I've waited on this post because I want to take as much emotion out of it as possible. I've been analyzing the situation in my head as throughout the past week. Yes I am very disappointed with the results. And if you listen to the conference call, you can tell all the analysts were as well.

Before I get into the conference call, let me discuss some of the action I saw on the day earnings were announced. The price started to run, and I considered taking the 10% gain off the table. The thought that crossed my mind was that the shorts could have been running up the stocks, because you can only short on an uptick. And also, in the past, when the stock had a run up intol earnings, it sold off afterwards, almost without failure. Yet I ignored these indicators because I was greedy and wanted to make more money. And because I did, I ultimately lost more than I wanted to make.

Earnings were a disappointment. I am truly upset with management. They didn't warn, which would've been at least somewhat helpful, and moreover they lost the confidence of their investors. They claim that sales were down due to unforseen weather in Europe and Asia. I don't buy it. Something happened there. Maybe they don't have enough personnel to handle the growth they were expecting.

As someone on one of the boards I belong to pointed out, their expenses increased by $3 million, which translates into $.13 per share, which would have met analysts' estimates. And the increased expenses, as we all know, are because the company is adding people for future growth. Included in that number is the $800,000 charge paid to Goldman Sachs. That begs the question: what has Goldman done to earn their commission? As of now, I don't know, but I assume it must be something significant if they've already received that large of a sum already.

Despite not meeting estimates, US sales were strong. It was international sales that were weak. So this solidifies even more that a US denim glut hasn't hit yet, if it will hit at all, which I'm beginning to think will be soon. And everytime I walk into department stores, I see new denim companies, save for Seven, True Religion, and Citizen's of Humanity.

One thing that I really did like about the conference call, was said by Buckley. He said that he knows the company can get more exposure and see lots of growth in department stores. And I completely agree with him. Something very similar to what was done with Diesel with a "store within a store" concept is what I would like to see, and I believe can be seen.

In 2007, we can wait for new store openings and licensing agreements, which should add to the bottom line. But after the numbers miss, the question becomes, how much can you trust management and will they be able to grow in a healthy manner? And the answer to that at the moment is, "I don't know."

So I asked myself, why? Why did management not warn and then guide down? I have come up with two "conspiracy" theories as to why. The first would be to buy out the company at a lower price, especially if it is a leveraged buyout in which Lubell would still retain ownership. The second would be to beat future estimates, and be rewarded with upside price movement. I don't know how probable these scenarios are, but I do know that when money is involved, you can't rule anything out.

Technically, the stock is hurting right now. The chart looks ugly, and it looks like dead money for at least the next 60 days. Today it broke through some resistance that was at 15.50, but not but much, and we can expect more resistance as if it trends up. I'm currently holding my current position, added a small portion at 15.61, but will hold out on buying more until I see some upwards movement.

In response to comment in my last post, yes, I am disappointed, but I don't think the story is completely done yet. What makes you think it is? I think the company is still in a transition period, and you won't see the fruits of their labor until probably the second half of 2007, at the earliest. TRLG was in fact more than 90% of my portfolio at one point. I did get out, in the $19 to $22 range, and bought a much smaller position at $19.90 before earnings.

The main reason I'm not adding to my position rapidly, is because I think we will have a correction coming in the markets within the next 6 months. And with a slowing economy, ultimately all retail sectors will get hit, even the high end ones. I am much more skeptical of the company though, and am not as sure about their growht prospects as I was 8 days ago. As you know, I will keep my eye on it.