True Religion Apparel, Inc. (TRLG)
Q3 2012 Earnings Conference Call
November 5, 2012 11:00 AM ET
Jean Fontana – Senior Vice President, ICR.
Jeff Lubell – Chairman, CEO and Chief Merchant
Lynne Koplin – President
Pete Collins – Chief Financial Officer.
Eric Beder - Brean Capital
Diana Katz - Lazard Capital Markets
Susan Anderson - Citi
Scott Krasik - BB&T Capital Markets
Ed Yruma - Keybanc Capital Markets
Ronald Bookbinder - The Benchmark Company
Janine Stitcher - Telsey
Dorothy Lakner – Caris
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Thank you. Good morning everyone, and thank you for joining us today to discuss True Religion Apparel's third quarter 2012 financial results. By now, everyone should have access to the earnings release, which went out earlier this morning. If you have not received the release, it is available on the Investor Relations portion of True Religion's website at www.truereligionbrandjeans.com by clicking on the Investor Relations tab. We've also posted on the site the detailed management commentary on our segment results for the third quarter of 2012. This call is being webcast, and a replay will be available and archived on the company's website.
Please note that all the information discussed on the call today is covered under the Safe Harbor provision of the Private Securities Litigation Reform Act. We caution listeners that during this call, True Religion management will be providing financial guidance and making other forward-looking statements regarding future financial results and business opportunities. We encourage you to read the 2011 10-K, the upcoming 2012 third quarter 10-Q and other reports that we file periodically with the SEC. These documents contain a discussion of the risks facing our business, including factors that could cause these forward-looking statements to not come true. The company does not currently intend to update these forward-looking statements except as required by law.
With that, it is my pleasure to turn the call over to True Religion Apparel's Chairman, Chief Executive Officer and Chief Merchant, Jeff Lubell.
Thank you Jean and good morning everybody. Thank you for joining us today as we discuss our financial results for the third quarter 2012. Speaking on the call with me today are Lynne Koplin, our President; and Pete Collins, our Chief Financial Officer.
Happy outset, I want to express my support for everyone who was impacted by hurricane Sandy, while many of our stores in the North East were closed because of the hurricane, I was impressed by our people who came together to check on their co-workers and showed that they were eager to get back to work. Their caring for each other and resilience impressed me greatly.
Now onto the third quarter results. Overall we were generally pleased with our financial results for the quarter. We delivered strong sales performance in the U.S. wholesale segment and continue to benefit from our retail expansion in both the U.S and the international markets. Although, our same store sales fell short of our expectations, our ability to transition the full fresh merchandise into our stores for the holiday season should help to stabilize these trends and to position us to once again drive our store performance and productivity, higher in 2013.
During the quarter we opened 3 new stores in the U.S and 5 abroad, 2 each in Canada and Germany and 1 in Austria. Before turning the call over to Pete for detail financial overview, I’d like to provide an update on our strategy. In the third quarter, we were remained intently focused on executing our strategic plans, this includes 1) extending our differentiated and well established brand across our even broader spectrum of customers, by further enhancing our leadership in men’s wear, strengthening our women’s offerings and then expanding our sportswear, driving growth in the U.S wholesale sales by focusing on building core denim assortments and our overall merchandise in offering and continuing to increase our Specialty store penetration. Expanding our profitability in the U.S retail store base and growing our international business across our existing footprint and into new markets through wholesale distributors.
As you know, we have been taking a number of steps to execute against this growth strategy including, enhancing our source and capabilities to enhance the quality and breath of our sportswear offerings. Separating design resources into women’s and men’s teams, the sport, the women’s growth, organizing plan rolls with a greater focus on localization, coordinating merchandising across channels, both in the United States and internationally. And selectively, increasing brand investments with targeted marketing all while maintaining a disciplined cost structure to further leverage sales gains.
Although, there was still more work to be done, we have a differentiated and strong brand heritage and we believe we are making solid progress on many of our initiatives, to regain traction in our women’s business and drive growth and profitability across all channels and geographies.
In October, we hired three experienced leaders into our open positions to support our growth strategy. Our new general merchandising manager for North America consumer direct brings 32 years of women’s fashion retailing experience. Our senior women’s denim and sportswear designer brings 28 years of women’s denim experience, her experience will help us create distinctive new stalls for women’s and also add additional sportswear product on that side as well. Our new director of licensing will be responsible for reinvigorating our licensing business. Our priorities will be to collaborate with our current partners to ensure that product appropriately reflects the True Religion brand as well expand into additional categories with new partnerships. We have re-dedicated our design and merchandising efforts to focus on updating our best selling classics, will also stay in current on trends with a goal of leveraging our brand and broadening our customer base.