Rue 21 2010 Annual Report Download - page 9

Our Competitive Strengths
We attribute our success as a specialty apparel retailer to the following competitive strengths:
•Compelling “fashion meets value” proposition. We offer the newest fashion to girls and guys at prices
lower than many other similar apparel retailers. Our broad product assortment, ranging from apparel to
accessories to footwear, enables our customers to create a complete look. In addition, we provide our
customers with a distinctive shopping experience in a fun-to-shop environment, further enhancing our
branded value proposition.
•Flexible, fast-fashion business model. Our merchandising model allows us to quickly identify and respond
to trends and bring proven concepts and styles to our stores. Our sourcing model is designed to achieve lower
cost, faster turnaround and lower inventory levels. Our vendor network consists of domestic importers and
domestic suppliers. Our collaborative relationship with our vendors allows us to test small quantities of new
products in select stores before broadly distributing them to our stores which, in turn, reduces markdown
risk. By carrying the newest styles and regularly updating our floor sets, we provide our customers with a
reason to frequently shop our stores.
•Attractive new store economics. We operate a proven and efficient store model that delivers strong cash
flow. Not only do our stores provide a distinctive shopping experience and compelling merchandise
assortment, but with low store build-out costs, competitive lease terms and a low-cost operating model, our
stores also generate a strong return on store investment. All of our new stores feature our rue21 etc!
store-in-store layout, showcasing an expanded accessories offering.
•Distinct company and customer culture. We have a strong core culture that emanates from our employees,
many of whom are high school and college students who live in the community and are rue21 customers.
Through our viral marketing efforts and the support of our online rueCommunity, we bring the rue21 culture
to our customer base. We believe our culture enables us to connect to our employees and customers,
differentiate our in-store shopping experience and ultimately strengthen our brand image and drive customer
loyalty.
•Strong and experienced management team. Our senior management team has extensive experience across
a broad range of disciplines in the specialty retail industry, including merchandising, real estate, supply
chain and finance. Bob Fisch, our President and Chief Executive Officer, has more than 30 years of
experience in the apparel industry. Since being named President and Chief Executive Officer, the company
has experienced consistent growth in net sales and income from operations.
Our Growth Strategy
We believe we are positioned to take advantage of significant opportunities to increase net sales and net
income. We continue to invest significant capital to build the infrastructure necessary to support our growth. This
includes investments in new planning and allocation systems designed to drive sales and improve merchandise
margins, as well as the continued implementation of supply chain initiatives that will increase our ability to
efficiently distribute merchandise to our stores. Key elements of our growth strategy include:
•Increase Square Footage. We intend to drive our square footage growth by opening new stores and
converting existing stores to our larger rue21 etc! layout. Following a disciplined real estate strategy, we
have increased our geographic presence by opening 105 new retail stores in fiscal 2010. We operated 638
locations as of January 29, 2011, and believe there is significant opportunity to expand to over 1,000 stores.
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