• Q2 net income up 0.7% to US$9.8m
  • Gross margin decreases to 64.3% 
  • Net sales increase 6.8% to $104.9m

Luxury jeanswear business True Religion has lowered its full-year earnings outlook despite posting a rise in its second quarter net profit.

Net income for the quarter ended 30 June edged up 0.7% to US$9.8m, while operating income increased 9.6% to $16.6m.

Net sales were up 6.8% to $104.9m as the company's consumer direct and wholesale business in the US offset declines in True Religion's international segment.

Gross margin rate decreased 120 basis points to 64.3%, primarily due to increased markdowns in the company's outlet stores to sell slower moving women's merchandise.

As a result, the company has lowered its full-year earnings outlook. True Religion now expects earnings per diluted share to be in the range of $1.80 to $1.86, compared to its earlier guidance of $1.88-1.95.

Jeffrey Lubell, chairman, CEO and chief merchant, said: "I am pleased that our largest segment, US consumer direct, had a same-store sales increase. But, we did not achieve our sales plan due primarily to a weaker response toward our spring and summer merchandise assortment."

For the first six months of the year, net income increased 9.2% to $20.6m, while operating income was up 12.8% to $33.9m, while net sales reached $211.7m, up 10.2%.