True Religion Brand Jeans (TRLG) June 2008 Quarter Earnings Notes
Press Release
-EPS 39c vs. 32c est. (20% beat). Revenue $64.2M vs. $50.2M est. (28% beat)
-Revenue was up 78.9% y/y. Earnings up 86% y/y. U.S. wholesale business was up 57.3% y/y. International wholesale business was up 66.3% y/y. Consumer direct sales (includes their branded stores) was up 170.5% y/y. This is an acceleration from the March quarter where the company grew 47.4%, 29.5%, 28.5%, 190.3% respectively
-Gross margin was 57.5% vs 57.3% a year ago. Operating margin was 24% vs. 23.5% a year ago
-Raising 2008 guidance to $242-$247M in sales ($220-$225M previously) and EPS to $1.61-$1.65 ($1.52-$1.56 previously)
-”Our strong financial performance in the first half of the year combined with our increased visibility into the second half of 2008 give us confidence in our ability to achieve our goals for 2008 and led us to raise our 2008 guidance for the second consecutive quarter”
-$52M in cash and marketable securities
-U.S. wholesale forward order book is up 35% y/y
Conference Call
-Opened 15 new stores YTD. As performance has exceeded expectations, increasing 2008 new store goal to 24 (4 more than original plan). By year-end expect total store count to be 39
-ASP for womens $206, mens $196, kids $100
-Expect sales in the second half of 2008 to be evenly split between Q3 and Q4. Net income to be slightly higher in Q4 vs. Q3
-International sales backlog is down y/y. Expect international sales to be down 12% y/y in Q3 due to timing shift of fall orders from July 2008 to June 2008 ($3M)
-Opened 12 new stores in the quarter, 34 stores currently, 26 full prices and 8 outlets
Q&A
-Retail stores is 73% jeans and 27% sportswear
-Looking out to 2009 want 50% of sales to be from consumer direct
-If good performance continues, want to open 20-25 stores a year
-U.K. and Germany strong
-Getting a majority of the top real estate they want given the tougher economy
-In terms of calendar seasonality of denim, Q2 is the weakest (this quarter which they just posted 79% growth)
-No problem in fulfilling orders
Take-aways
-Confident in business trends to up the 2008 new store count by 4 to a total of 39 by year-end
-79% sales growth in a crumbling economy for $200 jeans is amazing