Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. You're listening to Bloomberg
Speaker 1: Business Week with Carol Masser and tim Stenoveek on Bloomberg Radio.
Speaker 1: We spent a lot of time talking about big companies today.
Speaker 1: We covered open Ai, Amazon and Nvidia, Nokia and more.
Speaker 1: A lot of the tech space too. Kind of want
Speaker 1: to zoom in a little bit on one of the
Speaker 1: smaller companies that.
Speaker 2: We talk about, Jeans. I had to look, Oh, I
Speaker 2: am we're in jeans.
Speaker 1: Yeah, Im, We're in James Yeah. Okay, but it's like a.
Speaker 3: Super jeans a lot. Now, Yeah, I wear jeans all
Speaker 3: the time.
Speaker 1: Now we're talking jeans. We're talking jeans because we've got
Speaker 1: Michael Buckley with us, the CEO of True Religion. He
Speaker 1: joins us from Gardena, California, so everybody knows the True Religion.
Speaker 1: The company began back in two thousand and two. It
Speaker 1: was publicly traded for a few years. It was taken
Speaker 1: private back in twenty thirteen. Earlier this year, Akon Investments
Speaker 1: took a majority stake in the company. Michael, you've been
Speaker 1: there for quite some time as CEO for wow six
Speaker 1: years at this point. Before we I want to ask
Speaker 1: you how businesses. I want to get an idea of
Speaker 1: the consumer. But because you're a private company, can you
Speaker 1: we don't have access to all the numbers that you
Speaker 1: know we do with public companies. Can you just throw
Speaker 1: us a few numbers contextualize for our audience the size
Speaker 1: of your business right now?
Speaker 4: Yeah, this year we're going to be just short of
Speaker 4: about five hundred million dollars in revenue, and that's we've
Speaker 4: doubled it over the last four years. And extremely it's
Speaker 4: the most profitable that it's ever been in.
Speaker 2: The twenty two year history.
Speaker 1: Wow.
Speaker 4: And I don't know if you guys know, but I
Speaker 4: was here the first time, so to speak. I was
Speaker 4: the president of the company when it was public, and
Speaker 4: I was here from two thousand and six and twenty ten.
Speaker 1: So what are you able to do now as a
Speaker 1: private company that's allowing you to be more profitable than
Speaker 1: you were back as a public company when you were
Speaker 1: a president?
Speaker 2: You know?
Speaker 4: When I you know, clearly the first thing you got
Speaker 4: to really understand in is business is who's your customer.
Speaker 4: So when I came back in twenty nineteen, the first
Speaker 4: thing I did was a consumer to really understand. I
Speaker 4: thought I understood who the customer was, but I wanted
Speaker 4: to really understand who the customer was from what it was.
Speaker 4: Call it in two thousand and five to twenty and twelve,
Speaker 4: when we were selling a you know, a high income
Speaker 4: Norse from Niemen Sacks, Bloomingdale's early adopter customer. So did
Speaker 4: a survey and it came back very clear. Men and
Speaker 4: women fifteenth to fifty the corebian like twenty to forty
Speaker 4: years old, African, American, Latino, White, Asian, all races, but
Speaker 4: about sixty five thousand household income, which is clearly it's
Speaker 4: the American average, but it's a lot less than the consumer.
Speaker 4: I was paying three hundred dollars for pair jeens at
Speaker 4: the beginning of the brand's history.
Speaker 3: Yeah, I mean it's funny, Like I was thinking about
Speaker 3: how many different types like brands of genes I have
Speaker 3: in my wardrobe and I've gone all in on jeans
Speaker 3: in the last couple of years, and it's there's lots
Speaker 3: of choices out there, but price point does matter, right, Like,
Speaker 3: So how do you think about Michael, Like how you
Speaker 3: guys differentiate yourself. Yes, you can have a name and
Speaker 3: a brand, but I feel like there's more at play.
Speaker 2: Yeah, I mean I.
Speaker 4: Think for us, I mean, first of all, just to
Speaker 4: set the uh the land. In terms of what this
Speaker 4: brand stands for today, we're about forty percent jeans. So
Speaker 4: of the five hundred million dollars, we're doing forty percent
Speaker 4: jeans and sixty percent in what we'll call sports for us,
Speaker 4: so I sell millions of T shirts, hoodies, joggers, button
Speaker 4: down shirts, dresses, skirts, you know, all apparallel classifications in
Speaker 4: addition to a number of accessory classifications. So you know,
Speaker 4: for us to be to be relevant, I mean knowing
Speaker 4: the customer. We know what the customer wants in terms
Speaker 4: of product, we know what the customer is willing to pay,
Speaker 4: and by reinventing the supply chain of the company, we're
Speaker 4: able to give the.
Speaker 2: Customer what they want at the price they want.
