True Religion shares rise on strong 1Q earnings

NEW YORK (AP) — True Religion, which makes high-end jeans, surprised Wall Street with better-than-expected first quarter, sending shares jumping 6 percent on Wednesday.

THE SPARK: Late Tuesday, the company said its first-quarter net income rose 16 percent as it opened new locations and sales at its established stores improved. True Religion also announced a dividend and authorized a $30 million share repurchase plan.

THE BIG PICTURE: True Religion operates 109 U.S. stores and sells its designer jeans at other stores through its wholesale unit. The wholesale unit has suffered as department stores and other retailers cut back spending as consumers stayed home. However, recent data suggests that consumers are coming back, which is crucial for any economic recover.

THE ANALYSIS: "We believe spring fashion has been well received with lots of color, and as the company is engineering product to be more competitively priced," wrote Benchmark analyst Ronald Bookbinder. "We expect color, new sportswear products, and competitively priced product to continue to drive sales in the remainder of the year."

SHARE ACTION: Shares of True Religion Apparel Inc. rose $1.66, or 6 percent, to $29.54 during midday trading. The stock had been down 19 percent since the beginning of the year.