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 locationsand 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 email@example.com firstname.lastname@example.org
rue21, inc. Announces First Quarter Fiscal Year 2013 Financial Results
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