~ Comparable Store Sales Increased 1.8%
~
~ Omni-Channel Drives Significant eCommerce
Growth ~
~ Introduces Q2 Guidance with Comparable
Store Sales Increase and Earnings Growth ~
New York & Company, Inc. (NYSE:NWY), a specialty
apparel chain with 504 retail stores, today announced results for
the first quarter ended May 2, 2015.
Gregory Scott, New York & Company’s CEO, stated: “We were
pleased to continue to gain traction on our key initiatives
delivering increases in top line sales, positive comparable store
sales and expansion of our gross margins. While incremental
investments impacted profitability for the quarter, we expect to be
profitable in the second quarter bringing us to approximately
breakeven for the first half of the year, on a non-GAAP basis. We
continue to see benefits from our initiatives which led to our
fourth consecutive quarter of increased traffic and the expansion
of our omni-channel capabilities giving us positive momentum as we
enter the second quarter. ”
First Quarter Fiscal Year 2015 Results: (13-weeks ended May
2, 2015 compared to the 13-weeks ended May 3, 2014)
- Net sales were $223.4 million, as
compared to $219.6 million in the prior year.
- Comparable store sales
increased 1.8%, following a decrease of 2.2% for the same
period last year.
- Gross profit as a percentage of net
sales increased 50 basis points versus the fiscal 2014 first
quarter.
- Selling, general and administrative
expenses were $68.5 million, as compared to $62.1 million in the
prior year period. Included in fiscal 2015 first quarter are $2.9
million of non-operating charges related primarily to the Company’s
business process re-engineering project, and $2.1 million of
increased marketing expenses, which are unique to the quarter and
relate to a testing agenda to drive traffic, increase brand
awareness and improve sales. In addition, on an ongoing basis, rent
and depreciation expense has increased by $1.3 million related to
the Company’s new corporate headquarters, and the Company has also
experienced increases in variable distribution expenses associated
with its growing eCommerce business, which were offset by the
savings recognized as a result of the Company’s organizational
realignment initiated in the third quarter of fiscal year
2014.
- GAAP operating loss was $4.2 million,
as compared to the prior year’s first quarter GAAP breakeven
operating income. On a non-GAAP basis, excluding $2.9 million of
non-operating charges, adjusted operating loss was $1.4
million.
- GAAP net loss for the first quarter of
fiscal year 2015 was $4.7 million, or a loss of $0.07 per diluted
share. This compares to the prior year’s GAAP net loss of $0.3
million, or breakeven per diluted share. On a non-GAAP basis, the
Company’s adjusted net loss was $1.8 million, or a loss of $0.03
per diluted share.Please refer to the “Reconciliation of GAAP to
Non-GAAP Financial Measures” in Exhibit 4 of this press release,
which delineates the non-operating charges for the first quarter of
fiscal year 2015. There were no non-operating charges recorded
during the first quarter of fiscal year 2014.
- Total quarter-end inventory increased
8.0%, as compared to the end of last year’s first quarter, which
was slightly below the Company’s previously issued guidance on
March 19, 2015.
- Capital spending for the first quarter
of fiscal year 2015 was $6.7 million, as compared to $4.6 million
in last year’s first quarter, primarily reflecting continued
investments in the Company’s information technology infrastructure,
including its omni-channel retail strategy, and the opening of new
stores. The decrease in capital spending during the first quarter
of fiscal year 2015, compared to the Company’s previously issued
guidance, is primarily due to cost savings and modifications to the
timing of the build-out of the Company’s new corporate headquarters
and information technology projects.
- The Company opened 2 New York &
Company stores, 3 Outlet stores, closed 5 stores, converted 9 New
York & Company locations to Outlet stores, and remodeled 2 New
York & Company stores during the first quarter, ending the
fiscal quarter with 504 stores, including 74 Outlet stores, and 2.6
million selling square feet in operation.
- The Company ended the quarter with
$48.4 million of cash-on-hand and no outstanding borrowings under
its revolving credit facility, as compared to $47.5 million of
cash-on-hand at the end of last year’s first quarter.
Outlook:
Regarding expectations for the second quarter of fiscal year
2015, the Company is providing the following guidance:
- Net sales and comparable store sales
are expected to increase by a low single-digit percentage versus
last year.
