Rue 21 2010 Annual Report Download - page 16

Although large value retailers, including Walmart, Target and Kohl’s, sell merchandise at comparable price points,
our store format and in-store shopping experience is distinctive, with an exciting and inviting atmosphere offering
trend-right fashions and our exclusive brands. Large value retailers may only have a small part of their store and
total product selection dedicated to apparel and accessories. Department stores, including Dillard’s and JC Penney,
or other junior retailers may be located in regional malls or outlet centers in small to middle markets; however we
believe that we have been successful competing in these markets against all types of competition based on our
product assortment, exclusive brands, ability to respond to changing trends, and our distinctive combination of
fashion and value. Although we feel we have many competitive strengths, we recognize that we face some
competitive challenges in small to middle markets, including the fact that large value retailers, department stores
and some junior retail stores have substantially greater name recognition, as well as financial, marketing, and other
resources, and devote greater resources to the marketing and sale of their products than we do. We believe that we
benefit from the traffic that large value retailers generate in a shopping center, and often seek to place ourselves in
close proximity to large value retailers.
The junior and young men’s specialty apparel landscape is highly competitive in large markets, which we
define as communities with populations in excess of 200,000 people. We believe we are able to operate successfully
in these markets given our distinctive combination of fashion and value. In large markets, we tend to position
ourselves adjacent to other value retailers in strip centers or outlet centers, providing the possibility of significant
customer traffic and increased potential for sales.
Intellectual Property
We have registered numerous trademarks, trade names and logos with the United States Patent and Trademark
Office, including rue21 and rue21 etc!, Carbon, Carbon Black, the CJ logo design, rue Kicks and tarea by rue21. We
also own trademark registrations for the names of our fragrances, including rue by rue21, revert eco rue21, CJ Black
rue21, sparkle rue21, Metro Black rue21, Pink Ice by rue21, Carbon elements and twentyone black. These
trademarks are renewable indefinitely, as long as they are still in use and their registrations are properly maintained.
We believe that the recognition associated with these trademarks makes them extremely valuable and, therefore, we
intend to use and renew our trademarks in accordance with our business plans. In addition we own domain names,
including www.rue21.com, for our primary trademarks and own unregistered copyright rights in our website
content. We also rely on a variety of intellectual property rights that we license from third parties. We expect to
continually grow our merchandise assortment and strengthen our brands, and we will continue to file new
applications as appropriate to protect our intellectual property rights.
Regulation and Legislation
We are subject to labor and employment laws, laws governing advertising and promotions, privacy laws, safety
regulations and other laws, including consumer protection regulations that regulate retailers and/or govern the
promotion and sale of merchandise and the operation of stores and warehouse facilities. We monitor changes in
these laws and believe that we are in material compliance with applicable laws.
Insurance
We use a combination of insurance and self-insurance to protect ourselves against risks inherent in our
business, including workers’ compensation, general liability, automobile liability, and employee-related health care
benefits, a portion of which is paid by the employees. We believe that we have adequately reserved for our self-
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