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Target to Drop Cherokee Brand in the U.S. in 2017, Liz Lange to Remain

They say that all good things must come to an end—Target Corp. has decided not to renew its license for the Cherokee children’s clothing and accessories label after nearly 20 years.

Cherokee Global Brands disclosed the news late on Thursday, announcing that the two companies will let the existing distribution agreement expire on January 31, 2017, as Target makes room for new kids’ lines.

The decision is a blow to the apparel maker, whose Cherokee brand generated nearly $230 million in retail sales in the second quarter of fiscal 2016 for Target, according to this week’s earnings presentation. The non-renewal does not impact the license agreement with the retailer for the company’s Liz Lange brand.

“Moving forward, Cherokee Global Brands is in a strong position to enter into new platform partnerships that will expand Cherokee’s presence in the U.S.,” Henry Stupp, chief executive officer, said in a statement, which noted that the news won’t affect other partner licenses around the world. “Large-scale retailers and wholesalers have frequently expressed interest in the Cherokee brand based on its multi-category relevance and high consumer awareness.”

Cherokee, whose portfolio includes Tony Hawk and Everyday California as well as retail and e-commerce partnerships with Kohl’s and Sears Canada, said it does not expect the non-renewal to have any “material impact” on the company’s revenue in fiscal 2016.

“The transitions in our business continue to present exciting opportunities,” Strupp continued, adding, “Retail moves fast and agility is the hallmark of Cherokee Global Brands’ approach as we actively identify and engage with desirable new licensing partners that fully leverage our platform capabilities.”

The company also reported a 3 percent dip in second-quarter revenues to $8.5 million, citing the strong U.S. dollar and lower sales of Cherokee-branded goods in the U.K. and Canada, and a profit of $1.9 million, or $0.22 per diluted share, compared to $2.3 million in the year-ago period.

Following the announcement, Cherokee’s shares toppled 33 percent in extending trading.