- Gross margin is expected to increase by
100-200 basis points from the prior year’s second quarter rate
reflecting improved product costs and improved leverage of buying
and occupancy costs, partially offset by increased shipping costs
associated with the growing omni-channel business.
- Selling, general and administrative
expenses are expected to be up approximately $5 million from last
year reflecting non-operating charges of approximately $1 million,
which are primarily comprised of consulting related expenses due to
the continuation of the business process re-engineering project.
The increase in selling, general and administrative expenses
reflects investments in marketing, anticipated increases in
performance-based compensation accruals as compared to last year,
increased rent expense for the Company’s new corporate headquarters
and higher depreciation resulting from the increase in information
technology investments, partially offset by savings recognized as a
result of the Company’s organizational realignment. Selling,
general and administrative expenses are expected to normalize
during the second half of the year.
- On a non-GAAP basis, excluding the
non-operating charges of $1 million, adjusted operating income is
expected to be between $1 million and $2 million, reflecting an
improvement from the prior year’s breakeven operating income.
Additional Outlook:
- The Company continues to work on the
final phases of its business process re-engineering project, which
it now expects to generate $20 million to $25 million in annualized
savings once fully implemented. These savings began during the
first quarter of fiscal 2015 and are expected to build throughout
the second half of the fiscal year with the full implementation
completed during fiscal 2016. The expected savings are anticipated
to result in improvements in product cost and reductions of buying
expenses, which are components of gross margin, as well as
reductions in selling, general and administrative expenses;
however, a portion of these savings are expected to be reinvested
to fund growth and will be partially offset by the rent increase
for the new corporate headquarters.
- Total inventory is expected to increase
in the high single-digit range due to the acceleration of certain
deliveries in the current year, as compared to the prior year which
reflected late deliveries resulting from West Coast port delays. In
addition to the changes in the timing of certain receipts, the
Company is expected to increase inventory to support its growing
eCommerce business and the Eva Mendes Collection.
- Capital expenditures for the second
quarter of fiscal year 2015 are projected to be between $8 million
and $10 million, as compared to $6.2 million of capital
expenditures in the second quarter of last year. The increase
includes the carryforward of $4.1 million in capital spending
originally planned to be spent in 2014, which when combined with
planned 2015 expenditures, results in the following:
- Real Estate capital expenditures of $4
million to $5 million primarily related to the opening of new
stores and the remodeling existing locations;
- Investments of $3 million to $4 million
in information technology and eCommerce; and
- Capital expenditures of approximately
$1 million related to the Company’s build-out of its new corporate
headquarters.
- Depreciation expense for the second
quarter of fiscal year 2015 is estimated at $7 million.
- During the second quarter of fiscal
year 2015, the Company expects to open approximately 2 new Outlet
Stores, remodel 4 existing locations, and close 3 stores, ending
the quarter with 503 stores, including 76 Outlet stores and 2.6
million selling square feet. Capital spending for the full year
2015 is now estimated to be between $26 million and $28
million.
Conference Call Information
A conference call to discuss first quarter of fiscal year
2015 results is scheduled for today, Thursday, May 21, 2015 at
4:30 p.m. Eastern Time. Investors and analysts interested in
participating in the call are invited to dial (888) 572-7033 and
reference conference ID number 2502756 approximately ten minutes
prior to the start of the call. The conference call will also be
web-cast live at www.nyandcompany.com. A replay of this call will
be available at 7:30 p.m. Eastern Time on May 21, 2015, until 11:59
p.m. Eastern Time on May 28, 2015 and can be accessed by dialing
(877) 870-5176 and entering conference ID number 2502756.
About New York & Company
New York & Company, Inc. is a specialty retailer of women's
fashion apparel and accessories, and the modern wear-to-work
destination for women, providing perfectly fitting pants and NY
Style that is feminine, polished, on-trend and versatile – all at
compelling values. The Company's proprietary branded New York &
Company® merchandise is sold exclusively through its national
network of retail stores and online at www.nyandcompany.com. The
Company operates 504 stores in 43 states. Additionally, certain
product, press release and SEC filing information concerning the
Company are available at the Company's website:
www.nyandcompany.com.
