True Religion Apparel, Inc. announced financial results for the quarter and year ended December 31, 2010.
Fourth Quarter 2010 Financial Results • Total net sales increased 19.5% to $110.9 million.
• Net sales for the Company's U.S. Consumer Direct segment, which includes the Company's branded retail stores and e-commerce site, increased 38.4% to $62.5 million and accounted for 56.3% of the Company's total net sales for the quarter. Fourth quarter same-store sales for the 70 stores open at least 12 months increased 7.2%. The Company operated 94 branded stores in the United States as of December 31, 2010, compared to 70 as of December 31, 2009.
• Net sales for the Company's U.S. Wholesale segment totaled $28.1 million, a 10.9% decrease as compared to the prior year. This segment's sales have been impacted by the overall decrease in sales of women's premium denim in the major department store channel. This segment's sales of men's jeans increased in the fourth quarter of 2010 as compared to 2009.
• Net sales for the Company's International segment increased 29.2% to $18.9 million, the highest quarterly growth rate of the year for this segment. Growth in the segment was driven by the transition to a joint venture in Germany as well as sales increases in Korea and the United Kingdom.
• Net sales for the Company's Core Services segment included $1.4 million of licensing revenue as compared to $1.5 million in the same period last year.
• Gross profit increased 18.8% to $69.8 million, driven primarily by the sales growth in the U.S. Consumer Direct segment. The gross margin rate decreased 30 basis points to 62.9% as the U.S. Consumer Direct segment's sales increase produced a favorable sales mix shift that was offset by an increase in lower margin sportswear and additional sales discounts to U.S. Wholesale segment customers.
• Selling, general and administrative ("SG&A") expense, as a percentage of net sales, increased to 39.3% from 37.5% in the same quarter a year ago. The SG&A rate declined for each segment except the International segment, which increased SG&A to set up direct wholesale sales in Europe and Asia, open four new stores and establish regional offices in Hong Kong and Switzerland.
• Effective the fourth quarter of fiscal year 2010, the Company made changes to its business segments to more closely align them with how management reviews and monitors the performance of its operating segments. As such, the Company has reclassified certain SG&A expenses previously presented in the U.S. Wholesale segment to Core Services in order to conform to the revised presentation. Total SG&A expenses and total operating income were not changed as a result of these reclassifications. Please refer to Form 8-K filed concurrently with this release for the presentation of operating expenses as previously reported and as reclassified for prior periods of fiscal 2010, 2009 and 2008.
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