Why True Religion Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of premium denim maker True Religion Apparel (Nasdaq: TRLG  ) sank 12% on Wednesday after its quarterly results and guidance missed Wall Street expectations.

So what: True Religion's second-quarter miss -- EPS of $0.39 versus the consensus of $0.35 -- coupled with an equally gloomy full-year forecast reinforces concerns over high-end spending. Management cited slowing international sales and weak demand from women shoppers for the disappointing results, forcing analysts to lower their growth estimates yet again.

Now what: Management now sees full-year EPS of $1.80-$1.86 and revenue of $450 million-$455 million, down from its prior view of $1.88-$1.95 and $450 million-$460 million, respectively.

"We're still a very prestigious brand," founder and CEO Jeffrey Lubell reassured investors. "I call it a hiccup, but Wall Street likes to do what they do best, based on performance and our job here is to perform every quarter." With the stock hitting a new 52-week low today and trading at a cheapish forward P/E, True Religion might be a good way to take advantage of that short-termism.

Interested in more info on True Religion? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


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