By Kristin Jones 
 

True Religion Apparel Inc.'s (TRLG) fourth-quarter profit fell 6.8% as the jeans maker recorded higher costs from new store openings, offsetting higher sales.

But shares rose 3.6% to $24.61 in after-hours trading Wednesday, as sales beat the company's expectations.

True Religion has seen double-digit quarterly revenue growth for most of the past two years, driven by direct sales of jeans and other clothing to consumers in the U.S. But the brand has faced stiff competition from other premium denim makers such as J Brand and Paige Denim, and from lower-priced retailers such as Gap Inc. (GPS) and Forever 21 Inc.

In October, the company said that it is considering a possible sale of the company after receiving interest from third parties. Though a special committee has been set up to explore and evaluate potential strategic alternatives, the company said Wednesday that no decision had been made.

For the latest quarter, the company reported a profit of $13.5 million, or 53 cents a share, down from $14.5 million, or 57 cents a share, a year earlier.

Sales grew 15% to $137 million. The company in November had targeted per-share earnings of 52 cents to 58 cents a share on sales of $128 million to $133 million.

Gross margin widened to 64.3% from 64.1%.

Direct U.S. consumer sales rose 12%, while U.S. wholesale revenue grew 14%. International sales jumped 28%, helped by store openings. The company operated 30 international stores at year end, up from 14 at the end of 2011.

Overhead costs grew 21%, due primarily to costs associated with store openings.

Looking ahead to 2013, the company expects per-share earnings of $1.89 to $1.95 on revenue of $509 million to $513 million, as international sales and direct-to-consumer sales are expected to drive growth. Analysts polled by Thomson Reuters recently projected per-share earnings of $1.86 on revenue of $495 million.

For the current quarter, True Religion expects a profit of 31 cents to 35 cents a share, on sales of $113 million to $114 million. Analysts recently called for per-share earnings of 38 cents a share.

Through the close, the stock was up 9% in the past six months.

Write to Kristin Jones at kristin.jones@dowjones.com

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