UPDATE 3-Denim maker True Religion says exploring sale
* Receives interest from potential buyers
* Shares up 25 percent
* Proposals from private equity firms and rivals - WSJ
(Adds analyst comments, background)
By Juhi Arora and Siddharth Cavale
Oct 10 (Reuters) - Premium jeans maker True Religion Apparel Inc , which has been hit by falling sales, said it may sell itself after receiving interest from potential buyers.
Shares of the company jumped as much as 25 percent to $26.25 in early trading on Wednesday, valuing it at about $680 million. They had fallen by about a quarter in the last three months.
True Religion, known for its colorful jeans that sell for up to $360 at its specialty boutiques, has been hit by falling demand as consumers switch to lower-priced denim. The company's sales have fallen 12 percent over the last three quarters.
"The company has undergone a number of fashion missteps. More importantly, we question the relevancy of the brand, particularly given its premium price point," said analyst Edward Yruma of KayBanc Capital Markets.
Weak demand for True Religion's women's range in particular, including jeans and shirts with serape patterns, prints and colored stitching, forced the company to cut its full-year profit outlook in July.
The Wall Street Journal reported earlier that the company had fielded buyout proposals from private equity firms and apparel industry companies. ()
True Religion said it had formed a special committee comprising non-management directors and had hired Guggenheim Securities LLC as financial adviser and Greenberg Traurig LLP as legal counsel to assist in a strategic review.
Guggenheim Securities and Greenberg were not immediately available for comment.
True Religion, founded in 2002 by CEO Jeffrey Lubell, made its mark with jeans that featured colorful reinforced stitching and oversized low flap pockets.
Sales soared over the decade as celebrities such as Angelina Jolie, Jessica Simpson, Megan Fox and Jennifer Lopez were seen wearing the jeans.
However, sales growth has slowed in the past year, prompting the company to introduce lower-priced clothes before the holiday season in an attempt to turn around its women's apparel business.
"True Religion has all of the hallmarks of a fad. It enjoyed its heyday, over-expanded, and lost its core customer," KeyBanc Capital Markets analyst Edward Yruma said. He expects operating margins for 2012 to fall to 16.9 percent, well below their peak of 30.5 percent in 2005.
The company, whose competitors include Joe's Jeans Inc
and Aeropostale Inc , owns and operates 116 stores in the United States as well as 23 international shops.
(Additional reporting by Neha Alawadhi and Siddharth Cavale in Bangalore; Editing by Sreejiraj Eluvangal and Saumyadeb Chakrabarty)
Keywords: TRUERELIGIONAPPAREL ACQUISITION/