Management Comments
"Third quarter results were a reflection of the changing mix of our business model. U.S. Consumer Direct, our largest segment, performed very well, generating a 9% same-store sales increase which was an acceleration from the second quarter increase. Sales in our U.S. Wholesale segment declined, driven by our strategic reduction of sales to the off-price channel and the ongoing weakness of the women's premium denim category in the Major department stores. We remain focused on working with our Major department store accounts to reinvigorate this category. In addition, we are very pleased with our second consecutive quarter of growth in the Specialty channel, the preferred channel of denim tastemakers," stated Jeffrey Lubell, Chairman, Chief Executive Officer and Chief Merchant of True Religion Apparel, Inc.
"In our International segment, our newly opened stores in Tokyo, London and Cologne were well received, and the retail sell-through of our products continues to be positive. This quarter's International results also reflect our decision to terminate some distributors as we accelerate our plans to take certain markets direct. Direct control of key markets is essential for us to effectively protect and grow our brand in the long term. Overall, we did not make the progress that we had expected to in the quarter.
“However, we continue to focus on executing our growth plans for our U.S. Consumer Direct and International business segments while investing in infrastructure and personnel to drive our future growth and profitability. I remain very confident in our business strategy and management team."
Year-to-date 2010 Financial Results
• Total net sales increased 15.9% to $252.8 million in the nine months ended September 30, 2010. Net sales for the Company's U.S. Consumer Direct segment increased 50.9% to $126.6 million, and same-store sales increased 10.8%. Net sales for the Company's U.S. Wholesale segment totaled $76.7 million, a 16.2% decrease as compared to the prior year period, and net sales for the Company's International segment increased 14.3% year-over-year to $45.6 million. Net sales included $3.9 million of licensing revenue as compared to $2.8 million in the same period last year.
• Operating income decreased 18.6% to $43.7 million as compared to the prior year period, primarily due to the $4.4 million separation costs incurred in the second quarter of 2010, the sales decrease in the U.S. Wholesale segment, and additional spending to support International wholesale and direct to consumer business growth. Operating income was 17.3% of net sales in the first nine months of 2010 versus 24.6% in the prior year period. The 2010 year to date operating margin excluding the separation costs is 19.0%.
Store Openings
During the 2010 third quarter, True Religion Apparel opened eight stores in the U.S., bringing its total U.S. store count at September 30, 2010, to 89 stores, compared to 66 stores at September 30, 2009. The Company also operated four stores in Japan, one in the U.K. and one in Germany as of September 30, 2010. Subsequent to the close of the third quarter, the Company opened two additional stores in the U.S. and one store in Toronto, Canada. The Company anticipates opening three additional retail stores in the U.S. over the remainder of the fourth quarter, 2010.
True Religion Apparel Inc
20240830145952.gif)
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "UBM China (Shanghai)")
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
