Sales surge 14.8% at True Religion in Q4

Excluding the costs associated with the review of strategic alternatives described above, adjusted net income attributable to True Religion Apparel, Inc. was $14.0 million, or $0.55 per diluted share for the fourth quarter of 2012.

Management Comments

“We finished the fourth quarter with double digit sales increases in our three key segments. And, we expanded our gross margin in our domestic consumer direct and wholesale segments. These two segments combined for 82% of our net sales this quarter,” stated Jeffrey Lubell, Chairman, Chief Executive Officer and Chief Merchant of True Religion Apparel, Inc. “As we start 2013, our plan is to enhance our men’s merchandise offering with sportswear innovation and re-establish the True Religion Brand Jeans women’s collection with updated, well-edited core basic denim bottoms and fashion-forward concepts.”

Year Ended 2012 Financial Results

Total net sales for the year ended December 31, 2012 increased to $467.3 million, an 11.3% increase as compared to the year ended December 31, 2011. Net sales for the Company’s U.S. Consumer Direct segment increased 12.0% to $281.6 million, and same-store sales for the year ended 2012 increased 2.7%.

Net sales for the Company’s U.S. Wholesale segment totaled $99.2 million, a 15.0% increase as compared to the prior year, driven by increases in sales to the Off-Price and Specialty Store channels, which was partially offset by a decrease in sales to Major accounts. Net sales for the Company’s International segment for the year increased to $83.8 million, or 6.1% as compared to the year ended December 31, 2011.

Gross profit increased 10.2% to $299.5 million, and gross margin decreased by 70 basis points to 64.1% as compared to the year ended December 31, 2011.

SG&A expense increased 12.3% to $221.4 million from $197.2 million in the prior year, and as a percentage of net sales increased to 47.4% from 47.0% in the prior year. The increase primarily reflects the opening and operating of 28 new branded stores in 2012.

Included in SG&A for the year ended December 31, 2012 were costs associated with the review of strategic alternatives of $1.0 million. Included in SG&A for the year ended December 31, 2011 were net separation costs of $1.2 million associated with the resignation of a former executive.

Operating income increased 4.7% to $78.1 million, or 16.7% of net sales, versus $74.6 million or 17.8% of net sales in the prior year.

True Religion