For TowerBrook, the brand offers a new dimension for growth. The company’s current portfolio contains only one other apparel company, Phase Eight, a U.K. retailer that TowerBrook invested in in 2011. TowerBrook has seen success with apparel in the past, though, selling Jimmy Choo to Labelux in 2011.
True Religion stalled out
True Religion Apparel, Inc. (NASDAQ:TRLG) had slowed recently, and this week’s results were more of the same. While total sales were up 13%, comparable sales were up only 0.7%. Last year, same-store sales were up 2.7% for the full year, and 1.5% for the fourth quarter. Operating margin has also fallen over the last few years, hitting 17% last year — last quarter’s operating margin dropped to 2.5% because of costs associated with the loss of former CEO Jeff Lubell.
TowerBrook said it saw potential in True Religion Apparel, Inc. (NASDAQ:TRLG)’s “established, high-end brand [and] strong retail network and a loyal following.” The company hopes to close the transaction by the third quarter of this year.
So — now what?
If you really wanted to invest in True Religion Apparel, Inc. (NASDAQ:TRLG), or if you’re soon to be a “former” shareholder, let’s take this opportunity to move on. The True Religion ship has sailed, but there are plenty of other yachts in the harbor. We’ll start with The Buckle, Inc. (NYSE:BKE), which is a longtime favorite of mine.
The Buckle’s comparable sales were slightly higher than True Religion Apparel, Inc. (NASDAQ:TRLG)’s last year, at 2.1%. The big differentiation comes from The Buckle’s operating margin, which came in at 23%. On top of the strong operational data, The Buckle has a history of paying out an excellent dividend. On top of the regular dividend, The Buckle, Inc. (NYSE:BKE) has paid a special dividend for years, with 2012’s dividend coming in at $4.50 per share — 10% of the stock’s price on the date of payment.
If The Buckle doesn’t float your boat, maybe American Eagle Outfitters (NYSE:AEO) is for you. American Eagle Outfitters (NYSE:AEO) is more diverse in its offerings than Buckle, carrying shoes, shirts, cologne, and, later this year, personal-care products. American Eagle Outfitters (NYSE:AEO) has had a strong year, with comparable sales up 9% last year. The stock is actually down over the past 12 months, and it trades at a slight discount to The Buckle, Inc. (NYSE:BKE). Now could be a good time to get on board for a potential rebound.
While True Religion Apparel, Inc. (NASDAQ:TRLG) is gone, that doesn’t mean investors can no longer own this market. Denim has come through a tough few years, with cotton prices spiking and a promotional environment gone wild. If we’ve learned nothing, we’ve learned that consumers have an appetite for jeans, so investors should, too.
The article True Religion Is Going, Going, Gone! originally appeared on Fool.com and is written by Andrew Marder.
Fool contributor Andrew Marder owns shares of The Buckle. The Motley Fool recommends and owns shares of The Buckle.
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