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Rue21's CEO Discusses Q4 2011 Results - Earnings Call Transcript

We achieved our profit goals and we maintained our pricing integrity. This is a theme for rue21 that we will carry forward into 2012 and beyond. We will drive profit growth by running a regular-priced fashion business, offering every day great value, combined with impactful sales on key items. And we will not sacrifice profits for a temporary lift in comp store sales. When you look at our results for 2011 versus the industry in general, it really highlights the strength of our business model.

We opened 120 new stores with excellence and converted 38 existing stores to our larger rue21 etc! format. Above all, we are a square footage growth story, one of the few in the industry. We also have strong relationships with the [indiscernible] spenders and a sourcing model that allowed us to avoid any meaningful merchandise cost increases in 2011, despite the higher labor and raw materials costs, such as cotton and fuel that plagued our industry.

This certainly helped us stay on track and supported our margin goals. And in addition to strong fashion and key item sportswear assortments, we keep growing our etc! business which includes footwear, jewelry, lingerie, accessories and fragrance beauty. As I will discuss shortly, this merchandise diversification and growth strategy will continue to play a very important part of our success going forward.

I know that this may sound like a broken record, but the beauty of our business model is that it produces consistent earnings growth quarter after quarter. We do not have wild swings in profits or huge drops or gains each quarter. Our management team has experience and a long track record together, and we are confident that we will produce predictable results in the future just as we have for many years before we were a public company. We believe shareholders appreciate this type of consistency.

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