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rue21, inc. Announces First Quarter Fiscal Year 2013 Financial Results



rue21, inc. Announces First Quarter Fiscal Year 2013 Financial Results

WARRENDALE, Pa., June 5, 2013 (GLOBE NEWSWIRE) -- rue21, inc. (Nasdaq:RUE)
today announced its financial results for the first quarter ended May 4, 2013.

First Quarter Summary:

For the first quarter of fiscal 2013, net sales increased 9.1% to $224.4
million from $205.6 million a year ago, including a comparable store sales
decrease for the quarter of 4.6% following a 1.7% increase in the first
quarter of fiscal 2012. The Company opened 41 new stores in the first quarter
of fiscal 2013 compared to 40 new stores in the first quarter of fiscal 2012.
Gross profit increased by $10.0 million in the first quarter of 2013 to $89.7
million as compared to $79.7 million in the first quarter of fiscal 2012.
Gross margin increased 120 bps to 40.0% for the quarter from 38.8% from the
first quarter of fiscal 2012. Selling, general and administrative expense
increased 18.4%, or $9.9 million, to $63.7 million in the first quarter of
2013 as compared to $53.8 million in the first quarter of 2012. As a
percentage of net sales, selling, general and administrative expense increased
to 28.4% in the first quarter of 2013 as compared to 26.2% in the first
quarter of 2012. The increase was primarily due to deleveraging of store
payroll, stock compensation expenses, and e-commerce expenses. E-commerce
start-up costs related to planning and designing the e-commerce business,
which is expected to begin operations by the end of the year, were $0.7
million in the first quarter of fiscal 2013. Net income decreased 6.9%, or
$0.8 million, to $10.8 million for the first quarter, and diluted earnings per
share were $0.44 compared to earnings per share of $0.46 in the first quarter
of 2012.

Bob Fisch, rue21's President and CEO, stated: "Despite a challenging
environment which impacted our first quarter financial results, we are proud
to have achieved another 41 successful new store openings, gross margin
expansion of 120 basis points, and an increase in gross profit. We also feel
positive about the continued progress we made this past quarter on our long
term goals, which include opening profitable new stores in underserved markets
and moving up the launch of our e-commerce site to the fourth quarter. We are
confident that going forward we will be able to continue to produce the
consistent productivity and profitability gains that our team is so proud to
have delivered over the past 10 years."

Impact of 53^rd Week in Fiscal 2012 on Comparable Store Sales in Fiscal 2013:

Fiscal 2012 included an extra week in the fourth quarter of the year (the
53^rd week). For comparable sales reporting in the first quarter of fiscal
2013, sales are compared to the thirteen week period ended May 5, 2012.  

Stock Repurchase Program:

During the first quarter of fiscal 2013, the Company repurchased 351,703
shares for $10.4 million. The stock repurchase program was suspended on May
23, 2013.

Apax Partners Transaction:

On May 23, 2013, rue21 announced that it had entered into a definitive
agreement under which funds advised by Apax Partners, a global private equity
firm, will acquire all outstanding shares of rue21 for $42.00 per share in
cash, or a total of $1.1 billion.  As part of the agreement, the Special
Committee of rue21's Board of Directors, with the assistance of its advisors,
is conducting an initial 40-day "go-shop" process during which it is actively
soliciting, evaluating and potentially entering into negotiations with any
parties willing to offer a superior acquisition proposal.  Pending the outcome
of the go-shop process, the transaction is expected to close before the end of
calendar 2013, subject to approval by the majority of the stockholders
unaffiliated with the SKM II funds, rue21's largest stockholder, as well as
customary closing conditions.

Outlook:

For fiscal 2013, the Company is lowering its prior guidance based on first
quarter results and expects diluted earnings per share to be in the range of
$1.98 to $2.03 versus its previous guidance of $2.00 to $2.05, and as compared
to $1.76 in fiscal 2012. This incorporates 24.2 million average diluted shares
expected for fiscal 2013 as compared to 24.9 million average diluted shares in
fiscal 2012.  For the second quarter of fiscal 2013, the Company currently
expects low single digit comparable store sales.  Diluted earnings per share
for the second quarter are expected to be in the range of $0.51 to $0.53,
including $0.03 relating to e-commerce, versus $0.36 in the second quarter
last year.

Conference Call Information:

A conference call to discuss first quarter fiscal 2013 financial results is
scheduled for today, June 5, 2013 at 4:30 PM Eastern Time. To participate,
dial toll-free (877) 723-9522 or 1-(719) 325-4789 (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
934 stores in 47 states. Learn more at www.rue21.com

Forward Looking Statements:

Certain statements herein, including statements relating to future store
openings, growth strategies and statements relating to the Apax Partners
transaction and the go-shop process 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
February 2, 2013, 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.

