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rue21 Inc (NAS:RUE)
Gross Profit
$355.6 Mil (TTM As of Jul. 2013)

rue21 Inc's gross profit for the three months ended in Jul. 2013 was $79.6 Mil. rue21 Inc's gross profit for the trailing twelve months (TTM) ended in Jul. 2013 was $355.6 Mil.

Gross Margin is calculated as gross profit divided by its revenue. rue21 Inc's gross profit for the three months ended in Jul. 2013 was $79.6 Mil. rue21 Inc's revenue for the three months ended in Jul. 2013 was $229.3 Mil. Therefore, rue21 Inc's Gross Margin for the quarter that ended in Jul. 2013 was 34.69%.

rue21 Inc had a gross margin of 34.69% for the quarter that ended in Jul. 2013 => Competition eroding margins


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

rue21 Inc's Gross Profit for the fiscal year that ended in Jan. 2013 is calculated as

Gross Profit (A: Jan. 2013 )=Revenue - Cost of Goods Sold
=901.886 - 556.368
=345.5

rue21 Inc's Gross Profit for the quarter that ended in Jul. 2013 is calculated as

Gross Profit (Q: Jul. 2013 )=Revenue - Cost of Goods Sold
=229.322 - 149.763
=79.6

rue21 Inc Gross Profit for the trailing twelve months (TTM) ended in Jul. 2013 was 85.106 (Oct. 2012 ) + 101.2 (Jan. 2013 ) + 89.699 (Apr. 2013 ) + 79.559 (Jul. 2013 ) = $355.6 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

rue21 Inc's Gross Margin for the quarter that ended in Jul. 2013 is calculated as

Gross Margin (Q: Jul. 2013 )=Gross Profit (Q: Jul. 2013 ) / Revenue (Q: Jul. 2013 )
=(Revenue - Cost of Goods Sold) / Revenue
=79.6 / 229.322
=34.69 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

rue21 Inc had a gross margin of 34.69% for the quarter that ended in Jul. 2013 => Competition eroding margins


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

rue21 Inc Annual Data

Jan08Jan09Jan10Jan11Jan12Jan13
Gross_Profit 0.00.00.00.0101.9133.6187.9234.8286.6345.5

rue21 Inc Quarterly Data

Apr11Jul11Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13
Gross_Profit 67.267.671.480.479.779.585.1101.289.779.6
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