Stock Repurchase Plan

During the second quarter of fiscal 2012, the Company repurchased 1,142,464 shares of common stock for a total of $13.4 million, or an average price of $11.74 per share, which completed the Company’s repurchase plan. Since the inception of the plan in August 2011, the Company repurchased 3,394,693 shares for a total of $40 million, at an average price of $11.78.

Updated Fiscal 2012 Performance Goals

Store Growth:
For the 53-week period ending February 2, 2013 (“fiscal 2012”), the Company expects to open 40 to 44 new stores and close approximately 30 stores. This expected unit growth of approximately 4% would represent an increase in company-wide square footage of approximately 9%.
 

Sales:
The Company expects total sales for fiscal 2012 to increase in the range of 4% to 6% compared with fiscal 2011. This expectation for total sales growth reflects the additional week in the retail calendar for Fiscal 2012. This level of sales growth would imply a comparable store sales decrease in the low single digit range, excluding the impact of the additional week of sales.
 

Margins:
Based on the current outlook, the Company expects operating margin in fiscal 2012 to be 200 to 250 basis points below fiscal 2011 due to expected increases in container rates in the second half of the year combined with a continued promotional environment, as well as investments in additional personnel in key areas of the business to support the Company’s growth plans and technology investments.
 

Earnings:
Based on the above assumptions, the Company expects earnings per share for fiscal 2012 to be in the range of $0.72 to $0.82. The Company expects its effective tax rate for fiscal 2012 to range between 38% and 38.5%.
 

Cash Flow:
Excluding activity under the Company’s share repurchase program, the Company expects to again generate positive cash flow in fiscal 2012. Capital expenditures in fiscal 2012 are estimated to range between $29 million and $32 million.
 

Third Quarter Fiscal 2012 Outlook

For the third quarter ending October 27, 2012, the Company expects a net loss of $0.03 to $0.07 per diluted share compared with net income of $0.06 per share in the prior-year quarter. Net sales are expected to be $97 million to $99 million, with comparable store sales down 3% to 5%. The Company expects to open approximately 14 to 16 stores and close approximately 4 stores during the quarter.

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