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Case Brief: True Religion Jeans: Flash in The Pants or Enduring Brand?

True Religion Jeans struggled with declining sales as it failed to adapt pricing and distribution strategies to changing consumer trends and tastes. The company owned many stores but shifted more sales to e-commerce. It faced challenges from competitors and market saturation. Recommendations included expanding product lines, closing underperforming stores, and increasing marketing.

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Евгения Романенко
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595 views2 pages

Case Brief: True Religion Jeans: Flash in The Pants or Enduring Brand?

True Religion Jeans struggled with declining sales as it failed to adapt pricing and distribution strategies to changing consumer trends and tastes. The company owned many stores but shifted more sales to e-commerce. It faced challenges from competitors and market saturation. Recommendations included expanding product lines, closing underperforming stores, and increasing marketing.

Uploaded by

Евгения Романенко
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Yevheniia Romanenko 09/09/2021

BUS 450: Fall 2021


Case Brief: True Religion Jeans: Flash in the Pants or Enduring Brand?

Company profile: True Religion was founded in 2002 by Jeff Lubell, and it had become one of
the largest premium denim brands in the United States by 2012. True Religion Jeans was able to
create a lifestyle brand, and the company’s identity was related to the representation of the
American hippie-bohemian way of life with the mix of the traditions of the Wild West. However,
after years of declining sales, the company announced that it had been acquired by TowerBook
in 2013.
Basic Issues:
 True Religion failed to adapt its prices to align with consumer expectations. After the
economic downturn in 2007-2008, many consumers remained reluctant to pay up for the
“right” pair of jeans.
 True Religion Jeans had experienced revenue declines due to the highly competitive nature
of the market and a shift in fashion trends. In addition, the company shifted away from
selling products wholesale to selling its products through company-owned stores.
 Rapid store expansion and discounting affected the quality of product. The consumers tend to
switch to another brands and market share of "True Religion" gets constantly down.
Key Facts:
 Company-owned stores and e-commerce accounted for 60% of revenues in 2012 compared
to 17% in 2007. The company owned 122 stores in the United States and 30 international
stores at year-end 2012.
 In the first several years of True Religion’s expansion of the premium jeans market, the gross
margin for the segment of direct consumer sales reached as high as 77% in 2008. In 2009, the
indicator decreased to 74% and reached 70% in 2012.
 The operating profit margin before unallocated corporate expense plunged from a peak of
40.6% in 2007 to 33.3% in 2012.
Offer Hypothesis:
 True Religion Jeans should reconsider their distribution strategy. With the raising popularity
of e-commerce, it might be beneficial to promote their products online and provide contra
advertisement to popular Internet bloggers and influencers.
 Reconsider their pricing strategy. Pricing policy and marketing campaigns should be based
on the development of sufficient analysis of the existing trends and consumer behavior.
 The company has to emphasize the essentiality of product improvement while paying high
attention to the trends in the jeans industry. 
Draw Conclusions:
 Revenues declined as True Religion lost some of its popularity and the company was unable
to adapt to the fast-changing fashion trends.
 In 2009, the direct-to consumer business reported a 71% jump in revenues to $129 million, in
2012 the business had nearly doubled to $251 million.
Recommendations:
 Expanding the selection of products to include more than just jeans and basic t-shirts.
 Close underperforming stores and renegotiate their lease terms.
 Increase e-commerce presence and invest heavily in marketing to the new generation.
SWOT analysis
Strength: Weaknesses:

 True Religion benefits from its  True Religion has heavy production costs:
reputation of quality, premium brand they are generally higher than those of its
image, and from its high brand competitors because True Religion
positioning, this creates produces in the United States and it is
differentiation. more expensive than offshore production.
 True Religion’s production is in the  True Religion’s pairs of jeans are highly
United States. It adds “authenticity” priced however a lot of consumers are not
the brand and the consumers feel like willing to spend more than 100$ on a pair
they participate in the American of jeans: this reduces the number of
economy. potential consumers and their market
 True Religion have strong trademark shares.
and protects them by copyright: the  Except in the United States and in South-
famous trademark horseshoe on the East Asia, True Religion lacks global
back pockets of jeans and the brand brand awareness, and they are yet
logo of the smiling Buddha are sufficiently present. Also, the company
protected by copyright. lacks global distribution in terms of own
stores and specialty boutique.
Opportunities: Threads:

 International expansion: by entering  The denim market is saturated, crowded


new markets, True Religion with low barriers to new entrants.
enhances its global awareness, and it  Trends change very quickly in the fashion
will yield opportunities for revenue industry, which means that the probability
growth. of brand switching is even higher.
 True Religion can expand into other  The premium jeans market has become
markets: they have an opportunity to more competitive in recent years, while the
expand into other product categories consumers tend to prefer more basic casual
such as bags, shoes, belts. jeans.
 Nowadays, consumer trends are
more for quality than quantity, which
is favorable for a premium brand like
True Religion that is known for its
top quality products.

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