True Religion Apparel Inc. announced financial results for the quarter ended March 31, 2012.
First Quarter 2012 Financial Results
• Total net sales increased 13.9% to $106.8 million.
• Net sales for the Company's U.S. Consumer Direct segment, which includes the Company's retail stores and e-commerce business, increased 22.6% to $65.5 million and accounted for 61.3% of the Company's total net sales for the quarter.
• First quarter same-store sales for the 90 stores open at least 12 full months and e-commerce increased 13.3%. The Company opened one store and closed one store, ending the first quarter with 109 retail stores in the United States, compared to 96 as of March 31, 2011.
• Net sales for the Company's U.S. Wholesale segment totaled $21.4 million, a 2.8% increase as compared to the prior year first quarter, primarily due to increased sales to the specialty store channel; this is the eighth consecutive quarter of increased sales to this channel, which is the largest sales channel in the U.S. Wholesale segment. This is the first year-over-year increase in this segment's net sales since the fourth quarter of 2008.
• Net sales for the International segment totaled $19.1 million, a 3.6% increase as compared to the prior year quarter. This growth was primarily driven by an increase in retail sales in the U.K. and Canada. The Company opened two international stores in the first quarter of 2012, ending with 18 international retail stores compared to eight as of March 31, 2011. These increases were partially offset by a decrease in wholesale sales in Germany and Korea.
• Gross profit increased 13.4% to $68.9 million, driven primarily by the overall sales growth. The gross margin rate decreased 30 basis points to 64.5%, primarily due to targeted competitive pricing on selected key styles.
• Selling, general and administrative (“SG&A”) expenses increased 12.6% to $51.7 million from $45.9 million in the prior year quarter. The majority of the growth in the SG&A expenses was driven by the costs associated with operating 13 additional U.S. stores and ten additional international stores in 2012 as compared to the same period in 2011. As a percentage of net sales, SG&A expenses decreased to 48.4% from 48.9% in the same quarter a year ago due to the leveraging of fixed costs from the 13.9% consolidated net sales increase.
• Operating income increased 16.0% to $17.2 million, as compared to the first quarter of last year. Operating margin was 16.1% in the first quarter of 2012 versus 15.8% in the first quarter of 2011. The increase in the operating margin is primarily due to the leveraging of Core Services SG&A expenses on the 13.9% increase in consolidated net sales.
• The effective tax rate for the quarter was 40.8% as compared to 38.8% in the first quarter of 2011. The 2012 effective tax rate increase over 2011 is linked to the assessment that the likelihood of utilizing certain international net operating loss carry forwards is no longer more likely than not.
• Net income attributable to True Religion Apparel, Inc. increased to $10.4 million, or $0.41 per diluted share based on weighted average shares outstanding of 25.4 million, as compared to $9.0 million, or $0.36 per diluted share based on weighted average shares outstanding of 25.1 million in 2011.
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True Religion Apparel Inc
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