Fourth Quarter Net Income Increased 68%
Fourth Quarter Total Sales increased 30%
Fourth Quarter EPS of $0.32
Fourth Quarter Adjusted EPS of $0.36
Full Year 2009 Net Income Increased 74%
WARRENDALE, Pa., March 16, 2010 (GLOBE NEWSWIRE) -- rue21, inc. (Nasdaq:RUE) today announced financial results for the fourth quarter and fiscal year ended January 30, 2010.
Highlights for the fourth quarter of fiscal 2009:
- Net sales increased 30.5% to $155.4 million, compared to $119.1 million for the fourth quarter of fiscal 2008.
- Comparable-store sales increased by 8.6% over the fourth quarter of fiscal 2008.
- Selling, general and administrative expenses increased 38% from the fourth quarter of fiscal 2008 to $37.9 million, which included a non-recurring termination fee of $1.5 million paid to Apax Partners to end the financial advisory services agreement that had been in place.
- Operating margin increased to 8.3% for the fourth quarter of fiscal 2009 from 6.4% for the fourth quarter of fiscal 2008, driven primarily by gross margin expansion of 340 bps. Without the non-recurring termination fee, the operating margin would have been 9.2%.
- Diluted earnings per share were $0.32 on net income of $7.7 million for the fourth quarter of fiscal 2009 compared to diluted earnings per share of $0.20 on net income of $4.6 million for the fourth quarter of fiscal 2008. Adjusted for the non-recurring termination fee, diluted EPS were $0.36.
- Average diluted shares outstanding were 24.3 million for the fourth quarter of fiscal 2009 versus 22.8 million for the fourth quarter of fiscal 2008.
- During the fourth quarter of fiscal 2009 the Company opened three stores, closed two stores, and ended with 535 stores.
Highlights for the fiscal 2009 year:
- Net sales for fiscal 2009 increased 34.3% to $525.6 million from $391.4 million for fiscal 2008.
- Comparable-store sales for fiscal 2009 increased 7.8% on top of a 3.7% increase in fiscal 2008.
- Operating margin for the year increased to 7.0% from 5.7% in fiscal 2008.
- Diluted earnings per share for fiscal 2009 were $0.96 on net income of $22.0 million compared to diluted earnings per share of $0.55 on net income of $12.6 million for fiscal 2008.
- In fiscal 2009, the Company opened 88 stores and closed 2, and ended the year with 535 stores.
Bob Fisch, rue21's President and CEO, stated: "rue21 is off to a good start as a public company, and the management team is focused on delivering consistent growth and results. We continue to feel very good about how we are positioned in the marketplace including our presence in small and middle market communities and our speed-to-market merchandise strategy. We are confident that our class of 100 new stores in 2010 will meet our high productivity and profitably expectations. I once again want to thank the entire rue21 team for their hard work and effort in 2009, and for their dedication toward elevating our business again in 2010."
Balance sheet highlights as of January 30, 2010:
- Cash and cash equivalents increased to $26.8 million as of January 30, 2010, as compared to $4.6 million January 31, 2009 as a result of an increase in operating cash flows of $11.9 million and the receipt of proceeds of $24.7 million net of expenses from the Company's November initial public offering (IPO).
- All amounts outstanding under the Company's senior secured credit facility were repaid from the IPO proceeds and availability under the senior secured credit facility was $85.0 million at January 30, 2010.
- Inventories at the end of fiscal 2009 were $72.7 million, or up 8.8% compared to $66.8 million at the end of fiscal 2008. Inventory per sq ft at the end of fiscal 2009 declined 11% compared to the end of fiscal 2008.
