NEW YORK — True Religion Apparel earnings and sales, propelled by international business and rising market share in U.S. department stores and boutiques, soared in the third quarter.
Jeff Lubell, president and chief executive officer, said in an interview that Japan and the U.S. are the keys to the global premium denim market.
“What’s a good fit for the U.S. and Japan is good for the rest of the world,” said Lubell, whose Los Angeles-based company is on pace to break $100 million in sales for the year.
Focusing on those two countries has proved successful. True Religion this month reported triple-digit sales and earnings gains for the third quarter and the nine-month period. The company posted sales of $35 million in the third quarter ended Sept. 30, up from $7.4 million in the year-ago period. Earnings increased more than 700 percent to $7.7 million, or 33 cents a diluted share, from $954,102, or 5 cents.
International markets already account for almost half of sales, and Lubell wants to double the brand’s international presence to 40 countries in 2006, which hinges on the continued strength of his two largest markets.
“The only hurdles are trying to stay the leader in the U.S. and Japan,” Lubell said.
Constantly evolving the brand in those key markets has been vital and has helped reduce True Religion’s dependence on denim bottoms. New fall offerings have included corduroy, vests and denim jackets. The company has also introduced a fleece that Lubell said is “exploding.”
In a research note, Eric Beder, an analyst with Brean Murray Carret, noted that new product offerings had made the company less dependent on denim bottoms. Denim bottoms accounted for 85 percent of sales during the third quarter, according to Beder, down from more than 90 percent in past quarters.
Japan accounted for 30 percent of sales, he said, while in the U.S., the company has reported a more than 50 percent rise in average sales per boutique.
“True Religion has created a sustainable model with numerous levers to drive continued growth and expansion, which should enable the company to take the next step and become a true lifestyle brand,” Beder said.
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Lubell has seen no signs that indicate weakness in the premium denim category. He said, “All the retailers have realized this is the most important retail item in their stores.”
However, Lubell said stores will start narrowing their assortment of brands and concentrating on those that perform the best.