Net Sales Up 15.6% for the Quarter and 17.1% for the Year
WARRENDALE, Pa., Nov. 28, 2012 (GLOBE NEWSWIRE) -- rue21, inc. (Nasdaq:RUE) today announced sales and earnings results for the third quarter ended October 27, 2012. Third Quarter and Fiscal Year-to-Date Summary:
Net sales for the third quarter of fiscal 2012 increased 15.6% to $225.2 million, driven by new store growth and comparable store sales growth of 0.2%. Gross margin for the third quarter was 37.8% of sales, compared to 36.7% in the same period last year. The increase was driven by merchandise margin improvement of 120 bps. Net income and diluted earnings per share for the third fiscal quarter were impacted by a $2.9 million pre-tax litigation expense, or approximately $0.08 per share, related to the prospective settlement and related costs of wage and hour claims in California. When excluding this item, adjusted net income for the third quarter was $10.0 million and adjusted diluted earnings per share were $0.41, a 17% increase over $0.35 per share in the third quarter of 2011. The Company opened 29 new stores in the third quarter of fiscal year 2012.
For the first nine months of fiscal 2013, net sales were $632.8 million, a 17.1% increase over last year, and comparable store sales increased 0.8% over the same period last year. Gross margin for the first nine months was 38.6% of sales versus 38.2% for the comparable period last year. Adjusted net income for the period increased 17.9% to $30.7 million. The Company opened 108 new stores in the first nine months of fiscal year 2012.
The Company ended the third quarter with approximately $44.3 million in cash and short term investments on its balance sheet.
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: "We executed our plan for the third quarter and continued our history of quality top and bottom line earnings growth, highlighted by a record third quarter gross margin. We achieved solid comp store sales growth above our plan in the junior's sportswear division, which is our largest category and will benefit the overall business going forward. Even more exciting for rue, our 2012 new stores have given us some of the best performances of any stores in our history and we have already secured store locations in 2013 in markets similar to those that opened with such success this past year." Stock Repurchase Program:
During the third quarter of fiscal 2012, the Company repurchased 332,200 shares for $9.2 million. The stock repurchase program had a positive impact of $0.01 per share on diluted earnings per share in the third quarter. At the end of the third quarter, $27.8 million of the $50 million stock repurchase program remained available for future share repurchases. Under the 2012 share 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.
2012 Outlook:
The Company is raising its prior guidance and expects adjusted diluted earnings per share to be in the range of $1.83 to $1.86 as compared to $1.55 in fiscal 2011. This incorporates 25.0 million average diluted shares expected for fiscal 2012 as compared to 25.1 million average diluted shares in fiscal 2011. This guidance is based on low single digit comparable store sales in the fourth quarter. Diluted earnings per share for the fourth quarter are expected to be in the range of $0.60 to $0.63 compared to $0.52 in the fourth quarter of fiscal 2011.
Mr. Fisch continued: "We are very focused on achieving our results for the fourth quarter and we were excited by the record sales gains we achieved over the Thanksgiving holiday weekend without increasing our promotional cadence from last year. We have great momentum going into December in addition to strong opportunities and initiatives that we believe will bring us a very happy holiday season and position us well for 2013." Conference Call Information:
A conference call to discuss third quarter fiscal 2012 financial results is scheduled for today, November 28, 2012 at 4:30 PM Eastern Time. To participate, dial toll-free (877) 795-3648 or 1-719-325-4841 (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 879 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 locations and 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 thirteen week and thirty-nine week periods ended October 27, 2012. 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.
