Partly as a result of the stronger U.S. dollar, which resulted in lower U.S. dollar based royalties from our international licensees, total royalty revenues for our First Quarter totaled $8.9 million, as compared to $11.5 million in the comparable period last year. Cherokee's operating expenses for the First Quarter totaled $3.1 million, as compared to $3.7 million in the comparable period last year, representing a reduction of expenses of $0.6 million, due to continued expense management policies.

Cherokee's net income for the First Quarter decreased by a total of $847,000 to $3.8 million or $0.43 per diluted share, as compared to $4.7 million, or $0.52 per diluted share in the year ago period. The year ago period included $0.5 million of audit royalties, or an estimated $0.03 per diluted share, which represented several years of past royalties due. The Company estimates that our First Quarter diluted EPS would have totaled approximately $0.50 per share, or $0.07 higher, had exchange rates remained constant in the First Quarter as compared to the prior year. However, our First Quarter earnings also benefited by approximately $0.04 per diluted share from amended tax returns filed in the First Quarter. Normalizing for all of these adjustments to both periods, the Company estimates that First Quarter diluted EPS would have been $0.46 as compared to $0.49 per share last year.

Howard Siegel, President of Cherokee, stated, "Our domestic royalty revenues for the First Quarter decreased by $0.9 million from the prior year. This was primarily attributable to the reduction of Cherokee adult business at Target and the closure of Mervyn's. These declines were partially offset by our growth in the Cherokee children's business at Target and the Carole Little brand at TJX. We continue to discuss with Target expansion opportunities with the adult business for 2010. Internationally, we experienced retail sales growth in local currencies ranging from 11% to 28% in Hungary, Poland, the Czech Republic and Slovakia with Tesco. However, in the U.K. retail sales in local currency declined by 12.7%, and as a result of the stronger dollar the exchange rate difference totaled -27.6%. Although we expect that retail revenues may continue to be soft through the rest of this year, we believe we will benefit from our growing revenue streams from our Cherokee brand in Brazil, Chile, Peru and India, coupled with the continued growth of Norma Kamali at Wal Mart. In addition, we are excited about the upcoming launch of our Cherokee brand in Spain with Eroski, which is expected to occur in the second half of 2009, and believe this could grow to be a significant contributor to our future royalty revenues."

Robert Margolis, Chairman and CEO, added, "We believe that our business model and debt-free balance sheet serve us well given the current challenges in the retail environment worldwide. Although we are not pleased with our First Quarter revenue results, we are pleased with our prudent expense management and are very certain that our sales teams are focused on some exciting growth opportunities we hope to announce over the next 6 months."

Russell J. Riopelle, Chief Financial Officer, commented, "We finished the quarter in another strong cash position, with cash and cash equivalents of $9.6 million, trade receivables of $8.5 million, and no debt. As we previously announced, we will pay a dividend of $0.50 per share on June 18th. Unless we see a prudent and compelling acquisition opportunity or some other growth opportunity, we expect to continue a dividend policy commensurate with our earnings and excess cash availability, while we continue to monitor any proposed tax law changes which could accelerate our dividend policy. We will continue to implement and execute strategies designed to maximize value for our shareholders."

About Cherokee Inc.

Cherokee Inc., based in Van Nuys, is a marketer, licensor and manager of a variety of brands it owns (Cherokee, Sideout, Carole Little and others) and represents. Currently, Cherokee has licensing agreements in a number of categories, including family apparel, fashion accessories and footwear, as well as home furnishings and recreational products. Premier clients for the Cherokee brand around the world include Target Stores (U.S.), Tesco (U.K., Ireland and certain other European and Asian countries), Zellers (Canada), Pick ˜n Pay (South Africa), Grupo Pão de Acucar (Brazil), S.A.C.I. Falabella (Chile and Peru), Arvind Mills (India), Shufersal LTD. (Israel), Comercial Mexicana (Mexico) and Grupo Eroski (Spain). Premier clients for Cherokee's other brands include the TJX Companies (U.S., Canada and Europe) for the Carole Little brands, and Shanghai Bolderway (China) for the Sideout Brand. Cherokee also placed the Norma Kamali brand with Wal-Mart.

Statements included within this news release that are not historical in nature constitute forward-looking statements for the purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. When used, the words "anticipates," "believes," "expects," "may," "should" and similar expressions are intended to identify such forward-looking statements. Forward-looking statements included in this press release (including, without limitation, express or implied statements regarding anticipated growth in international markets, future dividend payments, anticipated free cash flows and potential future business development) involve known and unknown risk and uncertainties that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.