True Religion Apparel Inc.’s commitment to building a sizeable direct-to-consumer business, coupled with surging international growth, resulted in significant sales and earnings gains for 2009.
For the three months ended Dec. 31, the Vernon, Calif.-based premium denim label saw earnings rise 15.2 percent to $14.6 million, or 59 cents a diluted share, compared with earnings of $12.7 million, or 53 cents, during the same period a year ago.
Sales surged 27.2 percent to $92.8 million from $73 million. The driving force behind these gains has been the company’s rapid pace of opening branded stores. The consumer-direct segment, which also includes online sales, saw sales explode 84.8 percent during the quarter to $45.1 million from $24.4 million. The company finished the year with 70 stores, compared with 42 stores at the conclusion of 2008. Management said it intends to open 30 stores this year, three of which will be the brand’s first full-price international locations.
“This platform provides us greater control over our destiny,” Jeff Lubell, chairman and chief executive officer, said of the branded store environment during a conference call with analysts.
Comparable-store sales for the direct business were up 25.3 percent during the quarter. The average selling price for women’s jeans in the stores was $240, while men’s came in at $262.
International sales grew 24.3 percent to $14.6 million from $11.8 million, with performance particularly strong in Asia.
While there was some improvement in the U.S. wholesale channel, sales at major department stores and boutiques continued to weigh on results. The wholesale segment posted a sales decline of 13.1 percent to $31.6 million from $36.4 million, and management said sales to boutiques and major department stores fell more than 18 percent. Management doesn’t see the situation improving dramatically in 2010, and said during the call that it would reduce sales to off price retailers by $10 million this year.
For the full year, the company saw earnings improve 6.7 percent to $47.3 million, or $1.92 a share, compared with earnings of $44.4 million, or $1.83.
Sales increased 15.2 percent to $311 million from $270 million. The consumer direct division again fueled growth, with a sales gain of 71.3 percent to $129 million from $75.3 million. International sales gained 36 percent to $54.5 million from $40 million. The U.S. wholesale segment saw declines of 19.6 percent to $123.2 million from $153.2 million.
For 2010, management expects to generate sales of $360 million and earnings per share of between $2 and $2.10.
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