or CHKE was over-selling the deal.
Maybe if management wasn't so damn tight-lipped we'd know more.
I know I am late to this discussion but I think Cherokee (The company) functions as a manger/agent for these brands. They have better relationships with the department stores and can help the designers/manufacturers find better deals in both sales and in production. In exchange they receive a royalty.
Yes, those estimates do seem low compared to the impression we have been given. Those numbers will not do much to offset the royalties Cherokee has been loosing from other retailers in the United States. A few ideas: Wal Mart is only going to be start selling at some of its stores in the beginning. They will only be selling womens clothes. Target sells the Cherokee brand in mens, womens and children. Most people don't realize it but children is actually the bigest Cherokee royalty generator from Taraget.
There is a good article on thestreet.com on how discount retailers are hiring fashion conscious designers. Walmart is going big with Norma Kamali. I see this as a huge gain for Cherokee in the current economy.