NEW YORK — True Religion Apparel’s string of branded store openings, coupled with a surge in international markets, helped take the sting out of a double-digit decline in its wholesale business during the third quarter.
This story first appeared in the November 4, 2009 issue of WWD. Subscribe Today.
For the three months ended Sept. 30, the Vernon, Calif.-based premium denim label saw earnings fall 8.8 percent to $14.1 million, or 58 cents a diluted share, compared with earnings of $15.4 million, or 64 cents a share, during the same period a year ago.
Sales improved 3.8 percent to $82.4 million from $79.4 million.
“We believe our performance highlights the ongoing preference for our brand,” said Jeff Lubell, chief executive officer, during a conference call with analysts.
The company’s direct-to-consumer segment has been fueling growth, with sales spiking 51.9 percent to $32.6 million compared with $21.5 million a year ago. An additional seven branded stores were opened during the quarter for a total of 66, compared with 36 last year. Management anticipates having 70 stores by the end of the year. The branded store environment allows the company to fetch higher prices on its goods. The average selling price for women’s jeans was $253 for the quarter, while men’s came in at $273.
Sales in the international segment rose 47.6 percent to $16.6 million from $11.2 million.
Struggles continued in the wholesale segment, where sales fell 31.1 percent to $31.9 million from $46.3 million. Michael Buckley, president, said sales to major department stores fell 17 percent during the quarter as store buyers were more conservative with their purchasing. Sales to specialty stores were also down, but the rate of decline had tempered.
“While [the boutique] business has decreased sharply over the past four quarters, we have seen some signs of stabilization,” said Buckley.
For the nine-month period, the company reported an earnings increase of 3.3 percent to $32.7 million, or $1.35 a share, from $31.7 million, or $1.31 a share.
Sales rose 10.7 percent to $218.2 million from $197 million.
The strong performance pushed management to up its guidance for the year. The company now expects to generate sales of between $295 million and $300 million for the year, with earnings per share between $1.82 and $1.86, up from previous guidance of $1.76 to $1.84.