rue21, inc. Announces Fourth Quarter and Fiscal Year 2012 Financial Results

rue21, inc. Announces Fourth Quarter and Fiscal Year 2012 Financial Results

                    Net Sales growth of 22.4% for Q4 2012

               Adjusted EPS $0.65, a 25% increase from Q4 2011

 Board of Directors Authorizes an Additional $25 Million for Share Repurchase
                                   Program

WARRENDALE, Pa., March 21, 2013 (GLOBE NEWSWIRE) -- rue21, inc. (Nasdaq:RUE)
today announced its financial results for the fourth quarter and full fiscal
year ended February 2, 2013.

Fourth Quarter Fiscal 2012 Summary:

For the fourth quarter of fiscal 2012, net sales increased 22.4% to $269.1
million from $219.9 million a year ago, including a comparable store sales
increase for the quarter of 0.7% following a 2.2% decrease in the fourth
quarter of fiscal 2011. The Company opened 17 new stores and closed 2 stores
in the fourth quarter of fiscal 2012. Gross margin increased 110 bps to 37.6%
for the quarter, driven by improved merchandise margin of 70 basis points and
leverage of expenses. Net income and diluted earnings per share (EPS) for the
fourth quarter were impacted by non-recurring professional fees of $1.2
million. On a GAAP basis, net income increased 16.4% and EPS were $0.62 versus
$0.52 in the fourth quarter of 2011. Adjusting out non-recurring professional
fees in this year's fourth quarter, net income increased by 22.4% and adjusted
EPS were $0.65 versus $0.52 in the fourth quarter of fiscal 2011. A
reconciliation of GAAP to non-GAAP financial measures is included in the
schedules accompanying the consolidated financial statements included with
this release.

Bob Fisch, rue21's President and CEO, stated: "Fiscal 2012 was another year of
consistent top and bottom line growth for rue21, including record gross margin
and double-digit growth in net income. We continue to focus on the qualities
that make rue21 appealing to our customers and our financial returns
attractive for our shareholders: offering current fashion at every day great
value, executing on our strategic square footage growth, and methodically
delivering productivity and profitability gains every quarter."

Fiscal Year 2012 Summary:

For fiscal 2012, net sales increased 18.6% to $901.9 million, and
comparable-store sales increased 0.7%. Gross margin increased 60 bps to 38.3%
from 37.7%, driven primarily by merchandise margin improvement. The Company
opened 125 new stores, closed 3 stores, and ended the year with 877 stores.
Ona GAAP basis, net income increased 12.7% and EPS were $1.76 versus $1.55 in
fiscal year 2011.Net income and EPS for fiscal 2012 were impacted by
non-recurring professional fees and non-recurring litigation expense
associated with the settlement and related costs of wage and hour claims in
California.Adjusted net income increased 19.4% for the year, to $46.5 million
from $39.0 million.Adjusted EPS were $1.87 in fiscal 2012 as compared to
$1.55 in fiscal 2011. 

For the year, cash and short term investments decreased 11.7% to $63.5
million.During fiscal 2012, the Company repurchased 925,668 shares of its
stock for $25 million. The Company did not borrow during the year and had no
long term debt as of February 2, 2013.Total Company inventory per square foot
was up 2.3% from the prior year end.

Impact of 53^rd Week:

Fiscal 2012 included an extra week in the fourth quarter of the year (the
53^rd week).The 53^rd week is not included in the calculation of comparable
store sales, but is included in net sales and net income for fiscal 2012.The
53^rd week was not material to fourth quarter or fiscal 2012 net income.

Stock Repurchase Program:

During the fourth quarter of fiscal 2012, the Company repurchased 97,568
shares for $2.8 million.For the full fiscal year, the Company repurchased
925,668 shares for $25 million. At the end of the fourth quarter, $25 million
of the $50 million stock repurchase program remained available for future
repurchases. The board of directors also authorized an additional $25 million
for the stock repurchase program. Under the stock repurchase program, the
Company may repurchase shares in the open market at current market prices at
the time of purchase or in privately negotiated transactions. The timing and
actual number of shares repurchased under the program will depend on a variety
of factors including price, corporate and regulatory requirements, and other
market and business conditions. The Company may suspend or discontinue the
program at any time, and may thereafter reinstitute purchases, all without
prior announcement.

