MANUFACTURING
2017 Newsmaker: Hitting the Denim Blues, True Religion Reorganizes After Bankruptcy
Los Angeles premium-denim companies that sold their expensive dungarees to fashionistas for hundreds of dollars were flying high until a few years ago when many companies saw sales slide precipitously.
One of those was True Religion, the Los Angeles denim brand whose blue jeans were known for the horseshoe design embroidered on the back of their pants. Chinese counterfeiters became so aggressive in knocking off their jeans some 10 years ago that the company hired counterfeit investigators to confiscate fake True Religion jeans sold at swap meets and at small stores. The company even trained customs inspectors to recognize the difference between knock-off True Religion jeans and the real deal.
The denim label was doing fine until it hit a rough patch in 2013 and sales took a swift decline. The culprit for missed sales was competition from online sites selling blue jeans for less, department stores that were slashing prices to lure shoppers and the popularity of activewear replacing denim.
A bit of cost cutting in travel expenses, sample spending and a 25 percent reduction in the work force didn’t keep the financial wolves from the door.
In July, with net losses mounting, True Religion filed for Chapter 11 bankruptcy protection to stay afloat. Several months later, the company emerged from bankruptcy by reducing its term loans from $471 million to $113.5 million and extending the loans’ maturity dates to 2022.
Citizens Bank, which provided a $60 million loan for the company to continue operating while it reorganized, provided an additional $60 million exit loan for cash to execute its growth plan.
At the time of filing bankruptcy, True Religion said it wanted to close 27 of its approximately 140 stores. One of its commercial retail creditors was Malibu Villagei n Malibu, Calif., which was owed nearly $107,000 at the time of the bankruptcy filing.
True Religion is hardly the company it used to be when cofounder Jeff Lubell launched the venture in 2002. When Lubell sold his company in 2013 for $835 million to TowerBrook Capital Partners, True Religion had a profit the previous year of $46 million on revenues of $467 million. For fiscal 2017, the company had a net loss of $78.5 million on $369.5 million in revenues.