Important Additional Information and Where to Find It:

In connection with the proposed transaction, rue21 intends to file a proxy
statement with the Securities and Exchange Commission (the "SEC") and mail it
to its stockholders. Stockholders of rue21 are urged to read the proxy
statement and the other relevant material when they become available because
they will contain important information about rue21, the proposed transaction
and related matters. STOCKHOLDERS ARE URGED TO CAREFULLY READ THE PROXY
STATEMENT AND THE OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BEFORE
MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED MERGER.
The proxy statement and other relevant materials (when available), and any and
all documents filed by rue21 with the SEC, may also be obtained for free at
the SEC's website at www.sec.gov. In addition, investors and security holders
may obtain free copies of the documents filed with the SEC by rue21 by
directing a written request to rue21, Attention Corporate Secretary, 800
Commonwealth Drive, Warrendale, Pennsylvania, 15086.

This announcement is neither a solicitation of proxy, an offer to purchase nor
a solicitation of an offer to sell shares of rue21. rue21, its executive
officers and directors may be deemed to be participants in the solicitation of
proxies from the security holders of rue21 in connection with the proposed
merger. Information about those executive officers and directors of rue21 and
their ownership of rue21 common stock is set forth in the rue21 proxy
statement for its 2013 Annual Meeting of Stockholders, which was filed with
the SEC on April 26, 2013, and its Annual Report on Form 10-K for the year
ended February 2, 2013, which was filed with the SEC on April 3, 2013. These
documents may be obtained for free at the SEC's website at www.sec.gov, and
from rue21 by contacting rue21, Attention Corporate Secretary, 800
Commonwealth Drive, Warrendale, Pennsylvania, 15086. Additional information
regarding the interests of participants in the solicitation of proxies in
connection with the transaction will be included in the proxy statement that
rue21 intends to file with the SEC.

 
 
rue21, inc. and subsidiaries
Consolidated Statements of Income
                                                             
                                                             
                                         Thirteen weeks ended
                                         May 4,             April 28,
                                         2013               2012
                                         (Unaudited)
                                         (in thousands, except per share data)
                                                             
                                                             
Net sales                                 $ 224,375          $ 205,615
Cost of goods sold (includes certain
buying, occupancy and distribution        134,676            125,934
center expenses)
Gross profit                              89,699             79,681
                                                             
Selling, general, and administrative      63,708             53,796
expense
Depreciation and amortization expense     9,045              7,528
Income from operations                    16,946             18,357
                                                             
Interest income, net                      (5)                (30)
Income before income taxes                16,951             18,387
                                                             
Provision for income taxes                6,153              6,785
Net income                                $ 10,798           $ 11,602
                                                             
Basic income per common share             $ 0.46             $ 0.47
Diluted income per common share           $ 0.44             $ 0.46
                                                             
Weighted average basic common shares      23,724             24,480
outstanding
Weighted average diluted common shares    24,355             25,119
outstanding

 
 
rue21, inc. and subsidiaries
Consolidated Balance Sheets
                                                                    
                                         May 4,       February 2,  April 28,
                                         2013         2013         2012
                                         (Unaudited)               (Unaudited)
                                         (in thousands, except per share data)
Assets                                                              
Current assets:                                                     
Cash and cash equivalents                 $ 55,696     $ 43,519     $ 51,845
Short term investments                    --           20,000       30,000
Accounts receivable                       8,739        10,555       9,864
Merchandise inventory, net                168,198      157,269      131,892
Prepaid expenses and other current        15,629       13,905       12,133
assets
Deferred tax assets                       5,846        5,910        6,064
Total current assets                      254,108      251,158      241,798
                                                                    
Property and equipment, net               153,017      144,852      126,650
                                                                    
Other assets                              4,071        3,499        3,680
Total assets                              $ 411,196    $ 399,509    $ 372,128
Liabilities and stockholders' equity                                
Current liabilities:                                                
Accounts payable                          $ 114,438    $ 108,760    $ 104,321
Accrued expenses and other current        19,497       24,202       18,401
liabilities
Accrued payroll and related taxes         10,517       8,932        7,715
Deferred rent and tenant allowances,      10,558       10,228       9,324
current portion
Accrued income and franchise taxes        5,231        126          10,667
Total current liabilities                 160,241      152,248      150,428
                                                                    
Non-current liabilities:                                            
Deferred rent, tenant allowances and      61,978       59,325       53,190
other long-term liabilities
Deferred tax liabilities                  8,075        9,625        7,523
Total non-current liabilities             70,053       68,950       60,713
                                                                    
                                                                    
Commitments and Contingencies             –            –            –
                                                                    
Stockholders' equity:                                               
Preferred stock -- par value $0.001 per
share, 10,000 shares authorized; none     –            –            –
issued or outstanding
Common stock -- par value $0.001 per
share; 200,000 shares authorized;
24,761, 24,694 and 24,493 shares issued   25           25           24
and 23,530, 23,755 and 24,493
outstanding, respectively.
Additional paid in capital                51,132       50,281       39,858
Treasury stock, 1,240, 939 and 0 shares,  (34,457)     (25,399)     –
respectively
Retained earnings                         164,202      153,404      121,105
Total stockholder's equity                180,902      178,311      160,987
                                                                    
Total liabilities and stockholders'       $ 411,196    $ 399,509    $ 372,128
equity 

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