· Q1 net income grew 21%
· Strong sales momentum forecast to continue
· EPS guidance raised
· Forward P/E 14
rue21 recently announced its financial results for the first quarter ended April 28, 2012, with net income increasing 21%. Net sales increased 18.9% to $205.6 million from $172.9 million. Comparable store sales for the quarter were up 1.7%, on top of a 5.2% increase for the first quarter of fiscal 2011. Gross margin was 38.8% compared to 38.9% in 2011.
With 809 stores in 46 states, rue21 is a value-oriented retailer offering teenagers a broad assortment of the newest emerging fashion trends in apparel and accessories.
Bob Fisch, rue21's president and CEO, said the company is well positioned to capitalize on the current color and fashion trends in the industry, and he expected the momentum to continue into the second quarter.
The results show a continuation of recent strong sales and earnings growth.
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Based on the improved outlook, the company raised its guidance for the full year EPS to be in the range of $1.76 to $1.81 (from $1.74 to $1.79) and as compared to $1.55 in fiscal 2011. Consensus EPS averaged 1.81 for fiscal year 2013 (5 analysts polled) and 2.07 for 2014 (54 analysts polled).
rue21 looks attractive, with recent EPS growth being consistently above 20% and a good track record for beating forecasts. A weak job market and signs of rising inventories are a concern for retailers but, trading on a historic P/E of 15.5 and forward P/E of 14, rue21 looks cheap.
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Disclosure: The author holds no positions in rue21 nor has any intentions to initiate any in the next 72 hours.