Outlook:
For fiscal 2010, the Company currently expects diluted earnings per share to be in the range of $1.08 to $1.13 as compared to $0.96 in fiscal 2009. This is based on 25.1 million average diluted shares expected for fiscal 2010 as compared to 23.0 million average diluted shares in fiscal 2009. For the first quarter, the Company currently expects diluted earnings per share to be in the range of $0.16 to $0.18 as compared to $0.13 in the first quarter of fiscal 2009. This is based on 25.1 million average diluted shares expected for the first quarter of fiscal 2010 as compared to 23.0 million average diluted shares for the first quarter of fiscal 2009. The Company currently expects a mid-single digit comparable store sales increase in the first quarter of fiscal 2010.
Conference Call Information
A conference call to discuss fourth quarter and fiscal 2009 financial results is scheduled for today, March 16, 2010 at 4:30 PM Eastern Time. To participate, dial toll-free 1-888-801-6497 or 1-913-905-3226 (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. At the end of the fourth quarter of fiscal 2009, rue21 operated 535 stores in 43 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 Prospectus and in all filings with the SEC made by the Company subsequent to the filing of the Prospectus. 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 weeks and fiscal year ended January 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. Further, our reconciliations of GAAP to "adjusted" operating results, which are included on the attached tables, are presented to facilitate a reader's understanding of the impact of the various adjustments to our GAAP operating results, individually and in the aggregate, and are not intended to place any undue prominence on our adjusted operating results.
| rue21, inc. and subsidiary | ||
| Consolidated Statements of Income | ||
| Thirteen Weeks Ended | ||
|
January 30, 2010 |
January 31, 2009 |
|
| (in thousands, except per share data) | ||
| (Unaudited) | ||
| Net sales | $155,386 | $119,113 |
|
Cost of goods sold (includes certain buying, occupancy and distribution center expenses) |
99,961 | 80,633 |
| Gross profit | 55,425 | 38,480 |
| Selling, general, and administrative expense | 37,862 | 27,535 |
| Depreciation and amortization expense | 4,703 | 3,287 |
| Income from operations | 12,860 | 7,658 |
| Interest expense, net | 99 | 218 |
| Income before income taxes | 12,761 | 7,440 |
| Provision for income taxes | 5,040 | 2,842 |
| Net income | $7,721 | $4,598 |
| Basic income per common share | $0.33 | $0.21 |
| Diluted income per common share | $0.32 | $0.20 |
| Weighted average basic common shares outstanding | 23,530 | 22,046 |
| Weighted average diluted common shares outstanding | 24,281 | 22,846 |
| rue21, inc. and subsidiary | ||
| Consolidated Statements of Income | ||
| Fiscal Year Ended | ||
|
January 30, 2010 |
January 31, 2009 |
|
| (in thousands, except per share data) | ||
| (Unaudited) | ||
| Net sales | $525,600 | $391,414 |
|
Cost of goods sold (includes certain buying, occupancy and distribution center expenses) |
337,693 | 257,853 |
| Gross profit | 187,907 | 133,561 |
| Selling, general, and administrative expense | 134,078 | 99,886 |
| Depreciation and amortization expense | 16,898 | 11,532 |
| Income from operations | 36,931 | 22,143 |
| Interest expense, net | 532 | 1,477 |
| Income before income taxes | 36,399 | 20,666 |
| Provision for income taxes | 14,382 | 8,027 |
| Net income | $22,017 | $12,639 |
| Basic income per common share | $0.99 | $0.58 |
| Diluted income per common share | $0.96 | $0.55 |
| Weighted average basic common shares outstanding | 22,267 | 21,914 |
| Weighted average diluted common shares outstanding | 23,037 | 22,814 |
| rue21, inc. and subsidiary | ||
| Consolidated Balance Sheets | ||
|
January 30, 2010 |
