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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