US: True Religion Q4 profit cut despite strong sales
By Richard Woodard | 7 February 2013
- Q4 net profit down 6.9% to US$13.5m
- Sales up 14.8% to $137m
- Product revamp planned for 2013
Fashion business True Religion posted a small reduction in fourth quarter profit, but registered strong sales in its core US and developing overseas businesses.
The company’s US consumer direct segment – comprising its retail and online units – recorded an 11.8% increase in revenue to $86.4m, with like-for-like sales edging up 1.5%.
US wholesale revenues rose 14.1% to $25.5m, driven by growth in the speciality store and off-price channels.
International revenues increased 27.8% to $24.2m, thanks mainly to a near doubling of the company’s store count over the last year, from 16 to 30.
Meanwhile, gross margin was up 20 basis points to 64.3%, with a strong contribution from the US wholesale and consumer direct segments.
“As we start 2013, our plan is to enhance our men’s merchandise offering with sportswear innovation and re-establish the True Religion Brand Jeans women’s collection with updated, well-edited core basic denim bottoms and fashion-forward concepts,” said Jeffrey Lubell, chairman, CEO and chief merchant at True Religion.
The company said there was as yet no update on the investigations of a special committee of non-executive directors, appointed last October to evaluate “potential strategic alternatives” for the company, adding that the review was continuing.
For the full year ahead, True Religion expects to post net sales of $509-513m, and diluted earnings per share of $1.89-1.95.
Expert analysis
Global market review of denim and jeanswear – forecasts to 2018
The global jeanswear market is expected to grow in value over the next six years and mass market retailers will continue to source their denim from the most cost-effective manufacturers around the world. The advent of designer denim in the late twentieth century has done much to ensure the future legacy of jeanswear - premium jeanswear has undoubtedly suffered the most drastically from a dip in consumer confidence as a result of the global financial crisis but should recover as the US and Western Europe claw their way out of recession.
Sectors: Apparel, Finance, Retail
Companies: True Religion
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