True Religion, once synonymous with high-priced denim and celebrity endorsements, has embarked on a transformative journey after its acquisition by private equity firm Acon Investments and SB360 Capital Partners, a company linked to American Eagle’s CEO, Jay Schottenstein. This acquisition signifies a reinvigoration for the brand, which had been struggling to redefine itself after two bankruptcy filings, the latter occurring in 2020. The specifics of the deal remain undisclosed, although prior estimates suggested a mid-single-digit multiple of its earnings before interest, taxes, depreciation, and amortization (EBITDA).
Under the leadership of CEO Michael Buckley, who resumed his role in 2019, True Religion has managed to recover with impressive statistics: a 20% growth in sales, reaching $280 million, and generating $80 million in EBITDA. Buckley’s optimism is palpable as he emphasizes the potential impact of the partnership with Acon and SB360, highlighting an eagerness to boost digital and retail capabilities while pursuing international expansion and product innovation.
True Religion’s resurgence can be attributed to broader trends within the fashion industry that emphasize nostalgia, particularly the revival of Y2K aesthetics. Far beyond simply selling jeans, True Religion has adeptly positioned itself to reclaim a spot in the hearts of younger consumers yearning for the styles of the early 2000s. This shift isn’t solely driven by nostalgia; it reflects a practical understanding of evolving consumer preferences. Jeans, once seeing a drop in popularity, have seen a renaissance, aligning with a resurgence in brands like Ed Hardy and Von Dutch, thereby enhancing True Religion’s relevance.
The strategic marketing approach executed by Chief Marketing Officer Kristen D’Arcy has been integral to this revival. By engaging with modern influencers and celebrities such as Megan Thee Stallion—who starred in the brand’s 2024 holiday campaign—True Religion has not only revived its image as a luxury denim brand but made it a staple for urban youth culture. This engagement with a younger demographic, aiming at a more diverse audience, allows for a broader consumer base that includes individuals with an average income of around $60,000 to $65,000.
Historically, True Religion was revered for its premium-priced jeans, with some styles exceeding $300, making it a favorite among celebrities like Jessica Simpson and Britney Spears. However, the brand’s focus on affordability has transformed it into a more accessible option, with the average price point for jeans now hovering under $100. This strategic pricing adjustment aligns True Religion more closely with competitors like Levi Strauss, appealing to a demographic that values quality and style without leaving a dent in their wallets.
Buckley acknowledges the critical need for the brand to adapt. Reflecting on previous management’s missteps, he noted how they failed to cater to the evolving consumer landscape and clung to an outdated model. By recognizing the necessity of alignment with current consumer expectations and preferences, True Religion aims to reclaim its market share, particularly among new consumers who are less influenced by the brand’s past.
With the potential to revive itself as a billion-dollar enterprise, True Religion is focusing on broadening its product offerings and enhancing direct-to-consumer sales, a move away from traditional wholesale channels. The brand has identified women as a significant target, intending to craft a more inclusive and diverse range of apparel that resonates with modern shoppers.
However, there are hurdles to overcome. The fashion industry is notorious for its volatility, and the trends that might favor True Religion today could shift with little warning. To mitigate risks, the brand must remain agile, continuously innovating while ensuring that it doesn’t abandon its core identity. This balance between heritage and modernity will be fundamental to capturing the hearts of both long-time fans and new customers alike.
While the revival of True Religion reflects a savvy business strategy and a responsive approach to market dynamics, its long-term success will depend on its ability to stay relevant in an ever-changing fashion landscape. The acquisitions and subsequent strategies mark not just a new chapter for the brand but a critical test of its resilience and adaptability in the competitive apparel sector.