Even though True Religion
Fourth-quarter net income increased 42.6% to $12.7 million, or $0.53 per share. Revenue jumped 38.5% to $73 million. True Religion was even able to increase gross margin despite the overall markdown-happy economic environment -- gross margin increased to 59.3% of sales from 57.2% of sales this time last year, because of a shift to the company's higher-margin consumer direct segment.
Those results sound pretty darn impressive, but then again, like many consumer-facing companies, True Religion's guidance for next year didn't give much reason for hope. True Religion said it expects earnings somewhere between $1.73 and $1.81 per share. That would be a decrease, since full-year 2008 earnings came in at $1.83 per share.
It was an impressive quarter in difficult times, though, and it's also worthwhile to mention that True Religion has cash ($57.2 million) on the balance sheet and no debt, which makes it one of those stocks that's less risky than those of highly indebted retail and consumer-goods companies.
Still, True Religion makes pricey jeans, which seem a bit risky in the current environment, where luxury is in a free fall and companies such as Saks
Given the tough economy and a new consumer focus on frugality, a stock like True Religion strikes me as a bit too speculative, and I'm not too sure how strong its brand is. It reminds me of the overpriced denim craze of several years ago, and I have to question how much true staying power its brand has. Although it's an interesting stock for watch lists, I think for now it should remain there.
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