Forward-looking Statements
This press release contains certain forward looking statements,
including statements made under “Outlook” and “Additional Outlook,”
within the meaning of the safe harbor provisions of the United
States Private Securities Litigation Reform Act of 1995. Some of
these statements can be identified by terms and phrases such as
“expect,” “anticipate,” “believe,” “intend,” “estimate,”
“continue,” “could,” “may,” “plan,” “project,” “predict,” and
similar expressions and references to assumptions that the Company
believes are reasonable and relate to its future prospects,
developments and business strategies. Such statements are subject
to various risks and uncertainties that could cause actual results
to differ materially. These include, but are not limited to: (i)
the impact of general economic conditions and their effect on
consumer confidence and spending patterns; (ii) changes in the cost
of raw materials, distribution services or labor; (iii) the
potential for current economic conditions to negatively impact the
Company's merchandise vendors and their ability to deliver
products; (iv) the Company’s ability to open and operate stores
successfully; (v) seasonal fluctuations in the Company’s business;
(vi) the Company’s ability to anticipate and respond to fashion
trends; (vii) the Company’s dependence on mall traffic for its
sales; (viii) competition in the Company’s market, including
promotional and pricing competition; (ix) the Company’s ability to
retain, recruit and train key personnel; (x) the Company’s reliance
on third parties to manage some aspects of its business; (xi) the
Company’s reliance on foreign sources of production; (xii) the
Company’s ability to protect its trademarks and other intellectual
property rights; (xiii) the Company’s ability to maintain, and its
reliance on, its information technology infrastructure; (xiv) the
effects of government regulation; (xv) the control of the Company
by its sponsors and any potential change of ownership of those
sponsors; and (xvi) other risks and uncertainties as described in
the Company’s documents filed with the SEC, including its most
recent Annual Report on Form 10-K and subsequent Quarterly Reports
on Form 10-Q. The Company undertakes no obligation to revise the
forward looking statements included in this press release to
reflect any future events or circumstances.
Exhibit (1)
New York & Company, Inc. and
Subsidiaries
Condensed Consolidated Statements of
Operations
(Unaudited)
(Amounts in thousands, except per share amounts)
Three monthsended
May 2, 2015
%ofnetsales Three
monthsended
May 3, 2014
%ofnetsales Net sales $ 223,390 100.0 %
$ 219,593 100.0 % Cost of goods sold, buying and occupancy
costs 159,143 71.2 % 157,389 71.7 % Gross profit 64,247 28.8
% 62,204 28.3 % Selling, general and administrative expenses
68,492 30.7 % 62,143 28.3 % Operating (loss) income (4,245)
(1.9) % 61 — % Interest expense, net of interest income 289
0.1 % 84 — % Loss before income taxes (4,534) (2.0) % (23) —
% Provision for income taxes 137 0.1 % 259 0.1 % Net
loss $ (4,671) (2.1) % $ (282) (0.1) % Basic loss per
share $ (0.07) $ (0.00) Diluted loss per share $ (0.07) $
(0.00) Weighted average shares outstanding: Basic shares of
common stock 62,983 62,638 Diluted shares of common stock 62,983
62,638
Selected operating data: (Dollars in
thousands, except square foot data) Comparable store sales
increase (decrease) 1.8 % (2.2) % Net sales per average selling
square foot (a) $ 86 $ 83 Net sales per average store (b) $ 443 $
433 Average selling square footage per store (c) 5,155 5,193 Ending
store count 504 506
(a)
Net sales per average selling square foot
is defined as net sales divided by the average of beginning and end
of period selling square feet.
(b)
Net sales per average store is defined as
net sales divided by the average of beginning and end of period
number of stores.
(c)
Average selling square footage per store
is defined as end of period selling square feet divided by end of
period number of stores.
Exhibit (2)
New York & Company, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(Amounts in thousands) May 2, 2015 January
31, 2015 May 3, 2014 (Unaudited) (Audited)
(Unaudited) Assets Current assets: Cash and cash
equivalents $ 48,407 $ 69,293 $ 47,486 Restricted cash 1,509 1,509
— Accounts receivable 16,051 7,406 13,581 Income taxes receivable
73 99 99 Inventories, net 100,648 93,791 93,162 Prepaid expenses
19,991 20,581 21,059 Other current assets 1,277 1,121 1,237 Total
current assets 187,956 193,800 176,624 Property and
equipment, net 84,703 84,374 80,871 Intangible assets 14,879 14,879
14,879 Deferred income taxes 6,469 6,660 6,774 Other assets 2,259
2,167 1,034 Total assets $ 296,266 $ 301,880 $ 280,182
Liabilities and stockholders’ equity Current liabilities:
Current portion—long-term debt $ 1,000 $ 1,000 $ — Accounts payable
82,141 86,481 72,686 Accrued expenses 54,776 52,418 42,704 Income
taxes payable 737 710 648 Deferred income taxes 6,469 6,660 6,774
Total current liabilities 145,123 147,269 122,812 Long-term
debt, net of current portion 13,500 13,750 — Deferred rent 35,876
35,169 37,946 Other liabilities 6,306 6,333 5,169 Total liabilities
200,805 202,521 165,927 Total stockholders’ equity 95,461
99,359 114,255 Total liabilities and stockholders’ equity $ 296,266
$ 301,880 $ 280,182
Exhibit (3)
New York & Company, Inc.
