Shares of True Religion Apparel, Inc. (TRLG) plunged nearly 13 percent in extended trade on Tuesday after the casual apparel retailer provided earnings and revenue guidance for the full-year 2012, below Street view.
The company also reported a profit for the second quarter that edged up from last year, reflecting lower expenses and improved sales. Earnings per share topped analysts' expectations, while quarterly revenues missed their estimates.
"I am pleased that our largest segment, U.S. Consumer Direct, had a same store sales increase. But, we did not achieve our sales plan due primarily to a weaker response toward our spring and summer merchandise assortment," Chairman and CEO Jeffrey Lubell said in a statement.
The Vernon, California-based jeans and sports apparel retailer reported net income of $9.78 million or $0.39 per share for the second quarter, edging up from $9.43 million or $0.38 per share in the year-ago quarter.
Excluding special items, adjusted net income for the year-ago quarter was $10.78 million or $0.43 per share.
On average, seven analysts polled by Thomson Reuters expected earnings of $0.35 per share for the quarter. Analysts' estimates typically exclude special items.
"However, we carefully managed our business throughout the quarter, including the initiation of a semi-annual sale, expanded sales efforts to specialty accounts in the U.S. Wholesale segment, and reinforced overhead cost discipline. These efforts allowed us to exceed our second quarter earnings per share forecast," Lubell added.
True Religion's net sales for the quarter grew 6.8 percent to $104.91 million from $98.26 million in the same quarter last year, but missed six Wall Street analysts' consensus estimate of $107.31 million for the quarter.
U.S. Consumer direct net sales for the quarter increased 9.4 percent, with same-store sales increasing 2.4 percent, and U.S. wholesale net sales grew 6.7 percent from last year.
Meanwhile, international net sales declined 2 percent from last year amid slowdown in wholesale sales in Korea and Canada.
Gross margin rate contracted 120 basis points to 64.3 percent, as sales shifted towards markdowns in Outlet stores to sell through slower moving women's merchandise.
Selling, general and administrative, as a percentage of sales, declined 160 basis points to 48.5 percent from last year.
The company's board also approved a quarterly cash dividend of $0.20 per share, payable on August 29 to all stockholders of record as of August 15, 2012.
Looking ahead to fiscal 2012, the company expects earnings in a range of $1.80 to $1.86 per share, on anticipated between $450 million and $455 million, with a mid-single digit same store sales growth in the U.S. Consumer Direct segment.
Street is currently looking for full-year 2012 earnings of $1.97 per share on annual revenues of $467.84 million.
TRLG closed Tuesday's regular trading session at $26.24, down $1.03 or 3.78% on a volume of 0.89 million shares. The stock lost a further $3.30 or 12.58% in after-hours trading.
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