Despite posting higher-than-expected fourth quarter earnings, the horseshoe-shaped stitching on the back pockets of True Religion Apparel Inc.'s high-end jeans may not bring the denim company as much luck this year.
The Vernon apparel maker reported $12.7 million in net income for the quarter, a 43 percent increase over the same period a year ago.
"It's all about the fashion and fit," said Jeff Mintz, an analyst with Wedbush Morgan Securities in Los Angeles.
Mintz believes the company's competitors Joe's Jeans, 7 for All Mankind and Citizens of Humanity aren't distinctive enough. "The True Religion customer loves that you can immediately tell what the brand is."
While True Religion's opening of 27 stores last year helped boost sales, the company expects its 2009 wholesale business to fall 17 percent to 19 percent because other stores that sell its jeans have been suffering under the recession. Clothing boutiques have been hurt as department stores offer deep discounts on many of the same goods, making it almost impossible to compete.
True Religion plans to open 25 more of its stores this year; it already opened three in January. This way the company isn't dependent on sales at stores that could go belly up.
"No one wants to do business with someone who can't pay," Mintz said. "So True Religion is taking a conservative view and choosing not to ship to them."
Despite weakened consumer spending, Forever 21 Inc. has aggressive plans, even expanding into department store-size spaces.
The fast-fashion company, with headquarters near downtown Los Angeles, plans to open 11 stores by the end of March in former Mervyn's spaces. Its first conversion opened last week in Victorville. Openings at former Mervyn's spaces in Lakewood, Montebello and Palmdale are planned, as are others in Arizona, Utah and Texas.
At a December court auction, Forever 21 and Kohl's acquired Mervyn's leases from mall developer Macerich Co. in a joint bid. Forever 21 got 15; Kohl's 31. The combined cost for the leases was $6.3 million. The auction was the result of Mervyn's October failure.
Forever 21 also plans to move into a former Mervyn's in the Macerich-owned Los Cerritos Center later this year. That store is 80,000 square feet. Forever 21's current largest store, at 40,000 square feet, is in Pasadena.
The new concept will resemble a department store, with sections for its other brands, Heritage 1981 and Twelve by Twelve. There will also be more offerings in shoes and lingerie, as well as larger clothing sizes.
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