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by David Gibbs

True Religion Apparel Inc. (NASDAQ:TRLG) beat Q4 earnings estimates Wednesday after the bell, boasting profits of $0.59/share, $0.03 ahead of consensus estimates. Revenues rose 27.1% year-over-year to $92.8 million, the most the designer, retailer and distributor of high-end jeans has ever seen in a single Q, and well ahead of the Street’s $84.5 million estimates. Additionally, management announced that they intend to open 28 new stores in 2010. Considering that TRLG’s jeans typically sell in the $200-$300 range, it is apparent that not all consumers feel the pain of the “Great Recession” equally.

On a more solemn note, management’s FY 2010 projections came in a tad shy of estimates. EPS forecasts now stand at $2.00-$2.10 vs. consensus estimates of $2.12. Revenue forecasts, however, came in at $360 million, good enough for a slight beat of the $347.66 million Street consensus. These revenue estimates assume 40%-45% growth in direct sales in 2010, which assume the company is able to successfully open all 28 of the aforementioned new stores planned for the year. Wholesale revenues are expected to decline in 2010 largely due to management’s decision to slow down sales into the off-price channel and place a greater emphasis on selling to regular-price destinations. Hey, if they beat estimates selling $300 jeans in this economy, maybe they know what they’re doing.

TRLG closed the day up 3.28% and added another 3.71% following the report, finishing up after-hours trading at $21.55. The stock has been held under $22 since gapping down in early-November and its 200-day moving average crossed through its 50-day just before the new year, never a good sign. If you’re looking for an investment I would wait to see if they can come through on some of their revenue assumptions, especially new store openings. Last Q was a bit of a disaster so you’ll want a bit more proof that TRLG is on the right track before you commit to a long-term holding. But for a trade, I would say that you can buy on a breakout above $22.16, especially on volume, looking for a 10% to 20% move. Just remember to keep a tight stop (8% max).

Disclosure: No holdings in TRLG.

Source: True Religion Zips Up, Beats Estimates