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Management of rue21 raises fiscal 2011 earnings guidance
31
May '11
rue21 inc announced financial results for the first quarter of fiscal 2011 ended April 30, 2011.

Highlights for the First Quarter of Fiscal 2011:

• Net sales increased 25.5% to $172.9 million, compared to $137.8 million in the first quarter of fiscal 2010 ended May 1, 2010. Comparable store sales increased by 5.2%, following a 7.7% increase in the first quarter of 2010.
• During the first quarter of fiscal 2011 the company opened 39 new stores and converted 12 existing stores to the larger etc! format with no store closures compared to opening 31 new stores, 13 conversions and 1 store closure in the first quarter of fiscal 2010. The Company ended the quarter with 677 stores.
• Gross margin increased 100 bps to 38.9% from 37.9% in the first quarter of 2010.
• Selling, general and administrative (SG&A) expenses for the first quarter were $45.4 million or 26.2% of sales. This compares to SG&A expenses of $37.3 million or 27.1% of sales in the first quarter of 2010.
• Operating margin increased to 9.1% for the first quarter of fiscal 2011 compared to 7.2% in the first quarter of fiscal 2010.
• Net income in the first quarter increased 65.2% to $9.6 million from $5.8 million in the first quarter of 2010.
• Diluted earnings per share increased to $0.38 in the first quarter of fiscal 2011 compared to diluted earnings per share of $0.23 in the first quarter of fiscal 2010, which included $0.03 per share of non-recurring expenses related to the secondary offering.

Bob Fisch, rue21's President and CEO, stated: "We are very pleased that we were able to deliver consistent results to our shareholders again this quarter, having achieved strong total net sales and comparable store sales increases as well as margin expansion. I am proud that we continue to achieve solid net income growth each quarter as a public company. We take a prudent approach to the business, we are realistic about our opportunities, and we are focused on delivering our annual and long-term goals."

Balance sheet highlights for the First Quarter of Fiscal 2011:

• Cash and cash equivalents increased to $55.6 million as of April 30, 2011, as compared to $27.8 million as of May 1, 2010, with no long-term debt. Cash provided by operating activities was up $8.8 million compared to the first quarter of fiscal 2010.
• Inventory per square foot at the end of the first quarter 2011 declined 2.9% compared to the first quarter of 2010.

Outlook:

For fiscal 2011, the Company is raising its full year guidance based primarily on first quarter results, and now expects diluted earnings per share to be in the range of $1.50 to $1.54 as compared to $1.21 in fiscal year 2010. This is based on 25.2 million average diluted shares expected for fiscal year 2011 as compared to 25.0 million average diluted shares in fiscal year 2010. For the second quarter, the Company currently expects diluted earnings per share to be in the range of $0.30 to $0.32 as compared to $0.26 in the second quarter of fiscal year 2010. The Company currently expects a low single digit comparable store sales increase in the second quarter of fiscal 2011.

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