Speaker 4: And quite frankly, our price is today, you know, it
Speaker 4: could be anywhere from you know, sixty nine to one
Speaker 4: hundred and ten dollars for a pair of jeans. It
Speaker 4: could be nineteen ninety nine, twenty nine, ninety nine, thirty
Speaker 4: nine ninety nine for a hoodie or a T shirt.
Speaker 4: You know, we're position at price points where half of
Speaker 4: the two hundred and fifty billion in apparel and accessories
Speaker 4: as sold that today. Now you compare that two years
Speaker 4: ago when we sold three hundred dollar jeans, which was
Speaker 4: literally only a couple of billion dollar business.
Speaker 2: So today the brand.
Speaker 4: Has the ability to have a much more wider appeal
Speaker 4: based on the size of the audience that were going
Speaker 4: after as well as the price points that were able
Speaker 4: to hit for this consumer.
Speaker 1: Talk to me about your supply chain. Where are the
Speaker 1: products made?
Speaker 2: We make them all over the world.
Speaker 4: I mean, once upon a time we made everything in
Speaker 4: Los Angeles, and then eventually that shifted to Mexico and
Speaker 4: South America.
Speaker 1: Do you make anything in La anymore?
Speaker 4: We might do a couple items fast Chase, but predominantly
Speaker 4: it's ninety nine percent in other markets outside the US.
Speaker 1: Okay, sorry I cut you off, but you were talking
Speaker 1: about the other countries that you're in.
Speaker 4: Yeah, so we're in China, We're in Cambodia, We're in Vietnam,
Speaker 4: We're in Bangladesh, India, Pakistan, other countries in Guatemala, and
Speaker 4: some countries in South America, tiny tiny bit out of Mexico,
Speaker 4: So it's pretty diverse.
Speaker 1: Aspying today surprised to hear China for a couple of reasons. One,
Speaker 1: I thought that apparel manufacturing wasn't as big as it
Speaker 1: has been traditionally because that economy really has shifted to
Speaker 1: higher tech. But also because of tariffs. And you know,
Speaker 1: we knew the trade war in the first Trump administration
Speaker 1: sort of was a warning to many companies that that
Speaker 1: were manufacturing in China to find somewhere else to do it.
Speaker 1: What what do you do in China right now? And
Speaker 1: why are you still there?
Speaker 2: Well, first, of Allo's tariffs everywhere.
Speaker 1: Now there now the first Trump term, they were they
Speaker 1: were there was no so called liberation day.
Speaker 2: True.
Speaker 4: I mean today we do a lot out of China.
Speaker 4: We do a lot of out of other countries. We
Speaker 4: you know, like some of the suppliers out of China
Speaker 4: are very good in terms of making apparel.
Speaker 2: They are very quick.
Speaker 4: They have the ability to do more fashion compared to
Speaker 4: other countries that are doing just more basics in mass volume.
Speaker 2: Hey, Michael, why we've worked with our Ooh sorry, I'm sorry, No.
Speaker 3: No, no, please continue.
Speaker 2: You know, we've worked with our suppliers.
Speaker 4: We literally work with our suppliers to our design team
Speaker 4: will work with the suppliers to be able to bring
Speaker 4: the product in the quality we want, the details we want,
Speaker 4: at the cost we want, and whether that's China or
Speaker 4: other countries out there. So we've been fortunate partnering with
Speaker 4: these factories during Liberation Day and beyond, and we've mitigated
Speaker 4: you know, almost I want to say almost all, but
Speaker 4: probably ninety percent of the tariff impact that we've mitigated
Speaker 4: with partnerships with these factories.
Speaker 3: Hey, one thing I want to ask you about is marketing.
Speaker 3: And I know you guys just rolled out your holiday
Speaker 3: plan or holiday campaign. I'm thinking of. You know how
Speaker 3: much we talked about American Eagle and Sydney Sweeney and
Speaker 3: you know, the provocative you know, having good genes and
Speaker 3: so on and so forth are great genes. I mean,
Speaker 3: that got so much momentum. The President even commented on it.
Speaker 3: So tell us about the marketing you know, spend how
Speaker 3: much which that is crucial to your growth strategy.
Speaker 4: It's it's tremendously crucial. I mean, you know, it wasn't
Speaker 4: the first thing we invested in when I came back.
Speaker 4: I mean, I have a lot to fix in terms
Speaker 4: of supply chain, in terms of really building building out
Speaker 4: the product really getting woman's back to fifty percent of
Speaker 4: the business.
Speaker 2: But we invest heavily in marketing. Today.