Outlook:

For fiscal 2013 (52 week year), the Company currently expects diluted earnings
per share to be in the range of $2.10 to $2.15 not including the impact of the
Company's investments in the construction of its e-commerce platform.We
anticipate e-commerce investments to have approximately a $0.10 impact on
earnings per diluted share in 2013. Revenue impact from e-commerce in fiscal
2013, if any, will be immaterial. The Company expects comparable store sales
growth in 2013 to be in the low single digits. The Company guidance
incorporates 24.2 million average diluted shares expected for fiscal 2013.
Diluted earnings per share for the first quarter are expected to be in the
range of $0.47 to $0.50, not including the impact of the Company's investment
in its e-commerce platform.For the first quarter the e-commerce impact is
anticipated to be $0.02.The Company currently expects comparable store sales
growth in the first quarter of fiscal 2013 to be slightly negative to slightly
positive.

Conference Call Information:

A conference call to discuss fourth quarter and fiscal 2012 financial results
is scheduled for today, March 21, 2013 at 4:30 PM Eastern Time. To
participate, dial toll-free (888) 298-3466 or 1-719-325-2324 (international).
The conference call will also be webcast live at www.rue21.com 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.rue21 currently operates
900 stores in 47 states.Learn more at www.rue21.com

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 locationsand other
factors which are set forth in the Company's Annual Report on Form 10-K filed
March 27, 2012,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 fourteen week and fifty-three week
periods ended February 2, 2013. 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.

rue21, inc.
Consolidated Statements of Income
                                                              
                       Three Months Ended          Twelve Months Ended
                       February 2,   January 28,   February 2,   January 28,
                       2013          2012          2013          2012
                       (Unaudited)                (Unaudited)   
                       (in thousands, except per share data)
                                                              
Net sales               $269,054    $219,896    $901,886    $760,302
Cost of goods sold
(includes certain
buying, occupancy and   167,854      139,531      556,368      473,662
distribution center
expenses)
Gross profit            101,200      80,365       345,518      286,640
                                                              
Selling, general, and   68,763       52,130       244,096      197,176
administrative expense
Depreciation and        8,894        7,262        32,961       26,618
amortization expense
Income from operations  23,543       20,973       68,461       62,846
                                                              
Interest expense        37           16           (27)         (9)
(income), net
Income before income    23,506       20,957       68,488       62,855
taxes
                                                              
Provision for income    8,462        8,036        24,587       23,905
taxes
Net income              $15,044     $12,921     $43,901     $38,950
                                                              
Basic income per common $0.63       $0.53       $1.81       $1.60
share
Diluted income per      $0.62       $0.52       $1.76       $1.55
common share
                                                              
Weighted average basic
common shares           23,783       24,467       24,287       24,417
outstanding
Weighted average
diluted common shares   24,393       25,054       24,903       25,051
outstanding
                                                              
NOTE: The three and twelve months ended February 2, 2013 consisted of 14 weeks
and 53 weeks, respectively, compared with 13 weeks and 52 weeks in the
comparable prior-year periods.

                                                          
rue21, inc.
Consolidated Balance Sheets
                                                          
                                        February 2,        January 28,
                                        2013               2012
                                        (Unaudited)        
                                        (in thousands,exceptper share data)
Assets                                                     
Current assets:                                            
Cash and cash equivalents                $43,519          $41,960
Short term investments                   20,000            30,000
Accounts receivable                      10,555            6,675
Merchandise inventory, net               157,269           131,136
Prepaid expenses and other current       13,905            11,767
assets
Deferred tax assets                      5,910             5,121
Total current assets                     251,158           226,659
                                                          
Property and equipment, net              144,852           117,798
                                                          
Other assets                             3,499             3,565
Total assets                             $399,509         $348,022
                                                          
Liabilities and stockholders' equity                       
Current liabilities:                                       
Accounts payable                         $108,760         $103,914
Accrued expenses and other current       24,202            16,570
liabilities
Accrued payroll and related taxes        8,932             12,045
Deferred rent and tenant allowances,     10,228            8,652
current portion
Accrued income and franchise taxes       126               1,068
Total current liabilities                152,248           142,249
                                                          
