Is True Religion a Sinner?

As a shareholder, and having been positive myself on the prospects of True Religion Apparel (Nasdaq: TRLG), I'm licking my wounds a bit after their last earnings call. What a mess. Rather than give a full rundown, which will just up my PTSD, I'll just hit some of the high(low)lights:

1) This was not only a big miss, but the company also guided down for the year. It sounds like they weren't prepared for the weather in Europe and that growth in Japan has not been as fast as expected. First, I'll say that the weather excuse is a no-no - I don't like it. Second, this is a sign that internal projections just aren't up to snuff. This doesn't mean that the company is in dire straights, but it does mean that you can't really realy on their projections any more, and that's bad news on Wall Street.

2) Europe and Japan were poor, but U.S. sales continued to be strong. That's certainly reassuring - not enough to save them from their other sins, but reassuring.

3) I'm surprised Herb Greenberg didn't go to town. Herb has been skeptical of True Religion and I'm surprised he didn't take them to task worse than he did. I think he's right on point regarding the potential divorce of Jeff and Kim Lubell - it most certainly is related to the business. If you don't want your marriage questioned by stock analysts don't take a company public with your wife.

4) Everyone but Brean Murray cut the stock from Buy/Outperform to either Hold/Sector Perform or even Sell. I can understand that an analyst may feel funny maintaining a buy on a company that missed like that, but when you have 30% taken out of the price, it's hard to say that the risk hasn't been factored in.

5) Their new strategies in retailing and non-denim are an aggressive move, but it's obvious that they want Buckley to turn them into the next Diesel. I think it's questionable whether they pull it off, and as they're going full steam ahead, it could be a big problem if it doesn't work out. I'm hanging onto my shares, but viewing this similar to a biotech - maybe they pull it off and do really well, or maybe they whiff and the stock totally tanks.

Time will tell, but if not for some absolutely amazing numbers in December, it'll probably be a waiting game for the stock to start to creep back up.

Repetitive disclaimer: I own shares of TRLG.

-AvgJoe