~ Comparable Store Sales Increased 3.8% and
Total Sales Increased 4.3%~
~ Adjusted Operating Income Exceeds High End
of Previous Guidance ~
~ Introduces Q3 Guidance with Comparable
Store Sales Increase and Improved Operating Results ~
New York & Company, Inc. (NYSE:NWY), a specialty
apparel chain with 504 retail stores, today announced results for
the second quarter ended August 1, 2015.
Gregory Scott, New York & Company’s CEO, stated: “We are
very pleased with our second quarter performance, in which we
increased sales, drove positive comparable store sales and expanded
gross margin, leading to a $2.3 million increase in adjusted
operating income versus the second quarter last year and exceeded
our guidance. Our 3.8% comparable store sales gains accelerated in
July with the launch of our Jennifer Hudson Soho Jeans Collection
and the overall quarterly results also were driven by the expansion
of our omni-channel capabilities leading to significant growth in
eCommerce and by increased traffic marking our fifth consecutive
quarter of improved traffic growth. We believe this further
validates that our brand marketing and product strategies are
resonating with our core demographic. We also commenced the
implementation of major strategic initiatives that are expected to
drive significant efficiencies and cost savings for our Company
providing us with a stronger platform from which to implement our
growth plans. Finally, we are pleased with our positioning as we
begin the third quarter, and as our guidance reflects, we are
expecting our positive momentum to continue in the Fall.”
Second Quarter Fiscal Year 2015 Results: (13-weeks ended
August 1, 2015 compared to the 13-weeks ended August 2,
2014)
- Net sales were $235.7 million, as
compared to $226.1 million in the prior year.
- Comparable store sales
increased 3.8%, following an increase of 2.3% for the same
period last year and total net sales increased by 4.3%.
- Gross profit as a percentage of net
sales increased 110 basis points versus the fiscal 2014 second
quarter principally due to improved leverage of buying and
occupancy costs.
- Selling, general and administrative
expenses were $66.7 million, as compared to $61.7 million in the
prior year period. Included in fiscal 2015 second quarter are $2.0
million of non-operating charges as the Company continues on its
path of becoming a leaner Company. These non-operating charges are
due to a reduction in headcount in its corporate headquarters
resulting in a severance charge of $0.8 million, consulting fees of
$0.6 million to complete the previously disclosed business
re-engineering project, and $0.6 million of certain legal and
corporate moving expenses.
- Excluding non-operating charges of $2.0
million, non-GAAP selling, general and administrative expenses were
$64.7 million, as compared to $61.7 million in the prior year. This
increase reflects incremental investments in marketing to drive
sales, increases in variable distribution costs associated with the
growing eCommerce business, and increases in rent and depreciation
related to the new corporate headquarters, partially offset by
savings from the organizational realignment initiated in the third
quarter of fiscal 2014. There were no non-operating charges
recorded during the first or second quarters of fiscal year
2014.
- GAAP operating income was $0.4 million,
as compared to the prior year’s second quarter GAAP operating
income of $0.2 million. On a non-GAAP basis, excluding $2.0 million
of non-operating charges, adjusted operating income was $2.5
million, exceeding the high end of the Company’s previously issued
guidance range of $1 million to $2 million.
- GAAP net loss for the second quarter of
fiscal year 2015 was $0.1 million, or $0.00 per diluted share. This
compares to the prior year’s GAAP net loss of $0.1 million, or
$0.00 per diluted share. On a non-GAAP basis, the Company’s second
quarter 2015 adjusted net income was $1.9 million, or $0.03 per
diluted share.Please refer to the “Reconciliation of GAAP to
Non-GAAP Financial Measures” in Exhibit 5 of this press release,
which delineates the non-operating charges for the three and six
months ended August 1, 2015. [GAAP is defined as Generally Accepted
Accounting Principles].
- Total quarter-end inventory increased
1.2%, as compared to the end of last year’s second quarter, which
was below the Company’s previously issued guidance on May 21, 2015.
In-store inventory increased 7.6%, in line with the Company’s prior
expectations.
- Capital spending for the second quarter
of fiscal year 2015 was $7.3 million, as compared to $6.2 million
in last year’s second quarter, primarily reflecting continued
investments in the Company’s information technology infrastructure,
including its omni-channel retail strategy, the opening of new
Outlet stores and the remodeling of existing locations. The
decrease in capital spending during the second quarter of fiscal
year 2015, as compared to the Company’s previously issued guidance,
is primarily due to lower than expected costs related to the
build-out of the new corporate headquarters and a shift in the
timing of certain information technology projects to later this
year.
