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International segment grows in Q4 2011 at True Religion

13 Feb '12
6 min read

“In the fourth quarter we achieved growth in our net sales, good profitability and approximately $23.1 million in net operating cash flow. This wraps up a good year in which our U.S. Consumer Direct segment, our largest segment, increased its sales by 33% and its operating income by 37%. For the full year, same store sales rose 11%, on top of a 10% increase in 2010. Our International segment grew its net sales by 23%, driven by more direct control of our business, and we continued to make strategic investments to position us well for future growth."

"We expect the agreement for retail and wholesale expansion in Hong Kong and China that we signed in the third quarter, coupled with opportunities to strengthen existing international operations, will help increase our long-term penetration outside the U.S.,” stated Jeffrey Lubell, Chairman, Chief Executive Officer and Chief Merchant of True Religion Apparel, Inc. “Our business has many positive trends and we look forward to another year of increased net sales and profits in 2012.”

Total net sales increased 15.4% to $419.8 million in the year ended December 31, 2011. Net sales for the Company's U.S. Consumer Direct segment increased 32.9% to $251.3 million, and same-store sales for the year ended 2011 increased 10.9%. Net sales for the Company's International segment increased 22.5% to $79.0 million in the year ended December 31, 2011.

Net income attributable to True Religion Apparel, Inc. was $45.0 million, or $1.80 per diluted share based on weighted average shares outstanding of 25.0 million, as compared to $43.5 million, or $1.75 per diluted share based on weighted average shares outstanding of 24.9 million in the prior year. Net income attributable to True Religion Apparel, Inc. included $0.7 million in foreign currency losses related to intercompany balances, or $0.4 million after tax, compared to $0.3 million in foreign currency gains related to our intercompany balances, or $0.2 million after tax, in 2010.

Excluding the separation costs, non-cash impairment charges and foreign currency translation impact described above, 2011 adjusted net income attributable to True Religion Apparel, Inc. was $47.0 million, or $1.88 per diluted share, compared to $46.4 million, or $1.87 per diluted share in 2010.

As of December 31, 2011, the Company had $200.4 million of cash and cash equivalents as compared to $153.8 million as of December 31, 2010. The Company ended the year with no long-term borrowings. The inventory balance as of December 31, 2011 was $53.3 million, a 28% increase from the end of 2010. This increase is the result of our expanded retail store count, which increased by 24% over the past year, and the expansion of direct wholesale sales in our EMEA region, where we now store inventory at a third party logistics facility to support that region's wholesale sales growth.

Net cash provided by operating activities was $71.8 million in 2011 compared to $67.8 million in 2010. This increase in net cash provided by operating activities is linked to the increase in net income and the sales mix shift to the U.S. Consumer Direct segment, which accelerates the conversion of net sales to cash as compared to wholesale sales.

During the 2011 fourth quarter, True Religion Apparel opened five stores in the U.S., two stores in the U.K., and one store in Germany and closed one store in the U.S. As of December 31, 2011, the Company operated 109 stores in the U.S., five stores in the U.K, four stores in Germany, three stores in Canada, three stores in Japan, and one store in the Netherlands.

True Religion Apparel Inc

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