Total net sales of True Religion Apparel increased 6.8 percent to $104.9 million for the quarter ended June 30, 2012.
Net sales for the company’s U.S. consumer direct segment, which includes the company’s retail stores and e-commerce business, increased 9.4 percent to 64.4 million dollar and accounted for 61.3 percent of the company’s total net sales for the quarter.
Net sales for the company’s U.S. wholesale segment totaled 22.4 million dollar, a 6.7 percent increase as compared to the prior year quarter. Net sales for the international segment totaled 17.7 million dollar, a 2 percent decrease as compared to the prior year quarter primarily due to a slowdown in wholesale sales in Korea and Canada. Partially offsetting this decrease was a 114 percent increase in international retail sales due to an increase in store count from nine at the end of the second quarter of 2011 to 23 at the end of the second quarter of 2012.
Jeffrey Lubell, CEO, stated, “I am pleased that our largest segment, U.S. consumer direct, had a same store sales increase. But we did not achieve our sales plan due primarily to a weaker response toward our spring and summer merchandise assortment. However, we carefully managed our business throughout the quarter, including the initiation of a semi-annual sale, expanded sales efforts to specialty accounts in the U.S. wholesale segment, and reinforced overhead cost discipline. These efforts allowed us to exceed our second quarter earnings per share forecast.”
Gross profit increased 4.8 percent to 67.5 million dollar, driven primarily by the overall sales growth. The gross margin rate decreased 120 basis points to 64.3 percent, primarily due to increased markdowns in outlet stores to sell through slower moving women’s merchandise. Selling, general and administrative (SG&A) expenses increased 3.4 percent to 50.9 million dollar from 49.2 million dollar in the prior year quarter. The majority of the growth in the SG&A expenses was driven by the costs associated with operating 14 additional U.S. stores and 14 additional international stores in 2012 as compared to the same period in 2011.
Net income attributable to True Religion Apparel was 9.8 million dollar, or 0.39 dollar per diluted share, based on weighted average shares outstanding of 25.3 million for the second quarter of 2012. For the second quarter of 2011, net income attributable to True Religion Apparel Inc. was 9.4 million dollar or 0.38 dollar per diluted share.
California-based True Religion Apparel is a design-based jeans and jeans-related sportswear brand. The company has branded retail and outlet stores as well as department stores and boutiques in 50 countries on six continents. As of June 30, 2012, the company owned and operated 116 retail stores in the United States and 23 international stores.