- The Company opened 2 Outlet stores,
closed 2 stores, and remodeled 4 New York & Company stores
during the second quarter, ending the fiscal quarter with 504
stores, including 76 Outlet stores, and 2.6 million selling square
feet in operation.
- The Company ended the quarter with
$60.1 million of cash-on-hand and no outstanding borrowings under
its revolving credit facility, as compared to $63.2 million of
cash-on-hand at the end of last year’s second quarter.
Outlook:
Regarding expectations for the third 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 to mid-single-digit percentage
versus last year.
- Gross margin is expected to increase in
the range of 100 - 200 basis points from the prior year’s third
quarter rate reflecting improved product costs, reductions in
certain inbound air freight costs incurred in the prior year due to
West Coast port delays, 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 approximately flat to the prior year
period reflecting the elimination of $2.8 million of non-operating
charges incurred in the prior year and anticipated savings in
payroll as a result of the Company’s organizational realignment
offset by increases in the following areas of the Company’s
business: (i) anticipated increases in performance-based
compensation as compared to last year; (ii) increased rent and
depreciation expense related to the Company’s new corporate
headquarters and investments in information technology; and (iii)
increases in variable costs associated with the growing eCommerce
business. On a non-GAAP basis, excluding $2.8 million in
non-operating charges in the prior year, selling, general and
administrative expenses are expected to increase by approximately
$2 million to $3 million due to the aforementioned factors;
however, these expenses are expected to decrease as a percentage of
net sales based upon higher sales.
- Operating results for the third quarter
of fiscal year 2015 are expected to significantly improve versus
the prior year period reflecting a modest loss versus a loss of
$9.5 million in the prior year on a GAAP basis, which included
non-operating charges of $2.8 million. The Company does not
currently expect to incur any non-operating charges in the third
quarter of fiscal year 2015.
- Business
Process Improvement Plan UpdateAs previously announced,
the Company launched a comprehensive business process
re-engineering project in late 2014, referred to as Project
Excellence, to identify strategic initiatives to improve
productivity, increase speed-to-market and enhance profitability.
Following this very careful and thorough evaluation of its
business, the Company has updated its improvement plans and has
identified several additional opportunities to improve its business
operations, and Project Excellence is now expected to reduce future
operating costs by approximately $30 million, up from the Company’s
prior estimate of $20 million to $25 million. These reductions and
efficiencies are the result of the redesign of the Company’s
Go-to-Market process, the reduction of indirect procurement costs,
and an organizational realignment which resulted in a significant
reduction in the Company’s corporate workforce.As previously
disclosed, these reductions began to take effect during the first
quarter of fiscal year 2015 and are expected to build throughout
the second half of the year with the full implementation completed
during the first quarter of fiscal year 2016. The benefits of the
improvement plan are expected to be realized approximately evenly
between cost of sales and selling, general and administrative
expenses, with the cost of sales benefits realized through reduced
product costs and decreases in buying expenses both of which will
improve gross margins. The benefits in selling, general and
administrative expenses are expected to reduce payroll and related
costs and also reduce certain indirect procurement expenses,
largely mitigating anticipated expense increases in other areas of
the Company’s business and investments in growth initiatives to
drive sales.
Additional Outlook:
- Total inventory is expected to increase
in the mid to 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.
- Capital expenditures for the third
quarter of fiscal year 2015 are projected to be between $6 million
and $8 million, as compared to $10.3 million of capital
expenditures in the third quarter of last year. Capital
expenditures are projected to include the following:
- Real Estate capital expenditures of $3
million to $4 million primarily related to the opening of new
stores and the remodeling of existing locations; and
- Investments of $3 million to $4 million
in information technology and eCommerce.
- Depreciation expense for the third
quarter of fiscal year 2015 is estimated to be approximately $6
million.
- During the third quarter of fiscal year
2015, the Company expects to open approximately 2 New York &
Company stores, 3 new Outlet Stores, remodel 2 New York &
Company existing locations, and convert 3 New York & Company
locations to Outlet stores, ending the quarter with 509 stores,
including 82 Outlet stores and 2.6 million selling square feet.
Capital spending for the full year 2015 remains unchanged from
previously issued guidance and is estimated to range from $26
million to $28 million.
Conference Call Information
A conference call to discuss second quarter of fiscal year
2015 results is scheduled for today, Thursday, August 20, 2015
at 4:30 p.m. Eastern Time. Investors and analysts interested
in participating in the call are invited to dial (888) 329-8877 and
reference conference ID number 2567722 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 August 20, 2015, until
11:59 p.m. Eastern Time on August 27, 2015 and can be accessed by
dialing (877) 870-5176 and entering conference ID number
2567722.
