Jeans Maker Buttons Up

0

Jeans and lifestyle company True Religion Apparel Inc. has been restitching its international strategy, and the handiwork seems to be paying off.

Four months ago, the Vernon company’s stock dropped almost 28 percent after it reported less-than-desirable fourth quarter results.

A quarter later, the company is doing better. True Religion stock rose 5.6 percent last week, closing at $28.12 on May 16, making it one of the biggest gainers on the LABJ Stock Index. (See page 56.)

Why the renewed confidence? One analyst cites its decision to pull back from the South Korean market.

The company’s stock has been volatile since it reported its first quarter earnings for fiscal year 2012, even though it beat Wall Street expectations. That volatility can be traced to concern over companies with an international presence. Apparel companies with overseas operations generally got hurt.

Diana Katz, a financial analyst who covers True Religion for Lazard Capital Markets Ltd. in New York, said True Religion got caught up in general fear over economic turmoil abroad, even though its exposure is limited.

“Everyone’s really scared about anyone with any international exposure right now, particularly in Europe or Korea,” she said.

True Religion operates 109 stores in the United States and 18 in other countries, including five in the United Kingdom, four in Germany and one in the Netherlands. The company also sells wholesale to boutiques and department stores in 50 countries.

However, international sales make up only about 18 percent of the company’s revenue and, as a result, it dawned on investors that True Religion didn’t stand to be hurt too badly.

What’s more, Katz said, investors are reacting favorably to True Religion’s decision last year to pull a lot of its wholesale business out of Korea, where executives said the brand was being mismanaged.

The company did not return requests for comment for this article.

Katz said that while pulling out of Korea hurt the company in the fourth quarter last year, it’s now giving shareholders confidence in the company.

No posts to display