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rue21, inc. Announces Third Quarter Fiscal 2010 Financial Results

Third Quarter Net Sales Increased 19.5% with Comparable Store Sales Increasing 1.8%
/ Source: GlobeNewswire

Third Quarter Net Sales Increased 19.5% with Comparable Store Sales Increasing 1.8%

Management Raises Fiscal 2010 Earnings Guidance

WARRENDALE, Pa., Dec. 1, 2010 (GLOBE NEWSWIRE) -- rue21, inc. (Nasdaq:RUE) today announced its financial results for the third quarter and fiscal year-to-date ended October 30, 2010.

Highlights for the Quarter:

  • Net sales increased 19.5% to $163.9 million from $137.1 million for the comparable period a year ago, which ended October 31, 2009.
     
  • Comparable store sales increased 1.8% on top of a 13.5% increase for the same period in 2009.
     
  • The Company opened 33 stores in the quarter versus 29 in the same period last year. The Company converted an additional 9 stores to the rue21 etc! format versus 7 in the same period last year, and ended the quarter with 628 stores.
     
  • Gross margin increased 40 bps to 36.6% from 36.2% in the third quarter of fiscal 2009, driven by a merchandise margin increase of 60 bps. 
     
  • Selling, general and administrative expenses increased 21.4% to $42.6 million, which included incremental public company and share-based compensation costs of $1.1 million.  
     
  • Third quarter net income increased 19.5% to $7.1 million from $6.0 million in the third quarter of fiscal 2009. Adjusting for incremental public company expenses and share-based compensation costs in the third quarter of fiscal 2010, net income increased 29.4%.
     
  • Diluted earnings per share were $0.29 in the third quarter of fiscal 2010 compared to diluted earnings per share of $0.26 in the third quarter of fiscal 2009.
     
  • Average diluted shares outstanding were 25.0 million in the third quarter of fiscal 2010 versus 23.1 million in the third quarter of fiscal 2009. 
     
  • The Company ended the third quarter of fiscal 2010 with $18.7 million in cash and cash equivalents, and with no long-term debt.

Highlights for the Fiscal Year-to-Date:

  • Net sales increased 20.1% to $444.6 million from $370.2 million for the comparable period a year ago, which ended October 31, 2009. 
     
  • Comparable-store sales for the period increased 2.4% on top of a 7.4% increase for the same period in 2009.
     
  • Year-to-date the Company has opened 95 stores, closed 2 stores, and converted 31 stores to the rue21 etc! format.
     
  • Gross margin increased 170 bps from the comparable period in 2009.
     
  • Operating margin increased to 7.2% of net sales from 6.5% of net sales for the comparable period in 2009.
     
  • Year-to-date net income increased 35.4% to $19.4 million from $14.3 million for the comparable period in 2009. Adjusting for incremental public company expenses and share-based compensation costs, year-to-date net income increased 52.2%.

Bob Fisch, rue21's President and CEO, stated: "We are pleased to report strong total sales and profit growth this quarter.    We continue to successfully deliver fashion and quality at a great value to underserved communities while at the same time building our presence and market share in larger markets. We have exciting initiatives to drive the sales this holiday season, and we believe that rue21's increasing brand awareness combined with the strength of our product categories and assortments will allow us to achieve our goals."

Outlook:

For fiscal 2010, the Company is raising its full year guidance based on third quarter results, and expects diluted earnings per share to be in the range of $1.17 to $1.20 as compared to $0.96 in fiscal 2009. This incorporates 25.0 million average diluted shares expected for fiscal 2010 as compared to 23.0 million average diluted shares in fiscal 2009.  For the fourth quarter, the Company currently expects total sales growth in the range of 19% to 21%. Diluted earnings per share for the fourth quarter are expected to be in the range of $0.40 to $0.43 based on 25.0 million average diluted shares expected for the fourth quarter as compared to 24.3 million average diluted shares for the fourth quarter of fiscal 2009.

Conference Call Information:

A conference call to discuss third quarter fiscal 2010 financial results is scheduled for today, December 1, 2010 at 4:30 PM Eastern Time.  To participate, dial toll-free (888) 378-4439 or 1-719-325-2353 (international). The conference call will also be webcast live at under the Investor Relations section. A replay of this call will be available on the Investor Relations section of the Company's website, www.rue21.com, within two hours of the conclusion of the call and will remain on the website for ninety days.

About rue21, inc.

rue21 is a leading specialty apparel retailer offering exclusive branded merchandise and the newest trends at a great value. At the end of the third quarter of fiscal 2010, the Company operated 628 stores in 44 states. Learn more at .

Forward Looking Statements:

Certain statements herein, including statements relating to future store openings and growth strategies, are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the Company's current expectations or beliefs concerning future events and actual results of operations may differ materially from historical results or current expectations. Any such forward-looking statements are subject to various risks and uncertainties, including the strength of the economy, consumer spending, our ability to effectively identify and respond to changing fashion trends, our ability to compete with other retailers, our strategy and expansion plans, implementation of systems upgrades, reliance on key personnel, trade restrictions, events that may affect our vendors or their ability to finance their operations, availability of suitable new store locations and other factors which are set forth in the Company's Annual Report on Form 10-K filed March 31, 2010, and in all filings with the SEC made by the Company subsequent to the filing of the Form 10-K. The Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures: 

Management has presented its operating results in accordance with GAAP and on an "adjusted" (or non-GAAP) basis for the thirteen week and thirty-nine week periods ended October 30, 2010. The Company believes that the presentation of non-GAAP financial measures provides useful supplementary information to and facilitates additional analysis by investors. The Company uses these non-GAAP financial measures in connection with assessing its financial performance. These non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in conformity with GAAP.

CONTACT: ICR, Inc Joseph Teklits jteklits@icrinc.com Melissa Mackay 203-682-8200