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) the Company’s ability to fully recognize the
potential savings identified through Project Excellence; (vi)
seasonal fluctuations in the Company’s business; (vii) the
Company’s ability to anticipate and respond to fashion trends;
(viii) the Company’s dependence on mall traffic for its sales; (ix)
competition in the Company’s market, including promotional and
pricing competition; (x) the Company’s ability to retain, recruit
and train key personnel; (xi) the Company’s reliance on third
parties to manage some aspects of its business; (xii) the Company’s
reliance on foreign sources of production; (xiii) the Company’s
ability to protect its trademarks and other intellectual property
rights; (xiv) the Company’s ability to maintain, and its reliance
on, its information technology infrastructure; (xv) the effects of
government regulation; (xvi) the control of the Company by its
sponsors and any potential change of ownership of those sponsors;
and (xvii) 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 monthsendedAugust
1,2015
%ofnetsales
Three monthsendedAugust
2,2014
%ofnetsales Net sales $ 235,696 100.0 %
$ 226,066 100.0 % Cost of goods sold, buying and occupancy
costs 168,563 71.5 % 164,148 72.6 % Gross profit 67,133 28.5
% 61,918 27.4 % Selling, general and administrative expenses
66,698 28.3 % 61,738 27.3 % Operating income 435 0.2 % 180
0.1 % Interest expense, net of interest income 309 0.2 % 85
— % Income before income taxes 126 — % 95 0.1 %
Provision for income taxes 272 0.1 % 242 0.2 % Net loss $
(146) (0.1) % $ (147) (0.1) % Basic loss per share $
(0.00) $ (0.00) Diluted loss per share $ (0.00) $ (0.00)
Weighted average shares outstanding: Basic shares of common
stock 63,174 62,819 Diluted shares of common stock 63,174 62,819
Selected operating data: (Dollars in thousands,
except square foot data) Comparable store sales increase 3.8 %
2.3 % Net sales per average selling square foot (a) $ 91 $ 86 Net
sales per average store (b) $ 468 $ 445 Average selling square
footage per store (c) 5,132 5,169 Ending store count 504 509
(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 Statements of
Operations
(Unaudited)
(Amounts in thousands, except per share amounts)
Six monthsendedAugust
1, 2015
%ofnetsales
Six monthsendedAugust
2, 2014
%ofnetsales Net sales $ 459,086 100.0 %
$ 445,659 100.0 % Cost of goods sold, buying and occupancy
costs 327,706 71.4 % 321,537 72.1 % Gross profit 131,380
28.6 % 124,122 27.9 % Selling, general and administrative
expenses 135,190 29.4 % 123,881 27.8 % Operating (loss)
income (3,810) (0.8) % 241 0.1 % Interest expense, net of
interest income 598 0.1 % 169 — % (Loss) income before
income taxes (4,408) (0.9) % 72 0.1 % Provision for income
taxes 409 0.1 % 501 0.2 % Net loss $ (4,817) (1.0) % $ (429)
(0.1) % Basic loss per share $ (0.08) $ (0.01)
Diluted loss per share $ (0.08) $ (0.01) Weighted average
shares outstanding: Basic shares of common stock 63,079 62,728
Diluted shares of common stock 63,079 62,728
Selected
operating data: (Dollars in thousands, except square foot
data) Comparable store sales increase 2.9 % 0.1 % Net sales per
average selling square foot (a) $ 177 $ 169 Net sales per average
store (b) $ 911 $ 877 Average selling square footage per store (c)
5,132 5,169 (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 (3)
New York & Company, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(Amounts in thousands) August 1,
2015 January 31, 2015 August 2, 2014
(Unaudited) (Audited) (Unaudited)
Assets Current assets: Cash and cash equivalents $ 60,122 $
69,293 $ 63,166 Restricted cash 1,509 1,509 1,509 Accounts
receivable 12,682 7,406 10,688 Income taxes receivable 73 99 99
Inventories, net 85,896 93,791 84,896 Prepaid expenses 19,559
20,581 20,913 Other current assets 1,320 1,121 1,223 Total current
assets 181,161 193,800 182,494 Property and equipment, net
86,882 84,374 79,834 Intangible assets 14,879 14,879 14,879
Deferred income taxes 6,421 6,660 6,741 Other assets 2,204 2,167
995 Total assets $ 291,547 $ 301,880 $ 284,943
Liabilities and
stockholders’ equity Current liabilities: Current
portion—long-term debt $ 1,000 $ 1,000 $ — Accounts payable 81,453
86,481 82,173 Accrued expenses 48,750 52,418 38,402 Income taxes
payable 564 710 747 Deferred income taxes 6,421 6,660 6,741 Total
current liabilities 138,188 147,269 128,063 Long-term debt,
net of current portion 13,250 13,750 — Deferred rent 36,836 35,169
36,803 Other liabilities 7,034 6,333 5,032 Total liabilities
195,308 202,521 169,898 Total stockholders’ equity 96,239
99,359 115,045 Total liabilities and stockholders’ equity $ 291,547
$ 301,880 $ 284,943
Exhibit (4)
New York & Company, Inc.
