True Religion Apparel Inc. exceeded Wall Street’s second-quarter earnings expectations but saw its stock hit hard in after-hours trading on sales softness and weak full-year guidance.
Revenues suffered from declines in Korea and Canada and a tepid reaction to new women’s styles introduced by the company, executives said.
Following the 4 p.m. disclosure of quarterly results Tuesday, shares dipped $2.88, or 11 percent, to $23.36 after declining $1.03, or 3.8 percent, to $26.24 during the trading day.
For the three months ended June 30, net income rose 3.6 percent to $9.8 million, or 39 cents a diluted share, from $9.4 million, or 38 cents, in the year-ago quarter. The 2011 results included a litigation settlement and charge for bad debt expense that reduced earnings per share by 5 cents.
Revenues grew 6.8 percent to $104.9 million from $98.3 million. Comparable-store sales rose 2.4 percent in the U.S., contributing to a 9.4 percent increase to $64.4 million in the domestic direct channel, and were up 6.7 percent, to $22.4 million, for U.S. wholesale operations. International sales were down 2 percent to $17.7 million. Gross margin slipped to 64.3 percent of sales from 65.5 percent a year ago.
Second-quarter EPS of 39 cents was 4 cents better than the 35 cents anticipated, on average, by analysts, but the revenue number fell short of the $107.3 million projected by Wall Street. Adding urgency to the after-hours sell-off, full-year guidance for sales of $450 million to $455 million and EPS of between $1.80 and $1.86 was below the respective levels of $467.8 million and $1.97 earlier forecast by analysts.
Although pleased by the increase in comps, Jeffrey Lubell, chairman, chief executive officer and chief merchant of the Vernon, Calif.-based firm, noted, “We did not achieve our sales plan due primarily to weaker response towards our spring and summer merchandise assortment. However, we carefully managed our business throughout the quarter, including the initiation of a semiannual sale, expanded sales efforts to specialty accounts in the U.S. wholesale segment and reinforced overhead cost discipline.”
While its products for men enjoyed a good quarter, True Religion continued to struggle with its women’s business and saw some of its attempts at redirection rebuffed by consumers.
Lynne Koplin, president, told participants on a late afternoon conference call that four new collections for women “did not resonate well with our customers. While we are committed to expanding and evolving our assortment to include fresh and innovative new merchandise, we were overly aggressive with the pace of change this season. While we will continue to make every effort to provide an exciting merchandise offering to our customers, we will need to be more strategic in the way we introduce new product concepts and maintain a better balance between new collections and core styles that are familiar to our repeat customers.”
The firm finished the second quarter with 116 stores in the U.S. and 23 international units.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews