First Quarter 2013 Financial Results
- Total net sales increased to $120.8 million, a 13.1% increase compared to the same period in 2012.
- Net sales for the Company’s U.S. Consumer Direct segment, which includes the Company’s branded stores and e-commerce business, increased 12.1% to $73.3 million, compared with the prior year quarter. First quarter same-store sales for the 108 stores in our same-store base and e-commerce increased 0.7% compared to the same period in 2012. The Company operated a total of 124 branded stores in the United States as of March 31, 2013, compared to 109 as of March 31, 2012.
- Net sales for the Company’s U.S. Wholesale segment increased 19.1% to $25.5 million compared to the prior year quarter driven by growth in the Off-Price and Specialty Store channels.
- Net sales for the International segment totaled $21.3 million, an 11.6% increase as compared to the prior year quarter. The segment’s increase was driven by a $3.4 million 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% to $73.7 million, driven primarily by overall sales growth. The gross margin rate decreased 350 basis points from the rate in the prior year quarter to 61.0%, due to increased discounts to sell excess merchandise.
- Selling, general and administrative (“SG&A”) expenses increased 36.7% to $70.6 million from $51.7 million in the prior year quarter, and as a percentage of net sales increased to 58.5% from 48.4% in the same quarter a year ago. The increase in SG&A expenses was primarily attributable to executive separation costs of $7.5 million and costs associated with the Company’s review of strategic alternatives of $0.8 million. In addition, costs to operate our expanded retail footprint increased by $2.8 million in our U.S. Consumer Direct segment and $2.3 million in our International segment.
- Operating income totaled $3.1 million, down 82.2% from the same quarter in the prior year, 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.
- The effective tax rate for the quarter was 86.6% as compared to 40.8% in the first quarter of 2012. The first quarter 2013 effective tax rate increased primarily because the ratio of foreign losses to our 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 our taxable income, which also negatively impacted the effective tax rate.
- Net income attributable to True Religion Apparel, Inc. decreased to $0.5 million, or $0.02 per diluted share based on weighted average shares outstanding of 25.6 million, as compared to $10.4 million, or $0.41 per diluted share based on weighted average shares outstanding of 25.4 million 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, or $0.22 per diluted share for the first quarter of 2013.
