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Q1 2011 net sales up 20.4% to $93.8 mn at True Religion
02 May '11
5 min read
Management Comments
"We are off to a good start for 2011 as we exceeded our net sales and profitability targets for the first quarter of the year. The standout performance this quarter was our Consumer Direct segment, which benefitted from new store openings, a same-store sales increase of 7.4% and consistent operating cost oversight, and delivered a 260 basis point increase in operating margin. We also achieved a 34% increase in our international net sales, as we benefited from strategic investments and more direct control of our business in those markets," stated Jeffrey Lubell, Chairman, Chief Executive Officer and Chief Merchant of True Religion Apparel, Inc.
"We are aware of the challenges that face the overall retail market for premium denim and will continue to execute our plans to mitigate input cost pressures, protect our premium brand position and maintain strict inventory discipline. The strategic investments we have made in our domestic retail stores over the past years are generating healthy net sales and cash flow, and we plan that our substantial investments in EMEA, which are classified as operating costs, will create a platform for future sales and earnings growth."
Balance Sheet and Liquidity
As of March 31, 2011, the Company had $156.2 million of cash and cash equivalents as compared to $153.8 million as of December 31, 2010. The Company ended the quarter with no long-term borrowings. Over the past year, the Company added inventory to support the 20 U.S. and five international branded retail stores opened since March 31, 2010, expanded its wholesale sales presence in Germany, and added two initiatives that contributed to the overall inventory increase: selling excess wholesale merchandise through Company outlet stores versus off-price wholesale accounts, and consolidating new fashion merchandise for retail stores into one shipment at the beginning of the month. These developments resulted in an inventory balance of $46.6 million as of March 31, 2011, a 38.3% increase from the end of the first quarter of 2010 and an 11.8% increase from the beginning of 2011.
Net cash provided by operating activities for the first quarter of 2011 was $10.9 million compared to $12.5 million in first quarter of 2010. This decrease in net cash provided by operating activities is related to the additional investment in inventory described above.
Store Openings
During the 2011 first quarter, True Religion Apparel opened two stores in the U.S. and one store in Germany. As of March 31, 2011, the Company operated 96 stores in the U.S., four stores in Japan, one store in the U.K., two stores in Germany, and one store in Canada. The Company anticipates opening 20 additional retail stores in 2011, including 13 stores in the U.S. and seven stores outside the U.S.
"We are off to a good start for 2011 as we exceeded our net sales and profitability targets for the first quarter of the year. The standout performance this quarter was our Consumer Direct segment, which benefitted from new store openings, a same-store sales increase of 7.4% and consistent operating cost oversight, and delivered a 260 basis point increase in operating margin. We also achieved a 34% increase in our international net sales, as we benefited from strategic investments and more direct control of our business in those markets," stated Jeffrey Lubell, Chairman, Chief Executive Officer and Chief Merchant of True Religion Apparel, Inc.
"We are aware of the challenges that face the overall retail market for premium denim and will continue to execute our plans to mitigate input cost pressures, protect our premium brand position and maintain strict inventory discipline. The strategic investments we have made in our domestic retail stores over the past years are generating healthy net sales and cash flow, and we plan that our substantial investments in EMEA, which are classified as operating costs, will create a platform for future sales and earnings growth."
Balance Sheet and Liquidity
As of March 31, 2011, the Company had $156.2 million of cash and cash equivalents as compared to $153.8 million as of December 31, 2010. The Company ended the quarter with no long-term borrowings. Over the past year, the Company added inventory to support the 20 U.S. and five international branded retail stores opened since March 31, 2010, expanded its wholesale sales presence in Germany, and added two initiatives that contributed to the overall inventory increase: selling excess wholesale merchandise through Company outlet stores versus off-price wholesale accounts, and consolidating new fashion merchandise for retail stores into one shipment at the beginning of the month. These developments resulted in an inventory balance of $46.6 million as of March 31, 2011, a 38.3% increase from the end of the first quarter of 2010 and an 11.8% increase from the beginning of 2011.
Net cash provided by operating activities for the first quarter of 2011 was $10.9 million compared to $12.5 million in first quarter of 2010. This decrease in net cash provided by operating activities is related to the additional investment in inventory described above.
Store Openings
During the 2011 first quarter, True Religion Apparel opened two stores in the U.S. and one store in Germany. As of March 31, 2011, the Company operated 96 stores in the U.S., four stores in Japan, one store in the U.K., two stores in Germany, and one store in Canada. The Company anticipates opening 20 additional retail stores in 2011, including 13 stores in the U.S. and seven stores outside the U.S.
True Religion Apparel Inc
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