True Religion Apparel Inc. found itself in a bind last week one that was perhaps even tighter than the pricey denim maker’s suffocating skinny-leg jeans.
Herb Greenberg, a senior columnist for MarketWatch, called out the Los Angeles-based company for a bit of financial funny business. He accused True Religion of cooking the numbers by channel stuffing, or piling up orders to its Japanese distributor, Jameric, at the end of quarters.
The allegation didn’t pass shareholders’ detection. Following Greenberg’s article early last week, True Religion’s stock price plunged 6 percent to land at $17.27 on April 18. Only a day before, shares had gone up almost 2 percent to $18.41 after Wedbush Morgan Securities analyst Jeff Mintz upgraded True Religion to “buy.”
To back his claim, Greenberg turned to third-quarter results: Sales to Jameric doubled to nearly $12 million from the prior quarter, and $5.5 million of that total came in the quarter’s last two weeks. “For the past year, sales to the distributor tended to soar in the last two weeks of each quarter, but nothing like the third and fourth quarters,” he wrote.
He also pointed out that Jameric post dates its check by 14 days for goods sent by True Religion to Japan, indicating the company was receiving more goods at once than it could afford. The checks “reflected the amount shipped two weeks before the quarter’s close,” Greenberg declared.
True Religion disputed the claims in a subsequent column. Chief Financial Officer Charles Lesser told Greenberg there was no channel stuffing “whatsoever,” adding the sales were normal orders that Jameric didn’t have any problem paying for.
Lesser has a supporter in Mintz who stood by his earlier upgrade. In a research note, the analyst said Greenberg’s channel stuffing insinuation is “unjustified when all of the evidence is considered” and that Japanese consumers “embrace the company’s unique style.”
After the tussle, shareholders seem to have come down on the side of Lesser and Mintz. After a short stint under $18, True Religion shares rebounded to above that mark late last week.
Bra Building
Amanda Kennedy normally refuses to wear underwire bras, but she recently made one exception to test out her own.
To Kennedy, the president of Los Angeles undergarment maker Sassybax LLC, underwire bras are just too uncomfortable. And so, since she launched her products in 2004, she avoided the underwire gamut in her seamless bras, which are intended to eliminate unbecoming bra bulges.
But Kennedy said the clamoring for the wire-lined bras was too much to bear she received a flood of requests from customers who demanded Sassybax come out with an underwire style. And because she often fits her own products on her body, that meant she’d have to try one out as well.
“There is a large contingency of women who want the underwire because they think it makes them look best,” she explained.
This month, Sassybax underwire bras hit the lingerie floor of Neiman Marcus Group Inc. stores, and they will also be in Nordstrom Inc. and Bloomingdales Inc., the high-end subsidiary of department store behemoth Federated Department Stores Inc.
Kennedy thought it would be easy to bring the underwire bras to market, but the product ended up taking a year to develop, rather than months. The problem was that the operators of the Santoni machines she uses to create seamless products weren’t accustomed to making underwire bras.
All in all, though, Sassybax has taken off, with Kennedy estimating the company made in excess of $3 million in sales last year, prompting her to pull back a bit. She decided not to appear on the QVC home shopping channel, for example, because she didn’t want to be deluged with orders she didn’t have the immediate production capacity to manufacture.
Now, she’s planning to shore up production capacity to handle growth and recently visited factories that might handle her work.
Restaurant Redo
After almost 10 years without a remodel, owner Jean-Pierre Bosc thought it was about time to spruce up the French bistro Mimosa.
Starting in February, he closed down the restaurant on Sundays and Mondays to redo bits and pieces of the Los Angeles eatery, including the bathroom and kitchen. Then, last month, he shut down for 10 days to complete the task.
Now, the restaurant looks even more like a typical French bistro than before its red awnings and wood flooring add to the feel. “Mimosa is a little more comfortable. There is better seating, more space, better circulation,” said Bosc, who also owns Caf & #233; des Artistes in Hollywood and estimated he spent around $100,000 to overhaul the bistro.
With the improved layout, Bosc was able to bring in a cart to serve up to eight different varieties of cheese, and he has tweaked the main menu as well. Although it still contains the classics, including fish soup, the new two-pager also includes some lighter, vegetable-laden items.
Staff reporter Rachel Brown can be reached at (323) 549-5225, ext. 224, or at
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