True Religion’s blistering pace of opening branded stores is guiding the premium denim label through the worst of the recession, helping the company reap double-digit sales and earnings gains during the second quarter.

This story first appeared in the August 5, 2009 issue of WWD. Subscribe Today.

For the three months ended June 30, the Vernon, Calif.-based company saw earnings improve 18.4 percent to $11 million, or 45 cents a share, compared with earnings of $9.3 million, or 29 cents, in the same period a year ago.

Sales rose 12.4 percent to $72.1 million from $64.2 million. Leading results was the company’s consumer direct segment, which includes its stores and e-commerce site. Sales for the segment spiked 59.8 percent to $28.2 million from $17.7 million.

The addition of 10 stores during the quarter brought the overall count to 59 compared with 30 during the same period a year ago. The latest store opened July 27 at Pacific Place in Seattle and management intends to finish the year with 69 stores.

“We are committed to expanding this segment,” said Jeffrey Lubell, chairman and chief executive officer, during a conference call with analysts. “More importantly, we are gaining access to locations that were not previously available at very attractive rents.”

While the consumer direct business is shining, the company’s U.S. wholesale business continued to falter, as department store traffic dwindles and boutiques around the country are forced to shutter. The U.S. wholesale segment saw sales fall 19.8 percent to $30.8 million from $38.4 million. The bulk of the decline was attributed to a sharp pullback in sales to boutiques, while declines to major department stores were in the low single digits.

Lubell said the company is now giving major wholesale customers an early look at collections to get a better read on expectations. However, management is seeing no signs the wholesale business will turn around through the remainder of the year. As a result, management now expects its wholesale business to decline 18 to 20 percent for the year, a steeper decrease than previous expectations of a drop of 17 to 19 percent.

The label’s international business saw sales rise 53.8 percent to $12.1 million from $7.8 million.

Lubell also noted True Religion ended the quarter with $78.8 million in cash and no long-term debt. “We believe that this represents a unique advantage, as many companies in the apparel and retail space do not have the same flexibility,” he said.

For the first half, earnings rose 14.7 percent to $18.6 million, or 77 cents a share, compared with $16.2 million, or 67 cents, last year.

Sales in the consumer direct segment vaulted 74.2 percent to $51.2 million compared with $29.4 million a year ago. The U.S. wholesale segment reported a 15.8 percent decline in sales to $59.7 million from $70.9 million. International sales rose 39 percent to $23.3 million from $16.7 million.

The firm anticipates earnings for the full year to be between $1.76 and $1.84 a share, with sales of $293 million to $300 million.