What a long, strange trip it's been.
The must-have brand True Religion
Making the fuss a bit more interesting, True Religion spiked up in early trading yesterday, when the company raised guidance for the third quarter above both its prior forecast and the mean Wall Street "consensaguess." Despite initial enthusiasm at the announcement, the stock trailed off during the day and posted only a modest gain.
So why was there such an apparently oversized reaction to one analyst's report? Well, first of all, it doesn't look as though Wednesday is shaping up as a great day for those who target mall rats for their income. Aeropostale
To me, it makes sense that True Religion should be a bit more volatile than these other names. First, the stock has had quite a run over the past 12 months from where it began in the land of the bulletin board stocks. If you bought this stock at $5 and started hearing rumblings that consumers might sour on $300 jeans, I can see why selling at $15 might seem reasonable.
Second, we're talking about a company that sells $300 jeans! I get the fact that True Religion is setting itself as an aspirational brand for those who aren't Cameron Diaz or George Clooney but wish they were. But just because I get it, that doesn't mean I think it's automatically going to work. Trying to establish an aspirational brand when the retail boom is already a bit long in the tooth is a tough gig. And if consumers turn away from high-end denim, the company has almost nothing to fall back on right now.
My buddy Seth Jayson has already taken a long look at the weird history of this company, and I won't add to that here. Instead, I'll leave off this discussion with the following -- for every Coach
For more fashions for the faithful:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).