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Shares of True Religion Apparel Inc. advanced in after-hours trading Wednesday following the Los Angeles-based premium jeanswear brand’s report of lower fourth-quarter earnings that surpassed Wall Street’s estimates and upbeat guidance for the new year.
The company said its strategic review was continuing but offered no details about strategic alternatives being considered, including a possible sale of the firm.
For the three months ended Dec. 31, the firm reported net income of $13.8 million, or 53 cents a diluted share, 4.6 percent below the $14.5 million, or 57 cents, recorded in the final quarter of 2011. On an adjusted basis, eliminating costs associated with exploration of strategic options, earnings per share were 55 cents, 2 cents above the consensus estimate of analysts.
Revenues for the quarter advanced 14.8 percent to $137 million from $119.4 million in the prior-year period. Advances were led by TR’s international sales, up 27.8 percent to $24.2 million, with U.S. consumer direct sales ahead 11.8 percent to $86.4 million and U.S. wholesale business rising 14.1 percent to $25.5 million. Gross margin rose to 64.3 percent of revenues from 64.1 percent in the 2011 period.
“We finished the fourth quarter with double-digit sales increases in our three key segments, and we expanded our gross margin in our domestic consumer direct and wholesale segments,” said Jeffrey Lubell, chairman, chief executive officer and chief merchant of the firm. In the new year, he added, “our plan is to enhance our men’s merchandise offering with sportswear innovation and reestablish the True Religion Brand Jeans women’s collection with updated, well-edited core basic denim bottoms and fashion-forward concepts.”
Same-store sales in the U.S. retail segment rose 1.5 percent for the quarter, lower than the 2.7 percent gain for the entire year.
After opening 27 stores over the course of 2012, five of them in the year’s final quarter, True Religion ended the year with 122 stores in the U.S. and 30 in international markets. The cost of store openings was cited as among the causes of a 20.9 percent increase in fourth-quarter selling, general and administrative costs, to $62.7 million. An increase in the company’s effective tax rate also depressed quarterly earnings.
The company initiated 2013 guidance for EPS of between $1.89 and $1.95, above the consensus estimate for the year of $1.86, and first-quarter EPS guidance of between 33 and 35 cents, below the Wall Street estimate of 38 cents. The upside surprise for the year helped push shares of True Religion up $1.25, or 5.3 percent, to $25 in the early portion of after-hours trading after they’d finished Wednesday’s trading session at $23.75, up 31 cents, or 1.3 percent.
For the full year, net income grew 2.3 percent to $46 million, or $1.82 a diluted share, while revenues bounded 11.3 percent to $467.3 million.