True Religion to raise full year 2008 guidance

08 Nov '08

6 min read

Gross profit for the first nine months of 2008 was $113.7 million, or 57.7% of net sales, compared to $68.7 million, or 57.0% of net sales, in the first nine months of 2007. The overall improvement in gross margin reflects the ongoing segment net sales mix shift towards the Company's higher-margin consumer direct business, partially offset by increased sales of prior season merchandise to select off-price retailers, increased in-bound freight costs on certain imported denim fabric, and a decrease in net sales to boutique customers which produce a higher gross margin.

Operating income for the nine months ended September 30, 2008 increased 51.3% to $49.0 million, or 24.9% of net sales, from $32.4 million, or 26.9% of net sales for the nine months ended September 30, 2007.

We are pleased with our third quarter results which reflect the continued strength of our product assortment across each of our businesses," said Jeffrey Lubell, Chairman, Chief Executive Officer and Creative Director of True Religion Apparel, Inc. "We delivered another quarter of record breaking performance with revenues increasing 64% to $79.4 million from $48.4 million and net income growing 76% to $15.4 million from $8.8 million. Our financial position continued to strengthen as we ended the quarter with $55.8 million in cash and cash equivalents, and no debt. We are especially pleased with our ability to help fund our growth through our strong operating cash flow."

Mr. Lubell continued, "Our continued outperformance serves as a testament to our commitment to continuously innovate and evolve our merchandise in a manner that resonates with consumers. Key to building towards True Religion's goal to be a global, aspirational brand will be further expanding our assortment of denim and denim-related sportswear products, continuing to evolve our channels of distribution and increasing our presence in key international markets."

Store Openings
During the 2008 third quarter, True Religion opened six new stores, bringing its total store count at the end of the third quarter to 36 stores compared to 13 stores at the end of the 2007 third quarter. As of November 6, 2008, the Company has opened three additional stores since the end of the third quarter, bringing the total store count to 39 stores. The Company now expects a total of 41 branded retail stores by year end 2008 compared to its previous target of 39 branded retail stores.

2008 Guidance
The Company is updating its guidance for the fiscal year ended December 31, 2008 as follows:

Net sales are expected to be $265 million (as compared to its previously updated guidance on August 6, 2008 of $242 million to $247 million), representing an anticipated net sales increase of 53% compared to 2007 net sales of $173 million.

EPS is expected to be $1.78 (as compared to its previously updated guidance on August 6, 2008 of $1.61 to $1.65) representing an anticipated EPS increase of 53% compared to 2007 diluted EPS of $1.16.

Mr. Lubell added, "We are pleased to raise our full year 2008 guidance for the third consecutive quarter and look forward to building upon our positive momentum in the fourth quarter of 2008."

2009 Guidance
The Company intends to issue guidance for the full year 2009 when it reports fourth quarter and full year 2008 results in the first quarter of 2009.

True Religion Apparel Inc

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