Rue 21 2012 Annual Report Download - page 9

Download and view the complete annual report

Please find page 9 of the 2012 Rue 21 annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 76

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76

Our Business Strategy
We pursue a three-pronged business strategy that focuses on diversification and growth. The key elements of
our strategy are:
•Diversified Product — girls, guys, and rue21 etc! We offer a broad range of girls and guys apparel and
accessories, including footwear, jewelry and fragrances.
•Flexible Real Estate — strip centers, regional malls, and outlet centers. As of February 2, 2013
approximately 51% of our 877 stores were located in strip centers, 36% in regional malls and 13% in outlet
centers. With low store build-out costs, competitive lease terms and a low-cost operating model, our stores
generate a consistently strong return on investment in all three types of shopping centers.
•Balanced Sales Growth — new stores and comparable store sales. We drive sales growth through opening
new stores, and increasing our comparable store sales. In fiscal year 2012, we opened 125 new stores. Our
new stores ramp up to full maturity quickly and are generally profitable in the first year of operations.
We believe our business strategy presents us with significant opportunities to increase net sales and net income,
and we continue to invest capital to build the infrastructure necessary to support our growth. This includes
investments in systems designed to drive sales and improve merchandise margins and new in-store technology that
will allow us to streamline tasks and optimize customer service. We are also making significant investments to
construct our e-commerce platform for future online sales. Strategies that we believe will continue to generate
earnings growth for the Company include the opportunity to:
•Increase Square Footage. We intend to drive our square footage growth by opening new stores. Following a
disciplined real estate strategy, we have increased our geographic presence by opening 125 new retail stores
in fiscal year 2012. We operated 877 locations as of February 2, 2013, and believe there is significant
opportunity to expand to 1,700 stores. Most of our new stores will be opened in strip centers and regional
malls in small and middle market communities where there are few competitors offering fashion
merchandise with a similar shopping experience to ours.
•Drive Comparable Store Sales. We seek to maximize our comparable store sales by continuing to expand the
depth of our fashion offerings, adding impact with strong point-of-sale events in key volume sales
categories, and growing our high margin accessories categories. We believe marketing and operational
initiatives will also increase our brand loyalty, and our efforts to streamline our in-store processes and reduce
tasks will give our associates the ability to focus on providing superior customer service, resulting in
increased transactions. The Company plans to continue to reach our customers through social media
channels and by executing our successful bounce back coupon programs, which we believe will drive repeat
business and grow sales.
•Improve Profit Margins. We believe we have the opportunity to continue to drive margin expansion through
scale efficiencies, implementation of technology and business processes, continued cost discipline and
changes in merchandise mix. We believe our strong expected store growth will permit us to take advantage
of economies of scale in sourcing and to leverage our existing infrastructure, corporate overhead and fixed
costs. We are focused on increasing efficiencies in our supply chain and distribution systems to achieve
better product flow. We believe the expansion of our higher margin categories, such as accessories and
footwear, will increase our overall margins over time.
•E-commerce. The Company is actively engaged in the planning, design and construction of our e-commerce
business. Our e-commerce web site will allow our customers the ability to shop online for many of the same
products available in our store locations. We believe this is an opportunity to further enhance our customer
connection, our store experience, and awareness for our products. E-commerce will begin the next phase of
our brand development and will provide future growth opportunities.
Our Stores
As of February 2, 2013, we operated 877 stores in 47 states throughout the United States. Our stores are located
in strip centers, regional malls and outlet centers.
5