US: True Religion reports second quarter growth
Driven by its consumer direct segment, True Religion Apparel has reported a 16.3% rise in net sales for its second quarter to US$35.7m.
The sale rise led to a small rise in net income to $5.1m, or $0.21 per diluted share, compared to $4.9m, or $0.21 per diluted share in the same period in 2006.
The consumer direct segment, which includes the company's branded retail stores and e-commerce operation, increased its net sales significantly to $6.5m versus $0.7m in the second quarter of 2006. The increase primarily reflects the expansion of retail stores, with six full-price stores and two outlets open in the second quarter of 2007.
Sales in the company's US wholesale segment in the period were $24.4m versus $22.2m last year. However, the international wholesale business posted sales of $4.7m, down from the $7.8m in the comparable period in 2006, due partly to an anticipated year-over-year decrease in sales to Japan and the UK, as well as an earlier start of Fall shipments in 2006 versus 2007.
The company said that gross profit in the second quarter increased to $20.4m from $16.4m in the second quarter of 2006. Additionally, second quarter 2007 consolidated gross margin grew to 57.1% compared with 53.2% in the same period last year.
"We have hit the mid-year point with great stride, with growth on several fronts as we continue our strategy toward becoming a global aspirational brand known worldwide for superior denim and an innovative collection of casual luxury fashion and accessories," said Jeffrey Lubell, chairman and chief executive officer of True Religion Apparel. "Our branded retail business is prolific with enviable sales and margins, and we are above plan with 15 stores targeted by year end. Also during the quarter, we added two key new executives, our VP for real estate development and our general counsel. On the product front, we announced licensing deals for handbags and swimwear and recently signed a new deal for a fragrances line. Looking ahead, we see a strong selling season as we introduce the newest elements of our fall collection and our first licensed products to our customers."
The company said that its costs for the quarter included a $1.2m charge related to the separation agreements with former executives and the termination of the strategic review with Goldman Sachs. Excluding this charge, adjusted net income was $5.8m, or $0.25 per diluted share, which was in line with the company's plan, True Religion said.
Going forward, True Religion reiterated its previously reported financial guidance of full year net sales of approximately $167m, reflecting a 20% increase over 2006. Non-GAAP earnings per diluted share guidance remains unchanged and is anticipated to be between $1.24 and $1.27 for the year.
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