Q1 2011 net sales up 20.4% to $93.8 mn at True Religion
True Religion Apparel Inc announced financial results for the quarter ended March 31, 2011.
First Quarter 2011 financial results
• Total net sales increased 20.4% to $93.8 million.
• Net sales for the Company's U.S. Consumer Direct segment, which includes the Company's branded retail stores and e-commerce site, increased 37.6% to $53.4 million and accounted for 56.9% of the Company's total net sales for the quarter. First quarter same-store sales for the 76 stores open at least 12 months and e-commerce increased 7.4%. The Company operated a total of 96 branded stores in the United States as of March 31, 2011, compared to 76 as of March 31, 2010.
• Net sales for the Company's U.S. Wholesale segment totaled $20.9 million, a 13.6% decrease as compared to the prior year. This segment's sales continue to be impacted by the overall challenging sales trend for women's premium denim in the major department store channel. In addition, the Company's sales to off-price customers were reduced to support long-term brand value.
• Net sales for the Company's International segment increased 34.0% to $18.5 million. Growth in the segment was driven by the transition to a joint venture in Germany in August 2010 as well as sales increases in Korea and Canada.
• Gross profit increased 21.6% to $60.7 million, driven primarily by the overall sales growth. The gross margin rate increased 60 basis points to 64.8%, reflecting the ongoing net sales mix shift towards the higher-margin U.S. Consumer direct segment. Selling, general and administrative ("SG&A") expenses, as a percentage of net sales, increased to 48.9% from 47.0% in the same quarter a year ago. The SG&A rate declined for each segment except the International segment, which increased SG&A due to the addition over the past year of our EMEA managing director, regional headquarters staff in Switzerland, wholesale sales personnel in Germany, the UK and Italy, and retail sales personnel for five new retail stores.
• Operating income totaled $14.9 million, up 11.3% from the first quarter of last year. Operating margin was 15.8% in the first quarter of 2011 versus 17.1% in first quarter of 2010. The operating margin benefited primarily from an improvement in the Consumer Direct segment's operating margin, which was driven by the 7.4% same-store sales increase. This was offset by the increase in SG&A expenses in the International segment.
• The effective tax rate for the quarter was 38.8% as compared to 37.2% in the first quarter of 2010. The 2011 effective tax rate increased over 2010 as the Company established its European headquarters in Switzerland.
• Net income attributable to True Religion Apparel, Inc. increased to $9.0 million, or $0.36 per diluted share based on weighted average shares outstanding of 25.1 million, as compared to $8.4 million, or $0.34 per diluted share based on weighted average shares outstanding of 24.9 million in the 2010 first quarter.