January 31, 2009 |
|
| (in thousands, except per share data) | ||
| (unaudited) | ||
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $26,751 | $4,611 |
| Accounts Receivable | 3,834 | 2,527 |
| Merchandise inventory, net | 72,693 | 66,838 |
| Prepaid expenses and other current assets | 6,783 | 6,637 |
| Deferred tax assets | 4,286 | 3,135 |
| Total current assets | 114,347 | 83,748 |
| Property and equipment, net | 73,147 | 56,687 |
| Other assets | 937 | 765 |
| Total assets | $188,431 | $141,200 |
| Liabilities and stockholders' equity | ||
| Current liabilities: | ||
| Accounts payable | $59,963 | $60,449 |
| Accrued expenses and other current liabilities | 19,893 | 14,969 |
| Accrued payroll and related taxes | 10,486 | 7,532 |
| Accrued income and franchise taxes | 2,401 | – |
| Total current liabilities | 92,743 | 82,950 |
| Long-term liabilities: | ||
| Long-term debt | – | 19,476 |
| Deferred rent, tenant allowances and other long-term liabilities | 23,991 | 18,440 |
| Deferred tax liabilities | 4,249 | 1,941 |
| Total long-term liabilities | 28,240 | 39,857 |
| Total liabilities | 120,983 | 122,807 |
| Commitments and Contingencies | ||
| Stockholders' equity: | ||
|
Common stock--- par value $0.001 per share; 200,000 shares authorized; 24,237 shares issued and outstanding at January 30, 2010, par value $0.004 per share; 50,000 shares authorized; 22,090 shares issued and outstanding at January 31, 2009 |
24 | 88 |
| Additional paid in capital | 27,115 | 13 |
| Retained earnings | 40,309 | 18,292 |
| Total stockholder's equity | 67,448 | 18,393 |
| Total liabilities and stockholders' equity | $188,431 | $141,200 |
| rue21, inc. and subsidiary | |||
| Reconciliation of GAAP Earnings to Adjusted Earnings | |||
| (In thousands, except per share data) | |||
| (Unaudited) | |||
| Thirteen Weeks Ended January 30, 2010 | |||
| GAAP | Adjustments (1) | As Adjusted | |
| Income from Operations | $12,860 | 1,500 | $14,360 |
| Interest expense, net | 99 | 99 | |
| Income before income taxes | 12,761 | 14,261 | |
| Provision for income taxes | 5,040 | 593 | 5,633 |
| Net income | $7,721 | $8,628 | |
| Basic income per common share | $0.33 | $0.37 | |
| Diluted income per common share | $0.32 | $0.36 | |
| Weighted average basic common shares outstanding | 23,530 | 23,530 | |
| Weighted average diluted common shares outstanding | 24,281 | 24,281 | |
| Fiscal Year Ended January 30, 2010 | |||
| GAAP | Adjustments (1) | As Adjusted | |
| Income from Operations | $36,931 | 1,500 | $38,431 |
| Interest expense, net | 532 | 532 | |
| Income before income taxes | 36,399 | 37,899 | |
| Provision for income taxes | 14,382 | 593 | 14,975 |
| Net income | $22,017 | $22,924 | |
| Basic income per common share | $0.99 | $1.03 | |
| Diluted income per common share | $0.96 | $1.00 | |
| Weighted average basic common shares outstanding | 22,267 | 22,267 | |
| Weighted average diluted common shares outstanding | 23,037 | 23,037 | |
| rue21, inc. and subsidiary | |||
| Note to Reconciliation of GAAP Earnings to Adjusted Earnings | |||
| (Dollars in thousands) | |||
| (Unaudited) | |||
| (1) - In connection with the Company's initial public offering on November 13, 2009, the letter agreement with Apax Partners L.P. ("Apax") to provide financial advisory services to the Company was terminated and Apax received a one-time termination fee of $1,500, which the Company has included in selling, general and administrative expenses in the presentation of GAAP earnings. The Company excluded this one-time termination fee from income from operations in the presentation of adjusted earnings for the thirteen weeks and fiscal year ended January 30, 2010. The related income tax effect of this adjustment was computed at the Company's effective tax rate of 39.5% for both the thirteen weeks and fiscal year ended January 30, 2010. | |||