Jeans brand True Religion explores the sale

Jeans brand True Religion explores the sale

It's unclear what valuation True Religion is seeking, but the company could be sold for a mid-single-digit multiple of its EBITDA, the people said.

The sale process began in January and the sellers have targeted a wide range of consumer-focused private equity firms and a number of large, publicly traded apparel companies as potential buyers, the people said.

Farmstead Capital Management, the owner of True Religion, has hired Baird to lead the sales process.

Baird and True Religion declined to comment on the sale.

True Religion, best known for shaking up the denim industry in the early 2000s with its signature stitching, embroidery, and smiling Buddha and horseshoe logos, has been on a roller coaster ride over the past decade or so.

When it emerged on the Los Angeles fashion scene in 2002, consumers were enthralled by maximalist styles from brands like Von Dutch and Juicy Couture. True Religion's statement jeans became a staple for celebrities like Jessica Simpson and Britney Spears.

At the time, the jeans retailed for about $200 to $300 a pair, and True Religion found its niche in targeting female consumers who earned about $200,000 a year and tended to shop at luxury department stores like Neiman Marcus, Bloomingdales and Saks Fifth Avenue shopping. said CEO Michael Buckley.

True Religion went public in 2003 and made headlines for its growth and profits. But as the decade progressed, the company faced increasing competition from cheaper alternatives like Gap and Forever 21.

As the 2010s arrived, athleisure was on the rise and denim began to fall out of favor. The brand was privatized in 2013 and was bankrupt in 2017.

True Religion eventually emerged from that bankruptcy and was able to do so again in 2020 after filing for a second time at the height of the Covid pandemic. However, These days, the brand's journeys through Chapter 11 are in the rearview mirror.

Buckley, who led the company during its heyday in the 2000s and returned in 2019, has transformed True Religion into a leaner machine. The brand still focuses on its maximalist roots, but has tapped into a new consumer base with the comeback of Y2K-era styles.

True Religion's core buyers are diverse and have an average income of $60,000 to $65,000. The typical price of jeans has dropped to less than $100 a pair, which is comparable to competitors like Levi Strauss and Gap and better suited to its customer base.

“You have to know who your customer is. Before I came back, the previous management was still trying to appeal to the customer they believed was the customer in 2010,” Buckley said in a recent interview with CNBC. “They left the brand. There are a lot more followers out there.” [today] than there are, you know, we call it the early adopters who wanted that brand back then.”

True Religion recently conducted a market research survey and found that its Net Promoter Score, which measures customer loyalty, is more than 10% higher than that of its competitors, including mega brands like Levi, Nike, Michael Kors and Ralph Lauren.

Buckley said True Religion has the potential to become a billion-dollar brand. He wants to double sales in the next few years by focusing on digital sales, expanding the product range and attracting female buyers.