As part of our recent Specialty Retail report we spoke with Christine Chen Principal & Senior Research Analyst Needham & Company, LLC  had this to say about True Religion (TRLG);

Ms. Chen: Their jeans are the brand that’s extremely, extremely hot with teenagers, older customers, international cus­tomers. But I think the most important thing is they continue to in­novate their product, meaning they look different from any other premium denim brand out there. I have mentioned consolidation. Premium denim is one of the areas where there probably will be a lot of consolidation and True Religion continues to take market share in this environment because the product looks better than the competition. The product also looks different from what they tried to sell you last year. That’s a very important point because in this environment, if you try to sell the customer something at $260 or at $10 that she already has in her closet, she is just not going to buy it. It has to be something new. A lot of the other premium denim brands out there that are selling more basic merchandise that looks too similar to what they tried to sell you last year – even if it’s only $160 – she is just not buying it. She already has it.

Ms. Chen expects to see increased stability in the specialty retail sector as companies enter into the second half of 2009. Inventories should fall in line with demand and previous cost-cutting measures should have left retailers with lower fixed leverage points, which could lead to margin improvement in 2010.

Companies mentioned: Urban Outfitters Inc. (URBN); True Religion Apparel Inc. (TRLG); GUESS? Inc. (GES); American Eagle Outfitters (AEO); VF Corp. (VFC); Aeropostale Inc. (ARO) and Abercrombie & Fitch Co. (ANF).

This entry was posted on Wednesday, September 9th, 2009 at 8:41 am and is filed under Consumer Stocks. You can follow any responses to this entry through the RSS 2.0 feed.