Cherokee CEO Quits; Return of Founding Designer Is Rumored
Robert Margolis, Cherokee Inc.’s chairman and chief executive, resigned Monday, rekindling speculation that French designer Georges Marciano, a Cherokee investor, wants to take a more active role in the maker of women’s clothing.
The 45-year-old Margolis, a 13-year veteran of Cherokee, recently steered it back to profitability after a bankruptcy reorganization. He could not be reached for comment but said in a statement, “Now that the company is on a firmer financial footing and has reported a profitable first quarter, I feel the time is appropriate for me to step aside so that the new management team can focus on maximizing the potential of Cherokee’s brand name and other strengths in today’s marketplace.”
Rumors of Marciano’s interest in running Cherokee first took flight in August, when he resigned as chief executive of Guess? Inc. It was Marciano, 46, and his three brothers who founded the Los Angeles-based apparel company.
Marciano, who in June bought 19.9% of Cherokee for $4.1 million, could not be reached for comment on his plans in light of Margolis’ resignation. But Cary Cooper, Cherokee’s chief financial officer, said, “Mr. Marciano is an investor in the company and has never evidenced any interest in being anything else.”
Leon Greenblatt a principal in Scattered Corp., a Chicago broker-dealer that owns about 12.9% of Cherokee, said, “The stock market seems to think Marciano is going to be involved.” Cooper said Cherokee’s board will form a committee to search for a new chief executive. Until one is hired, the post will be filled by Bryan Marsal, 42, a partner in the New York-based management consulting firm Alvarez & Marsal.
Margolis will remain a consultant to Cherokee’s board, probably for a year, Cooper said.
Cherokee’s stock rose $1.125 a share on the news. It closed Monday at $6.25 a share in Nasdaq composite trading.
Cherokee posted net income of $297,000 for the fiscal first quarter ended Aug. 28, in contrast with a loss of $4.28 million a year earlier. Sales were down 17%, however, to $34 million, from $41 million a year ago.
