Brean Murray - COMPANY UPDATE True Religion Apparel...

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COMPANY UPDATE Please see the second to last page and last True Religion Apparel, Inc. February 25, 2010 Eric Beder , 212-702-6619 Jennifer Sung , 212-702-6688 True Religion Catechism of Long-Te Business Model Investment Summary We are reiterating our Buy rating, $35 target pr double digit top and bottom-line growth projec beat 4Q09 expectations and rolled out 2010 gui taking the correct steps to build the manageme and further reduce its dependence on the off- create a more compelling business model wi consistent returns. Further, with $4.45 per sh current valuation of 8.6x our new 2011 EPS compelling values in our entire universe; we reit Discussion s 4Q09 EPS of $0.59 was a nickel above our up 11.5% YoY, as better-than-expected re resulted in solid margin expansion, whic material declines in the domestic wholesale s 4Q09 record revenue of $92.8 million ro million and was $8.3 million above consen the Consumer Direct channel, which regist and $8.1 million above our expectations, a a 67% increase in the store base (from 42 impressively, even with the shift to lower- denim remained stable at $240 for wom $13), as the company’s high-end styles quarter and the emphasis on training and p conversion levels. At the domestic whole $0.7 million above our expectations and promotional department store environm levels; we also believe the domestic whole recent shift to an internal sales force. Fin remained strong, up 24.3% and $1.7 mill markets continued to rebound under management and Europe, primarily the standouts. t page of this document for important disclosures. (TRLG/NASDAQ) erm Planning Creates a Robust rice and 2010 EPS estimate and rolling out ctions for 2011 after the company handily idance that is highlighted by True Religion ent infrastructure for a true lifestyle brand price channel, both necessary actions to ith the ability to register premium and hare in cash and no debt, we believe the S estimate of $2.42 is among the most iterate our Buy rating on TRLG. r projection, $0.04 above consensus , and esults at the direct-to-consumer business ch was only slightly offset by continued le business. rose 27.2%, beat our estimate by $10.6 nsus . The upside was primarily driven by tered sales of $45.2 million, up 84.8% YoY as the unit registered a +22.3% comp and 2 to 70 units at year end). Perhaps more priced denim, the average sales price for en (down $7) and $262 for men (down continued to strongly resonate in the product knowledge helped drive stronger lesale unit, revenue of $31.6 million was d down 13.1%, reflecting the continued ent and the channel’s tight inventory esale channel results were affected by the inally, international sales of $14.6 million llion above our projections, as the Asian r the aegis of the company’s direct United Kingdom and Germany, remain Price 52-Week High/Low Shares Outstandin Market Cap. (mm) Average Daily Volu EPS F Mar $ Prior Jun $ Prior Sep $ Prior Dec $ Prior $ FY $ Prior $ Consensus P/E 1 FY Rev. (mm) $3 Source: BigCharts.c
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Brean Murray - COMPANY UPDATE True Religion Apparel...

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