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Consumer Direct delivers strong Y-O-Y sales gains at True
05
Nov '09
True Religion Apparel, Inc announced financial results for the three and nine months ended September 30, 2009.

Third Quarter 2009 Financial Results

• Total net sales were $82.4 million, an increase of 3.8% from $79.4 million in the third quarter of 2008.
o Net sales for the Company's U.S. wholesale segment decreased 31.1% to $31.9 million from $46.3 million in the prior year period, due to the planned reduction in sales to off-price retailers and a decline in sales to boutiques and Majors.
o Net sales for the Company's consumer direct segment, which includes the Company's branded retail stores and e-commerce site, increased 51.9% to $32.6 million from $21.5 million in the prior year period. The Company operated 66 branded stores as of September 30, 2009, compared to 36 as of September 30, 2008.
o Net sales for the Company's international segment increased 47.6% to $16.6 million from $11.2 million in the prior year period.
o Net sales included $1.3 million of licensing revenue.
• Gross profit was $53.3 million, or 64.7% of net sales, compared to $46.4 million, or 58.4% of net sales, in the third quarter of 2008. The overall improvement in gross margin was primarily due to the ongoing sales mix shift toward the Company's higher-margin consumer direct segment.
• Selling, general and administrative (“SG&A”) expense increased 27.2% to $30.6 million from $24.1 million in the prior year period, and as a percentage of sales, increased 680 basis points to 37.1% from 30.3% in the same period a year ago. The year-over-year growth in SG&A expenses was driven by the costs associated with opening and operating 30 new stores since September 2008.
• Operating income increased 1.9% to $22.7 million, or 27.6% of net sales, from $22.3 million, or 28.1% of net sales, in the 2008 third quarter.
• The effective tax rate for the quarter was 38.2% compared to 31.1% in the third quarter of 2008.
• Net income decreased 8.8% to $14.1 million, or $0.58 per diluted share based on weighted average shares outstanding of 24.2 million, from $15.4 million, or $0.64 per diluted share based on weighted average shares outstanding of 24.2 million, in the 2008 third quarter. In the third quarter of 2008, the Company implemented a tax planning strategy that reduced its tax provision in the quarter and increased its earnings per share by $0.06. The Company also finalized its 2007 tax returns, which reduced its income tax provision in the third quarter of 2008 and increased its EPS by $0.03. The cumulative impact of these changes resulted in a benefit to the Company's 2008 third quarter earnings per share of $0.09.

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True Religion Apparel

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