Rue 21 2012 Annual Report Download - page 32

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Selling, General and Administrative Expense
Selling, general and administrative expense includes administration, stock-based compensation and store
expenses but excludes store occupancy costs and freight to stores. These expenses do not generally vary
proportionally with net sales. As a result, selling, general and administrative expense as a percentage of net sales is
usually higher in lower volume quarters and lower in higher volume quarters. The components of our selling,
general and administrative expense may not be comparable to those of other retailers. Selling, general and
administrative expense has increased significantly due to an increase in new store growth. Store count has increased
approximately 64% to 877 stores from 535 stores since the beginning of fiscal year 2010.
Known Trends and Uncertainties
We are currently finalizing an amendment and restatement of our senior secured credit facility with Bank of
America, due to mature on April 10, 2013. We expect that the facility, as amended and restated, will be a five-year
$100 million senior secured revolving credit facility which is further expandable at our option in increments of
$10 million up to a maximum of $130 million under certain defined conditions. As working capital has historically
been the means by which the Company meets its material capital expenditure requirements, we anticipate that our
cash position and net cash provided by operating activities will be sufficient to finance working capital needs and
planned capital expenditures for at least the next twelve months even if we are unable to secure additional
availability under the senior secured credit facility through the proposed amendment or if the senior secured credit
facility matures according to its terms.
Results of Operations
The following tables summarize key components of our consolidated results of operations for the periods
indicated, both in dollars and as a percentage of net sales:
Fiscal Year Ended
February 2,
2013(1)
January 28,
2012
January 29,
2011
(in thousands, except operating data)
Net Sales ............................................ $901,886 $760,302 $634,728
Cost of goods sold ..................................... 556,368 473,662 399,896
Gross profit .......................................... 345,518 286,640 234,832
Selling, general and administrative expenses ................ 244,096 197,176 163,006
Depreciation and amortization expense ..................... 32,961 26,618 21,980
Income from operations ................................. 68,461 62,846 49,846
Interest (Income) expense, net ............................ (27) (9) 74
Income before income taxes ............................. 68,488 62,855 49,772
Provision for income taxes .............................. 24,587 23,905 19,528
Net income ........................................... $ 43,901 $ 38,950 $ 30,244
Operating Data (unaudited)
Number of stores open at the end of the period ............... 877 755 638
Gross square feet at the end of the period (in thousands) ....... 4,347 3,708 2,989
Comparable store sales change(2) ......................... 0.7% 0.4% 2.1%
28