Josh Arnold
Long/short equity

Cherokee Inc. - High Margins And A Great Dividend

Cherokee Inc. (NASDAQ:CHKE) is a 23 employee licensor of trademarked apparel to distributors worldwide. The company was founded in 1988 and licenses its apparel brands including Cherokee, Sideout, Liz Lange and many others to retailers in 40 countries. These brands generate gross sales of over $2 billion annually and CHKE earns a portion of those revenues as licensing fees. The company has no manufacturing, supply chain or retail expenditures as it is solely a licensor and bears no inventory risk. This means that Cherokee's business costs very little to run and free cash flow yield as a percentage of revenue is very high. I will argue in this article that, after CHKE's precipitous fall during the financial crisis,...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
FREESA PRO MEMBERS
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details