The Infidel: Herb Greenberg takes on True Religion

Herb Greenberg has a long-standing campaign against True Religion. He hates the company. One has to wonder why he hates it so much - did he feel slighted by something the company did, like refusing to comp him some test merchandise? Did he discover he can't fit in them? I don't know.
At his blog, Gualberto has done a good job of documenting Greenberg's take on the company.

Gualberto also takes the opportunity to show how some of Greenberg's other personal crusades have turned out. Read the comments to the post. Incidentally, unlike blogger commentators, Greenberg doens't actually own any stocks (except his employer's) according to the WSJ, which owns DowJones MarketWatch, where Greenberg is a senior columnist.

The column, which appears on pg B4 of today's (Saturday 10 June) WSJ, has this to say about TRLG:

Blue Jeans Lady
Whenever a brand claims to be hot, proff that it's not - or possibly not as much as it once was - is when its products start showing up at discounters.

Enter True Relgion Apparel, know for its pricey jeans. Until recently, the company insisted that the only place you can find its "damages," at discount prices, was Nordstrom Rack, the discounting arm of the upscale department store. In response to a questioner on its most recent earnings call, [CFO] Charles Lesser said that if the heans can be found elsewhere, 'call me immeidately so I can, in fact, get the New York Police Department on them.'

That's just what [Greenberg] did several weeks ago when [he] heard the jeans were showing up in New York's Century 21 department stores. Mr. Lesser told me the company had indeed sold some "voerstock" items to Century 21 - and that Century 21 and Nordstrom Rack were the only two discounters buying directly from True Religion. He said that if I could find them elsewhere, they're likely to be counterfeit.

So [Greenberg] called him again, this time asking about those True Religion jeans at a few BJ's Wholesale Club stores in New York and Mass. ...

If they are legit, how would they have gotten there? Probably by way of some small retailer that, if found, won't be a retailer for long, [Lesser] says. ... The question, of course, is why would a retailer have a hard time selling something that's supposedly in such high demand? Good question.

So, who's right? It is, of course, possible that the brand or the product category, could suffer a setback. I am not really an expert on fashion, which is why I generally avoid the category, but the company's overall earnings and revenues are very small relative to the categories in which they compete. They have room for growth but the key thing is, even if they had little topline growth, the stock would still be reasonably priced! You would have to assume a complete collapse of the brand, which I think unlikely. If, in fact, they couldn't hold their high pricepoints, they could always take their product downmarket, in terms of price point, and add huge volume.
Until management demonstrates that a)they are abandoning their strategy, or b) that they cannot deliver what they promised, even while following the strategy c) the company is sold, or d) the price rises about $22, the stock will remain among my investments.