Long-term liabilities:                                     
Deferred rent, tenant allowances and     59,325            46,965
other long-term liabilities
Deferred tax liabilities                 9,625             11,585
Total long-term liabilities              68,950            58,550
                                                          
Commitments and Contingencies            –                 –
                                                          
Stockholders' equity:                                      
Preferred stock--- par value $0.001 per
share, 10,000,000 shares authorized;     –                 –
none issued or outstanding
Common stock--- par value $0.001 per
share; 200,000 shares authorized; 23,755 25                24
and 24,476 shares issued and
outstanding, respectively
Additional paid in capital               50,281            37,696
Treasury stock, 939, and 0 respectively  (25,399)          –
Retained earnings                        153,404           109,503
Total stockholder's equity               178,311           147,223
                                                          
Total liabilities and stockholders'      $399,509         $348,022
equity

                                                             
rue21, inc.                                                   
Reconciliation of GAAP
Earnings to Adjusted                                          
Earnings
(In thousands, except per                                     
share data)
(Unaudited)                                                   
                                                             
                           Three Months Ended February 2, 2013
                                                             
                                                             
                           GAAP         Professional Fees (1)  As Adjusted
                                                             
Income from Operations     $23,543    $1,200               $24,743
Interest expense (income),  37                                37
net
                                                             
Income before income taxes  23,506                            24,706
Provision for income taxes  8,462       432                   8,894
                                                             
Net income                  $15,044                          $15,812
                                                             
Basic income per common     $0.63                            $0.66
share
Diluted income per common   $0.62                            $0.65
share
                                                             
Weighted average basic      23,783                            23,783
common shares outstanding
Weighted average diluted    24,393                            24,393
common shares outstanding
                                                             
                           Twelve Months Ended February 2, 2013
                                                             
                                       Expense                
                           GAAP         Adjustments (1) (2)    As Adjusted
                                                             
Income from Operations      $68,461    $4,100               $72,561
Interest expense (income),  (27)                              (27)
net
                                                             
Income before income taxes  68,488                            72,588
Provision for income taxes  24,587      1,491                 26,078
                                                             
Net income                  $43,901                          $46,510
                                                             
Basic income per common     $1.81                            $1.92
share
Diluted income per common   $1.76                            $1.87
share
                                                             
Weighted average basic      24,287                            24,287
common shares outstanding
Weighted average diluted    24,903                            24,903
common shares outstanding
                                                             
                                                             
                                                             
1. Estimated adjusted basic and diluted earnings per common share represents
management's estimate of basic and diluted earnings per common share for the
periods presented, before expenses associated with our non-recurring
professional fees in Fourth Quarter 2013.Adjusted basic and diluted earnings
per common share is presented because management believes it is a useful
adjunct to basic and diluted earnings per common share under accounting
principles generally accepted in the United States since it is a meaningful
measure of the Company's ongoing operating performance excluding the
non-recurring costs. Adjusted basic and diluted earnings per common share is
not a measure of financial performance under accounting principles generally
accepted in the United States and should not be considered as an alternative
to basic and diluted earnings per common share.
                                                             
2. Estimated adjusted basic and diluted earnings per common share represents
management's estimate of basic and diluted earnings per common share for the
periods presented, before expenses associated with our legal settlement for
California wage and hour litigation in October 2012.Adjusted basic and
diluted earnings per common share is presented because management believes it
is a useful adjunct to basic and diluted earnings per common share under
accounting principles generally accepted in the United States since it is a
meaningful measure of the Company's ongoing operating performance excluding
the non-recurring costs for our California wage and hour litigation costs.
Adjusted basic and diluted earnings per common share is not a measure of
financial performance under accounting principles generally accepted in the
United States and should not be considered as an alternative to basic and
diluted earnings per common share.

CONTACT: Joseph Teklits / Jill Gaul
         ICR, Inc
         203-682-8200
         jill.gaul@icrinc.com
         jteklits@icrinc.com
 
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