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Monday, February 14, 2011

Small Cap Cherokee Cutting Dividend in Half

Cherokee Inc. (CHKE) announced today that the company is cutting their dividend in half and their Chairman is stepping down.

The dividend announcement was buried near the bottom of a press release announcing that Robert Margolis is stepping down as Executive Chairman of the Board of Directors effective January 28, 2011.

The quarterly dividend payment is being reduced by 47% from $.38 per share to $.20 per share. Following the dividend cut, Cherokee shares will offer a current yield of 4.4% based on yesterday’s closing price.

The company’s rationale for the dividend cut is to better focus on the company’s brands and to enable Cherokee to execute on its growth strategy.

The apparel stock currently has a total market cap of less than $150 million and dropping. News of the dividend cut sent the stock price down over 11% in afternoon trading.

The next dividend is scheduled to be paid on March 15, 2011 to shareholders of record as of March 1, 2011.

 Disclosure I am long CHKE shares.

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