Speaker 4: We spend about ten percent of our turnover. So this
Speaker 4: year it's you know, circa fifty million dollars we'll spend
Speaker 4: on marketing and we'll continue to spend at that level
Speaker 4: to get the you know, we want to make sure
Speaker 4: that that we're relevant to this consumer that we know
Speaker 4: is our customer, and it's important. You know, we just
Speaker 4: launched our campaign with Sierra. You know, we've done other
Speaker 4: major campaigns with people that are relevant today, Megan Thee, Stallion,
Speaker 4: Anita Sweetie, you know, Quavo, India Love, you know, lots
Speaker 4: of people that are relevant to this consumer today. So
Speaker 4: it's incredibly important for us to continue to invest in
Speaker 4: the right talent that that makes this brand relevant to
Speaker 4: this consumer.
Speaker 1: So so, I mean, I know you can't give us
Speaker 1: any names about who you're thinking about, but how would
Speaker 1: you describe the individuals you've worked with or the brand
Speaker 1: image that you want to convey.
Speaker 4: I think that they work perfectly for who our consumer is.
Speaker 4: We have a very diverse consumer and you know, the
Speaker 4: success of this business, I mean literally since we really
Speaker 4: started to invest heavily in marketing over the last couple
Speaker 4: of years, Like I said, we've doubled the size of
Speaker 4: this business as we've ramped up the marketing spend.
Speaker 2: The close to ten percent of revenue.
Speaker 4: So the people we pick resonate well with the consumers
Speaker 4: that we know are the demographic target of this brand.
Speaker 1: So you're known for jeans, but as you mentioned to us,
Speaker 1: that's now less than half of your business. The area
Speaker 1: the biggest area of growth from an imperil perspective, what
Speaker 1: is it.
Speaker 2: I mean, we're in a lot of categories.
Speaker 4: We're in button down woven shirts, we're in sweaters, we're
Speaker 4: in an outer where we just need to go deeper
Speaker 4: in those categories. I mean, we believe long term, you know,
Speaker 4: having started as a gene company, genes will be circa
Speaker 4: forty percent of the business. But the growth of a
Speaker 4: brand is really going to come from us just selling
Speaker 4: more of these other classifications as well as selling you know,
Speaker 4: a lot more genes. You know, the price points that
Speaker 4: we sell out today, Like I said, over half of
Speaker 4: the two hundred and fifty billion of parallel accessories have
Speaker 4: sold that and the addressable market of this brand is
Speaker 4: around one hundred and twenty million consumers today versus ten
Speaker 4: million consumers when we were selling three hundred dollar genes.
Speaker 4: So you know, we believe, I mean, our path is
Speaker 4: to get to a billion over the next four or
Speaker 4: five years, but we believe long term this should be
Speaker 4: a multi billion dollar brand, you know, like the Levi's,
Speaker 4: Fashion Nova's and other Tommy's Calvins of the world.
Speaker 3: What's the best channel for selling. You've got stores, You've
Speaker 3: got online, You've got you know, partnerships, whether it's at
Speaker 3: you know, various I don't want to say, you know,
Speaker 3: department stores. You know what is the best or where's
Speaker 3: the growth?
Speaker 2: The growth is everywhere.
Speaker 4: I mean the business today is let's call it circa
Speaker 4: forty five percent coming from True Religion dot com. And
Speaker 4: then the balance is evenly split between fifty of our
Speaker 4: own brick and mortar stores, which are highly profitable. I
Speaker 4: mean it's forty five percent full will leave it the
Speaker 4: model within our stores, and the balance is I mean
Speaker 4: six thousand wholesale locations between North and North America, and
Speaker 4: I'm in another thousand wholesale locations outside of North America.
Speaker 4: So you know, we're in the Macy's and Dillard's and
Speaker 4: downtown locker Rooms and Pakistan's, Tilly's, Zoomies, Urban Outfitters, Buckles
Speaker 4: of the World, plus a lot of independent stores, you know,
Speaker 4: as well as major yeah and mead sized retailers outside
Speaker 4: the US as well.
Speaker 1: So owned by private equity. Obviously there's should be a
Speaker 1: payday for private equity. That's what they're expecting. You were
Speaker 1: at the company when it was public. Is the plan
Speaker 1: to take at public again?
Speaker 4: You know, obviously it's private equity owned. I mean at
Speaker 4: some point in time. Private equity always wants to monetize.
Speaker 4: I mean, I enjoyed running a public company.
Speaker 2: You know, it's really up to them what they want
Speaker 2: to do with it over time.
Speaker 3: All right, you know what we want to know. You're
Speaker 3: wearing jeans, I assume right, of.
Speaker 4: Course I'm wearing True I have my I have my
Speaker 4: suit and tie on. Here my suit and uh and
Speaker 4: my white shirt on. But yes, I'm wearing True Religion.
Speaker 3: All right. Just check it, hey, listen, stay in touch.
Speaker 3: Let's know how things are going, especially as we get
Speaker 3: into that all important holiday shopping season. Michael Buckley, his
Speaker 3: chief executive officer True Religion, joining us from California,