and Subsidiaries
Condensed Consolidated Statements of
Cash Flows
(Amounts in thousands)
Three months
ended
May 2, 2015
Three months ended
May 3, 2014
(Unaudited) (Unaudited) Operating activities
Net loss $ (4,671) $ (282) Adjustments to reconcile net loss
to net cash used in operating activities: Depreciation and
amortization 6,373 6,896 Loss from impairment charges — 358
Amortization of deferred financing costs 45 30 Share-based
compensation expense 943 1,266 Changes in operating assets and
liabilities: Accounts receivable (8,645) (6,555) Income taxes
receivable 26 — Inventories, net (6,857) (9,683) Prepaid expenses
590 82 Accounts payable (4,340) (3,188) Accrued expenses 2,358
(4,176) Income taxes payable 27 (427) Deferred rent 707 (1,979)
Other assets and liabilities (158) (18) Net cash used
in operating activities (13,602) (17,676)
Investing activities Capital expenditures (6,700)
(4,571) Net cash used in investing activities
(6,700) (4,571)
Financing
activities Repayment of long-term debt (250) — Proceeds from
exercise of stock options 16 128 Shares withheld for payment of
employee payroll taxes (247) (118) Principal payments on capital
lease obligation (103) — Net cash (used in) provided
by financing activities (584) 10 Net decrease
in cash and cash equivalents (20,886) (22,237) Cash and cash
equivalents at beginning of period 69,293 69,723 Cash
and cash equivalents at end of period $ 48,407 $ 47,486
Exhibit (4)
New York & Company, Inc. and
SubsidiariesReconciliation of GAAP to Non-GAAP Financial
Measures(Unaudited)
A reconciliation of the Company’s GAAP to non-GAAP selling,
general, and administrative expenses, operating loss, net loss and
loss per diluted share for the three months ended May 2, 2015 is
indicated below. This information reflects, on a non-GAAP basis,
the Company’s adjusted operating results after excluding certain
non-operating charges consisting primarily of consulting fees
incurred in connection with a business re-engineering program which
was initiated during the third quarter of fiscal year 2014 and
certain severance expenses. This non-GAAP financial information is
provided to enhance the user’s overall understanding of the
Company’s current financial performance. Specifically, the Company
believes the non-GAAP adjusted results provide useful information
to both management and investors by excluding expenses that the
Company believes are not indicative of the Company’s continuing
operating results. The non-GAAP financial information should be
considered in addition to, not as a substitute for or as being
superior to, measures of financial performance prepared in
accordance with GAAP. There were no non-operating charges recorded
during the first quarter of fiscal year 2014.
Three months ended May 2, 2015
Selling, general
and Loss per
administrative Operating diluted
(Amounts in thousands, except per share
amounts)
expenses loss Net loss share
GAAP as reported $ 68,492 $ (4,245 ) $ (4,671 ) $ (0.07 )
Adjustments
affecting comparability
Consulting expense 2,456 2,456 2,456 Severance expense 724 724 724
Reduction of BHQ moving expenses (313 ) (313 )
(313 ) Total adjustments (1) 2,867
2,867 2,867 0.04
Non-GAAP as adjusted
$ 65,625 $ (1,378 ) $ (1,804 ) $ (0.03 )
(1) The tax effect of $2.9 million of expenses, during the three
months ended May 2, 2015, is offset by a full valuation allowance
against deferred tax assets.
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version on businesswire.com: http://www.businesswire.com/news/home/20150521006404/en/
Investors/Media:ICR, Inc.Allison Malkin203-682-8200
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