Rue21 has refinanced to increase liquidity, lower its cost of capital and accelerate growth initiatives.
The Warrendale, Pa.-based specialty retailer also said Wednesday it plans to open 15 stores next year.
The amended asset-based credit facility, led by Bank of America N.A., will increase availability to $155 million and is due 2025. The amendment includes an increase to the FILO (first in, last out) loan through a partnership with Bank of America and Tiger Finance.
The company said its total liquidity exceeds $100 million.
“Today is an exciting day as we’ve accomplished our goal of putting Rue21 on a secure financial footing in the most unprecedented of times,” said Michele Pascoe, chief financial officer.
In more than 670 stores in 45 states and a website, Rue21 sells “trend right,” affordable private-label fashion to men and women ages 15 to 25. Among the key items, girls sweaters, priced $26.99, and $29.99 in plus sizes, as well as guy’s hoodies, priced $34.99, and joggers, $24.99. Jeans and jeggings are priced in the $25 to $40 range.
Executives said Wednesday Rue21’s business is “significantly outperforming” apparel market trends, which are generally weak.
Among its initiatives, the company recently launched a loyalty rewards program, which has more than 2.8 million members. Three brick-and-mortar stores were opened in the fall, and former HSN president Bill Brand became chief executive officer.
The retailer has been extending its size range. At the beginning of this year a “dedicated merchant team” for plus sizes was formed and the West Coast buying office in the Los Angeles Fashion District was tripled in size to accommodate the expansion of the business. The retailer also bolstered its team for plus sizes from three merchants to eight.
The digital side is underdeveloped and seen as an opportunity for growth and investment. It is believed that digital represents less than 10 percent of the retailer’s total volume, which in 2029 approximated $700 million. There is also an opportunity to raise the profile of the business.
Brand on Wednesday said the refinancing puts the company “in the enviable position of investing in building the Rue21 brand, new digital capabilities and opening more new stores.”
Added Pascoe: “Bank of America and Tiger Finance will help provide Rue21 with the working capital capacity to support our growth objectives.…In addition, our reduced debt load signals our financial strength to vendor and landlord partners.”
There’s something resilient about Rue21, having survived two bankruptcies and the pandemic. Apax Partners bought the company out of its first bankruptcy for $1.1 billion, put $800 million in debt on the books, and sold the business to hedge funds BlueMountain Capital Management, Southpaw Asset Management and Pentwater Capital Management in September 2017 to get the company out of its second bankruptcy.