Thursday night, it's time to get some True Religion (NASDAQ:TRLG). No, it's not a traveling Baptist ministry coming to town -- it's the premium denim designer reporting fourth-quarter earnings.

What analysts say:

  • Buy, sell, or waffle? Nine analysts follow this stock today. One says "buy," one says "sell," and the other seven say "hold it!" In our Motley Fool CAPS community, it's a three-star stock on the backs of 224 investor ratings.
  • Revenues. Wall Street calls for about $30 million of net sales, about 18% above the year-ago quarter. Management has guided to a $28.7 million to $30.7 million range.
  • Earnings. $0.22 per share would satisfy the average forecast, and would match last year's net take exactly. But the company expects to make $0.20 to $0.21 per share.

What management says:
True Religion just got themselves a new CFO in Nordstrom's (NYSE:JWN) former corporate controller, Peter Collins. He already knows a thing or two about the business, as Nordstrom is one of the company's largest retail channels, alongside hip outlets like Urban Outfitters (NASDAQ:URBN) and posh purveyors like Saks Fifth Avenue (NYSE:SKS). That's just the latest in a row of upgrades to the executive team, in what looks like a concerted effort to shed the you-can't-be-serious corporate image it got from its unusual roots and outrageously expensive commodity products.

What management does:
With nice, fat gross margins creeping upward, management is able to reinvest some of that into the stronger corporate infrastructure I mentioned a second ago. What's really impressive is the ability to grow free cash flow margins while building out a budding network of company-run retail stores in tragically hip areas like Miami's South Beach, New York's Greenwich Village, and Corte Madera, Calif.

Margin

6/2005

9/2005

12/2005

3/2006

6/2006

9/2006

Gross

49.4%

50.8%

51.3%

51.8%

52.5%

52.4%

Operating

31.7%

34.2%

33.2%

33.0%

33.1%

32.5%

Net

18.4%

20.3%

19.0%

18.8%

17.9%

17.2%

FCF/Revenue

5.8%

8.9%

11.3%

13.7%

19.2%

17.4%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
OK, I would never buy a pair of $300 jeans. But I realize that some people would and do shell out serious cash on highly designed and properly marketed everyday wear, so I own the stock. Days inventory outstanding average around 50 for the last six quarters' trailing-12-month periods, which tells me True Religion has no problem finding buyers as it ramps up its outsourced production, and it's still a very small fish in a very large clothing retail pond -- sales amounted to just $135 million over the trailing 12 months ending in September. That's a far cry from competitors like Ralph Lauren (NYSE:RL) or lesser, more comparable, lights like Hot Topic (NASDAQ:HOTT).

Management appears to realize that high-end jeans won't pay the bills forever. When the fashion trends swing away from that particular item again, these guys hope to catch consumers with a full line of branded outfits, including fleece, corduroy, and velvet options. The time will come, and True Religion is hedging for it.

Check out what your fellow investors think about apparel retailers with a 100% free Motley Fool CAPS account. Standing on the shoulders of the tall, the petite, and the regular-sized people alike, you get a great view of the market.

Fool contributor Anders Bylund is a True Religion shareholder but holds no position in any of the other companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure looks good on you.