By  on February 26, 2009

Bucking the economic headwinds, True Religion Apparel Inc. posted double-digit sales and earnings gains for the fourth quarter and full year.

“We could not be more pleased with our performance in 2008,” said Jeffrey Lubell, chairman and chief executive officer, on a conference call with analysts.

Lubell also noted the fourth quarter marked the fifth consecutive quarter in which the company exceeded sales and earnings expectations.

For the three months ended Dec. 31, the Vernon, Calif.-based premium denim label saw earnings jump 42.6 percent to $12.7 million, or 53 cents a diluted share, compared with earnings of $8.9 million, or 37 cents, in the same period a year ago.

Sales increased 38.5 percent to $73 million from $52.7 million. The company’s U.S. wholesale segment, its largest business unit, saw sales improve 14.4 percent to $36.4 million from $31.8 million during the quarter.

The label continued to claim more space with major department stores. However, those gains were tempered by significant declines with specialty store customers. According to management, the company’s boutique business declined 11 percent for the year and more than 30 percent during the fourth quarter. The dip was largely attributed to customers gravitating toward the heavy discounting going on at major department stores.

International sales rose 27.4 percent to $11.8 million from $9.2 million. The company’s direct-to-consumer segment saw sales jump 112.6 percent to $24.4 million from $11.5 million. The company finished the year with 42 stores, compared with 15 stores at the end of 2007.

“We are operating in uncharted territories,” said Lubell of the current economic environment. “Our marketplace has experienced rapid changes. While True Religion is not immune to these events, we remain acutely attuned to the macroenvironment. Our business plan is a proven one and one that has lasted throughout the changes in the global environment.”

Eric Beder, retail analyst at Brean Murray, Carret & Co., described the company as the “premium denim fashion leader” offering consumers the biggest selection of innovative styles.

“We believe True Religion has continued to build on its recent fashion momentum…to offer one of the most impressive series of premium denim newness we have seen in some time,” said Beder in a research note following his meeting with management at the Project trade show in Las Vegas this month. “We continue to believe the company is poised to drive strong results in a weak economic environment in 2009 and make material strides in becoming a lifestyle brand and charting its own destiny through its owned-store base.”

Earnings for the year rose 59.3 percent to $44.4 million, or $1.83 a share, compared with earnings of $27.8 million, or $1.16 a share, last year. Sales rose 55.8 percent to $270 million from $173.3 million.

For 2009, management is targeting sales of $290 million to $297 million, representing growth of 7 to 10 percent. The company also expects to grow its direct-to-consumer business by 60 percent, primarily through the opening of 25 signature stores. The company has set a goal of opening 80 stores by the end of 2010.

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