True Religion sales up 13.1 percent in Q1

Denim brand True Religion kicked off the year in fashion,

reporting total net sales increased to 120.8 million dollars (Rs 662.8 crores), a 13.1 percent increase compared to the same period in 2012. Gross profit increased 6.9 percent to 73.7 million dollars (Rs 403.8 crores) thanks to overall sales growth.

Main jump was registered within the company’s US Consumer Direct segment, which includes their branded stores and e-commerce business: + 12.1 percent to 73.3 million dollars (Rs 401.6 crores) and compared with the prior year quarter. In the same vein, the Wholesale segment increased 19.1 percent to 25.5 million dollars (Rs 139.9 crores), well ahead last year’s same period and mainly driven by growth in the Off-Price and Speciality Store channels.

Net income attributable to True Religion Apparel, Inc. decreased to 0.5 million dollars (Rs 2.7 crore), or 0.02 dollars (Rs 1.10) per diluted share based on weighted average shares outstanding of 25.6 million (Rs 140.2), as compared to 10.4 million dollars (Rs 57 crores), or 0.41 dollars (Rs 22.4) per diluted share based on weighted average shares outstanding of 25.4 million (Rs 139.1 crores) in 2012.

Excluding the separation costs and the review of strategic alternatives costs, adjusted net income attributable to True Religion Apparel, Inc. was 5.7 million dollars (Rs 31.2 crores), or 0.22 dollars (Rs 12.07) per diluted share for the first quarter of 2013.

First quarter same-store sales for the 108 stores in their same-store base and e-commerce increased 0.7 percent compared to the same period in 2012, announced the company Friday. True Religion operated a total of 124 branded stores in the United States as of March 31, 2013, compared to 109 as of March 31, 2012.

Gross profit increased 6.9 percent to 73.7 million dollars (Rs 404.4 crores) thanks to overall sales growth while gross margin rate decreased 350 basis points from the rate in the prior year quarter to 61.0 percent, due to increased discounts to sell excess merchandise.

Net sales for the International segment totaled 21.3 million dollars (Rs 116.7 crores), an 11.6 percent increase as compared to the prior year quarter. The segment's increase was driven by a 3.4 million dollars (Rs 18.6 crores) increase in international retail sales primarily as a result of an increase in store count from 18 at March 31, 2012 to 31 at March 31, 2013. The Company opened two international stores and closed one in the first quarter of 2013.

Gross profit increased 6.9 percent to 73.7 million dollars (Rs 403.8 crores), boosted by overall sales growth. The gross margin rate decreased 350 basis points from the rate in the prior year quarter to 61.0 percent, due to increased discounts to sell excess merchandise.

Selling, general and administrative ("SG&A") expenses increased 36.7 percent to 70.6 million dollars (Rs 387.4 crores) from 51.7 million dollars (Rs 283.7 crores) in the prior year quarter, and as a percentage of net sales increased to 58.5 percent from 48.4 percent in the same quarter a year ago. The increase in SG&A expenses was primarily attributable to executive separation costs of 7.5 million dollars (Rs 41.1 crores) and costs associated with the company's review of strategic alternatives of 0.8 million dollars (Rs 4.3 crore), as the company explained in a note issued Friday. In addition, costs to operate their expanded retail footprint increased by 2.8 million dollars (Rs 15.3 crore) in their US Consumer Direct segment and 2.3 million dollars (Rs 12.6 crore) in their International segment.

Operating income totaled 3.1 million dollars (Rs 17 crore), drastically cut (down 82.2 percent) since last year’s first quarter, “as the sales increase was offset by the former executive separation costs, higher discounts to sell excess merchandise, and the costs associated with the Company's review of strategic alternatives.” Besides, “the effective tax rate for the quarter was 86.6 percent as compared to 40.8 percent in the first quarter of 2012. The first quarter 2013 effective tax rate increased primarily because the ratio of foreign losses to their overall pre-tax income was higher than in the same quarter in the prior year. The separation costs and review of strategic alternative costs reduced their taxable income, which also negatively impacted the effective tax rate.”