GAAP EPS $0.33; Adjusted EPS $0.41
rue21, inc. and subsidiaries Consolidated Statements of Income
Thirteen weeks ended Thirty-nine weeks ended
October 27, October 29, October 27, October 29,
2012 2011 2012 2011
(Unaudited)
(in thousands, except per share data)
Net sales
$ 225,158
$ 194,761
$ 632,832
$ 540,406
Cost of goods sold (includes certain buying, occupancy and distribution center expenses)
140,052
123,361
388,514
334,130
Gross profit
85,106
71,400
244,318
206,276
Selling, general, and administrative expense
63,738
50,805
175,333
145,045
Depreciation and amortization expense
8,522
6,843
24,067
19,356
Income from operations
12,846
13,752
44,918
41,875
Interest (income) expense, net
(12)
16
(64)
(25)
Income before income taxes
12,858
13,736
44,982
41,900
Provision for income taxes
4,693
4,995
16,124
15,870
Net income
$ 8,165
$ 8,741
$ 28,858
$ 26,030
Basic income per common share
$ 0.34
$ 0.36
$ 1.18
$ 1.07
Diluted income per common share
$ 0.33
$ 0.35
$ 1.15
$ 1.04
Weighted average basic common shares outstanding
23,939
24,461
24,371
24,407
Weighted average diluted common shares outstanding
24,555
25,066
24,990
25,057
rue21, inc. and subsidiaries Consolidated Balance Sheets
October 27, January 28, October 29,
2012 2012 2011
(Unaudited)
(Unaudited)
(in thousands, except per share data) Assets
Current assets:
Cash and cash equivalents
$ 7,347
$ 41,960
$ 36,071
Short term investments
37,000
30,000
—
Accounts receivable
10,634
6,675
10,961
Merchandise inventory, net
180,609
131,136
142,869
Prepaid expenses and other current assets
13,660
11,767
11,062
Deferred tax assets
6,079
5,121
6,527
Total current assets
255,329
226,659
207,490
Property and equipment, net
139,443
117,798
115,109
Other assets
3,505
3,565
3,661
Total assets
$ 398,277
$ 348,022
$ 326,260 Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$ 129,410
$ 103,914
$ 104,618
Accrued expenses and other current liabilities
21,304
16,570
16,020
Accrued payroll and related taxes
9,939
12,045
10,099
Deferred rent and tenant allowances, current portion
9,945
8,652
8,630
Accrued income and franchise taxes
—
1,068
2,252
Total current liabilities
170,598
142,249
141,619
Non-current liabilities:
Deferred rent, tenant allowances and other long-term liabilities
57,850
46,965
46,212
Deferred tax liabilities
7,006
11,585
5,599
Total non-current liabilities
64,856
58,550
51,811
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; 24,651, 24,476 and 24,463 shares issued; 23,811, 24,476 and 24,463 outstanding, respectively.
25
24
24
Additional paid in capital
46,950
37,696
36,224
Treasury stock, 840, -0-, and -0- shares, respectively
(22,512)
—
—
Retained earnings
138,360
109,503
96,582
Total stockholder's equity
162,823
147,223
132,830
Total liabilities and stockholders' equity
$ 398,277
$ 348,022
$ 326,260
rue21, inc. and subsidiaries
Reconciliation of GAAP Earnings to Adjusted Earnings
(In thousands, except per share data)
(Unaudited)
Thirteen Weeks Ended October 27, 2012
GAAP Legal Costs (1) As Adjusted
Income from Operations
$ 12,846
$ 2,900
$ 15,746
Interest (income), net
(12)
(12)
Income before income taxes
12,858
15,758
Provision for income taxes
4,693
1,059
5,752
Net income
$ 8,165
$ 10,006
Basic income per common share
$ 0.34
$ 0.42
Diluted income per common share
$ 0.33
$ 0.41
Weighted average basic common shares outstanding
23,939
23,939
Weighted average diluted common shares outstanding
24,555
24,555
Thirty-Nine Weeks Ended October 27, 2012
GAAP Legal Costs (1) As Adjusted
Income from Operations
$ 44,918
$ 2,900
$ 47,818
Interest (income), net
(64)
(64)
Income before income taxes
44,982
47,882
Provision for income taxes
16,124
1,059
17,183
Net income
$ 28,858
$ 30,699
Basic income per common share
$ 1.18
$ 1.26
Diluted income per common share
$ 1.15
$ 1.23
Weighted average basic common shares outstanding
24,371
24,371
Weighted average diluted common shares outstanding
24,990
24,990
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 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
jteklits@icrinc.com