and Subsidiaries
Condensed Consolidated Statements of
Cash Flows
(Amounts in thousands)
Six monthsendedAugust 1,
2015
Six monthsendedAugust 2,
2014
(Unaudited) (Unaudited) Operating activities
Net loss $ (4,817) $ (429) Adjustments to reconcile net loss to net
cash provided by operating activities: Depreciation and
amortization 12,334 14,118 Loss from impairment charges 232 358
Amortization of deferred financing costs 92 60 Share-based
compensation expense 1,782 2,011 Changes in operating assets and
liabilities: Restricted cash — (1,509) Accounts receivable (5,276)
(3,662) Income taxes receivable 26 — Inventories, net 7,895 (1,417)
Prepaid expenses 1,022 228 Accounts payable (5,028) 6,299 Accrued
expenses (3,865) (8,478) Income taxes payable (146) (328) Deferred
rent 1,667 (3,122) Other assets and liabilities (87)
(110) Net cash provided by operating activities 5,831
4,019
Investing activities Capital expenditures
(13,993) (10,757) Net cash used in
investing activities (13,993) (10,757)
Financing activities Repayment of long-term debt
(500) — Payment of financing costs (22) — Proceeds from exercise of
stock options 16 299 Shares withheld for payment of employee
payroll taxes (247) (118) Principal payments on capital lease
obligations (256) — Net cash (used in) provided by
financing activities (1,009) 181 Net decrease
in cash and cash equivalents (9,171) (6,557) Cash and cash
equivalents at beginning of period 69,293 69,723 Cash
and cash equivalents at end of period $ 60,122 $ 63,166 Non-cash
capital lease transactions $ 1,080 $ —
Exhibit (5)
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 income (loss), net
income (loss) and earnings (loss) per diluted share for the three
and six months ended August 1, 2015 is indicated below. This
information reflects, on a non-GAAP basis, the Company’s adjusted
operating results after excluding certain non-operating charges.
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 or second
quarters of fiscal year 2014.
Three months ended August 1,
2015
(Amounts in thousands, except per share amounts)
Selling, general
andadministrativeexpenses
Operatingincome
Net (loss)income
(Loss) incomeper
dilutedshare
GAAP as reported $ 66,698 $ 435 $ (146) $ (0.00)
Adjustments
affecting comparability
Consulting expense 572 572 572 Severance expense 860 860 860 BHQ
moving expenses 197 197 197 Legal expense 386 386 386 Total
adjustments (1) 2,015 2,015 2,015 0.03 Non-GAAP as adjusted . $
64,683 $ 2,450 $ 1,869 $ 0.03
Six months ended August 1, 2015
(Amounts in thousands, except per share amounts)
Selling, general
andadministrativeexpenses
Operating(loss) income
Net (loss)income
(Loss) incomeper
dilutedshare
GAAP as reported $ 135,190 $ (3,810) $ (4,817) $ (0.08)
Adjustments
affecting comparability
Consulting expense 3,028 3,028 3,028 Severance expense 1,584 1,584
1,584 Net reduction of BHQ moving expenses (116) (116) (116) Legal
expense 386 386 386 Total adjustments (1) 4,882 4,882 4,882
0.08
Non-GAAP as adjusted
$ 130,308 $ 1,072 $ 65 $ 0.00 (1)
The tax effect of $2.0 million and $4.8 million of expenses,
during the three and six months ended August 1, 2015, respectively,
is offset by a full valuation allowance against deferred tax
assets.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150820006175/en/
ICR, Inc.Investor:Allison Malkin, 203-682-8200
New York & Company (NYSE:NWY)
Historical Stock Chart
From Apr 2024 to May 2024
New York & Company (NYSE:NWY)
Historical Stock Chart
From May 2023 to May 2024