United Kingdom Food Retailer in Talks to Buy Cherokee

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Tesco PLC, the United Kingdom’s largest food retailer, is considering purchasing casual apparel manufacturer Cherokee Inc.


Van Nuys-based Cherokee is reportedly on the block for $200 million and could be taken over by Tesco in several weeks. The deal would considerably expand the reach of the brand in Europe beyond Tesco’s core business of more than 2,300 supermarkets.


Tesco inked a deal with Cherokee in 2001 to become the exclusive distributor of Cherokee brand clothes in Great Britain. In the United States, Minneapolis-based Target Corp. has the exclusive right to merchandize Cherokee products in its stores a deal that would continue should the ownership change.


Revenue from sales of Cherokee products in Tesco stores was nearly $9 million in fiscal year 2005, up from $5.3 million in the prior fiscal year, according to a Securities and Exchange Commission filing. Cherokee products were introduced into Tesco stores in 2002.


Tesco is already expanding the Cherokee brand into some new areas. In 2004, Tesco was granted the rights to sell Cherokee products in Taiwan, Korea and Hungary, among other countries.


News of the possible buyout of Cherokee follows an offer last month by Mossimo Giannulli, chief executive of apparel maker Mossimo Inc., to purchase the outstanding shares of the company and take it private. Santa Monica-based Mossimo, like Cherokee, is exclusively sold in the United States at Target stores.

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