Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 1
My initial instinct tells me this company does not have a durable competitive advantage. There are four broad types of competitive advantages, according to Morningstar: 1) low-cost operator, 2) high switching costs, 3) intangibles, and 4) network effect.

Hewitt,

I don't know much about True Religion but when looking for a competitive advantage I think you need to see it as Volcom, another aparel maker. They also have a few stores but mostly sell through channels like PacSun and Zumiez. The advantage comes from having a protected brand and playing to a certain niche in the market. So I'd say it qualifies for 3) and a bit of 4). For Volcom 4) is actually quite strong which is a very large reason for their success currently.

The hard part is knowing whether the advantage is durable or not. Fashion can be fickle. But that hasn't stopped brands like Nike to establish a considerable moat.

Mark
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.