TRLG umph,
Press Release Source: True Religion Apparel, Inc.
True Religion Apparel Reports 2008 Second Quarter Financial Results
Wednesday August 6, 4:05 pm ET
--Record Breaking Q2 08 Net Sales of $64.2 Million, an Increase of 78.9% from $35.9 Million in Q2 07--
--Increases High-End of Net Sales Guidance by $22 Million to $247 Million from $225 Million and High-End of EPS Guidance by $0.09 to $1.65 from $1.56--
--Q2 08 Gross Profit Increased 79.6% to $36.9 Million from $20.5 Million in Q2 07--
--Q2 08 Operating Income Grew 83.0% to $15.4 Million from $8.4 Million in Q2 07--
--Q2 08 Net Income Grew 86.0% to $9.3 Million from $5.0 Million in Q2 07--
--Q2 08 Diluted EPS Reaches $0.39 vs. $0.21 in Q2 07--
VERNON, Calif.--(BUSINESS WIRE)--True Religion Apparel, Inc. (Nasdaq:TRLG - News) today announced financial results for the three and six months ended June 30, 2008.
Second Quarter Financial Results
Net sales in the second quarter of 2008 were $64.2 million, an increase of 78.9% from $35.9 million in the prior year period. Net sales in the Company’s U.S. wholesale segment increased 57.3% to $38.4 million from $24.4 million in the prior year period. The Company’s international wholesale segment’s net sales increased 66.3% to $7.8 million from $4.7 million in the prior year period. Net sales for the consumer direct segment, which includes the Company’s branded retail stores and e-commerce site, increased 170.5% to $17.7 million from $6.5 million in the prior year period. The Company operated 30 branded stores as of June 30, 2008, compared to eight as of June 30, 2007. Net sales for the second quarter of 2008 included $0.3 million of licensing revenues.
Gross profit in the second quarter of 2008 was $36.9 million, or 57.5% of net sales, compared to $20.5 million, or 57.3% of net sales, in the second quarter of 2007. The overall improvement in gross margin reflects the ongoing segment mix shift towards the Company’s higher margin consumer direct business, partially offset by higher in-bound freight costs on certain imported denim fabric and an increase in sales to major department stores, which receive a volume price discount.
Selling, general and administrative (“SG&A”) expenses in the second quarter of 2008 increased 77.1% to $21.5 million from $12.1 million in the prior year period. SG&A expenses for the second quarter of 2008 included growth in consumer direct operating costs of $4.0 million and incremental pre-opening costs of $0.8 million. The Company’s second quarter 2008 SG&A expenses included $0.4 million related to projects that are expected to improve the Company’s production planning and forecasting ability and contribute to the growth of its international segment. The Company also incurred professional costs of $0.5 million, primarily related to the restatement of its previously released financial statements. The Company’s second quarter 2007 SG&A expenses included $1.2 million of severance and recruiting costs related to the replacements of two former executives.
Operating income for the 2008 second quarter increased 83.0% to $15.4 million, or 24.0% of net sales, compared to $8.4 million, or 23.5% of net sales in the 2007 second quarter. In 2008, the combination of incremental pre-opening costs, production planning costs, international growth costs and restatement professional fees reduced the Company’s second quarter 2008 operating margin by 260 basis points.
True Religion’s effective tax rate for the second quarter of 2008 was 41.1% compared to 44.0% for the second quarter of 2007.
Net income for the 2008 second quarter was $9.3 million, or $0.39 per diluted share based on weighted average shares outstanding of 23.9 million, compared to $5.0 million, or $0.21 per diluted share based on weighted average shares outstanding of 24.0 million in the 2007 second quarter.
Year-to-Date Financial Results
Net sales for the first half of 2008 were $117.6 million, an increase of 63.1% from $72.1 million in the prior year period. Net sales in the Company’s U.S. wholesale segment increased 43.2% to $70.9 million from $49.5 million in the prior year period. The Company’s international wholesale segment’s net sales increased 43.8% to $16.7 million from $11.6 million in the first half of 2007. Net sales for the consumer direct segment, which includes the Company’s branded retail stores and e-commerce site, increased 178.1% to $29.4 million from $10.6 million in the prior year period. Net sales for the first half of 2008 included $0.5 million of licensing revenues.
Gross profit for the first half of 2008 was $67.4 million, or 57.3% of net sales, compared to $41.0 million, or 56.8% of net sales, in the second half 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 higher in-bound freight costs on certain imported denim fabric and an increase in sales to major department stores, which receive a volume price discount.
SG&A expenses for the first half of 2008 increased 70.8% to $40.6 million from $23.8 million in the first half of 2007. SG&A expenses for the first half of 2008 included growth in consumer direct operating costs of $6.9 million and incremental pre-opening costs of $1.0 million for the expansion of the company's consumer direct business, $1.2 million in incremental marketing expense related to the Company’s 2008 marketing campaign and $0.8 million in incremental professional fees primarily related to the restatement of the Company’s previously released financial statements. The Company’s SG&A expenses for the first half of 2007 included $2.4 million of severance and recruiting costs related to the replacements of two former executives.
Operating income for the six months ended June 30, 2008 increased 55.7% to $26.7 million, or 22.7% of net sales, compared to $17.2 million, or 23.8% of net sales for the six months ended June 30, 2007.
True Religion’s effective tax rate for the first half of 2008 was 41.1% compared to 44.0% for the first half of 2007.
Net income for the six months ended June 30, 2008 was $16.2 million, or $0.67 per diluted share based on weighted average shares outstanding of 24.1 million, compared to $10.1 million, or $0.43 per diluted share based on weighted average shares outstanding of 23.9 million in the six-month period ended June 30, 2007.
“The second quarter of 2008 marks another quarter of record breaking revenue and earnings growth,” said Jeffrey Lubell, Chairman, Chief Executive Officer and Creative Director of True Religion Apparel, Inc. “During the second quarter, we experienced broad based sales momentum, with strong growth across each of our business segments. Net sales for the quarter increased 79% to $64.2 million from $35.9 million in the prior year period, highlighting the continued demand for our premium denim jeans collections and expanding sportswear assortment in both our retail and wholesale channels. We are especially pleased to deliver year-over-year earnings growth of 86% to $9.3 million from $5.0 million in the prior year period, while making several strategic investments in our infrastructure to position True Religion for future profitable growth.”
Store Openings
During the 2008 second quarter, True Religion opened 12 new stores, bringing its total store count as of the end of the second quarter to 30 stores. As of August 6, 2008, the Company has opened four new stores since the end of the second quarter, bringing the total store count to 34 stores. The Company is raising its targeted 2008 store count to 39 stores by year end 2008 compared to its previous targeted 2008 store count of at least 35 stores by year end 2008. |
