Can Q4 2008 revenue growth send True Religion up above?
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As I embarked to the malls this post holiday season to return some gifts, I noticed the significant deep discounts being advertised by the major retailers. There wasn’t any product that was immune to these markdowns, one brand that stood out with a lot of activity are the premium priced jeans by True Religion (TRLG).
If you are not familiar with this small cap company, here is the company overview excerpt from the latest 10-Q:
“True Religion Apparel, Inc. designs, markets, sells and distributes premium fashion apparel, centered on our core denim products using the brand name “True Religion Brand Jeans.” The Company’s products include pants, tops and jackets made from denim, fleece, corduroy and other fabrics. The Company is known for its unique fits and styling details.”
This company has had a great ride so far in the sales growth category, experience massive growths vs. prior year in the most recent quarters [Refer to Exhibit 1]. With the average sales estimate for Dec 2008 at $68.3 million (representing a 30% increase), this will have this growth retailer trading at 1.12x price to sales. Looking forward to the analyst estimates for 2009 revenue, TRLG is trading at the 0.98x level.
Exhibit #1. Quarterly Sales Growth
I know there is significant amount of risk with the current global economic conditions in a premium segment of the retail industry, but how can you walk away from this type of sales growth. Do you have any insight on why TRLG is trading at these levels? If so, please leave a comment so that I can incorporate into my research.
In the next few weeks, I will continue to provide additional financial analysis on TRLG as we head into earnings season. If this stock proves to be a great value pick, I might consider adding it to my paper trade portfolio.
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Author Disclosure: I do not own any shares of True Religion at the time of posting
[...] the earnings call and as a followup to my initial writeup on True Religion (TRLG), the company should have no problem improving their gross margin % rates. The only thing that the [...]