Rue 21 2012 Annual Report Download - page 16

We experience fluctuations in our comparable store sales.
Our success depends in part on our ability to improve sales. A variety of factors affect comparable store sales,
including fashion trends, competition, current economic conditions, the timing of new merchandise releases and
promotional events, changes in our merchandise mix, timing and location in the opening of stores, and weather
conditions. These factors may cause our comparable store sales results to differ materially from prior periods and
from expectations. Our comparable store sales have fluctuated in the past on an annual, quarterly, and monthly
basis. Failure to meet the expectations of investors or securities analysts in one or more future periods could reduce
the market price of our common stock.
Our business is sensitive to global, national and regional consumer spending and economic conditions.
Consumer purchases of discretionary retail items and specialty retail products, including our products, may be
affected by economic conditions such as employment levels, salary and wage levels, the availability of consumer
credit, inflation, high interest rates, high tax rates, high fuel prices and consumer confidence in future economic
conditions. Purchases of fashion apparel, beauty products and accessories often decline during periods when
economic or market conditions are unsettled or weak. In such circumstances, we may increase the number of
promotional sales, which could have a material adverse effect on our results of operations, financial condition and
cash flows.
Continued challenging macroeconomic conditions and rising raw material costs could negatively impact our
vendors, which, in turn, could have an adverse impact on our business. Some of our vendors are small and
specialized with limited resources, production capacities and operating histories. Rising costs of raw materials, fuel,
or labor shortages could cause our vendors to slow or cease shipments or require or condition their sale of
merchandise on more stringent payment terms, which could result in lost sales, cancellation charges, or excessive
markdowns.
Our failure to protect our reputation could have a material adverse effect on our brand image.
Our ability to maintain our reputation is critical to our brand image and any negative publicity may reduce
demand for our merchandise. If we or our business partners fail to comply with local laws or regulations, ethical,
social, product, labor and environmental standards it could jeopardize our reputation and potentially lead to various
adverse consumer actions or loss of business. Damage to our reputation or loss of consumer confidence for any
reason could have a material adverse effect on our competitive position, results of operations, financial condition
and cash flows, as well as require additional resources to rebuild our reputation.
We could face increased competition from other retailers that could adversely affect us and our growth
strategy.
The specialty retail industry is highly competitive. We compete for sales with a broad range of other retailers,
including individual and chain specialty stores, department stores and discount retailers. In addition to the traditional
store-based retailers, we also compete with direct marketers or retailers that sell similar lines of merchandise online
and who target customers through the internet. Brand image, marketing, design, price, service, quality, image
presentation and fulfillment are all competitive factors in both the store-based and internet channels.
Many of our competitors have substantially greater name recognition as well as financial, marketing and other
resources and therefore may be able to adapt to changes in customer preferences more quickly, devote greater
resources to marketing and sale of their products, generate national brand recognition or adopt more aggressive
pricing policies than we can. Many of our competitors also utilize traditional forms of advertising and marketing
media which we do not, including advertising through use of newspapers, magazines, billboards, television and
radio, which may provide them with greater brand recognition than we have.
Our competitors may also sell certain products or substantially similar products through the internet or through
outlet centers or discount stores, increasing the competitive pricing pressure for those products. We cannot assure
you that we will continue to be able to compete successfully against existing or future competitors. Our expansion
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