~ 3rd Consecutive Quarter of Positive
Comparable Store Sales Growth ~
~ Comparable Store Sales Increased 4.9%;
Highest Q3 Comp Since 2004 ~
~ Introduces Q4 Guidance with Comparable
Store Sales Increase and Improved Operating Results ~
New York & Company, Inc. (NYSE:NWY), a specialty
apparel chain with 508 retail stores, today announced results for
the third quarter ended October 31, 2015.
Gregory Scott, New York & Company’s CEO, stated: “We are
pleased to continue our positive momentum from the first half of
the year and deliver another solid quarter where we achieved growth
across key financial metrics, including increased sales, positive
comparable store sales, and expansion in gross margin. Combined,
this drove a $4.1 million improvement in adjusted operating loss
versus last year’s third quarter. Once again, our performance
highlights the increased connection we are creating with our target
consumers as we deliver excitement in fashion, with celebrity
brands and great value. This, in addition to increased sales
productivity as we optimize our real estate with new openings and
outlet conversions and expand our omni-channel capabilities with
full ship from store capabilities, drove a 4.9% increase in
comparable store sales in the quarter.”
Third Quarter Fiscal Year 2015 Results: (13-weeks ended
October 31, 2015 compared to the 13-weeks ended November 1,
2014)
- Net sales were $219.8 million, as
compared to $210.3 million in the prior year.
- Comparable store sales
increased 4.9% and total net sales increased by 4.5%.
- Gross profit as a percentage of net
sales increased 180 basis points versus the fiscal year 2014 third
quarter principally due to reduced product costs, decreased buying
expenses and improved leverage of fixed occupancy costs, partially
offset by increased shipping costs associated with significant
growth in the Company’s eCommerce business.
- Selling, general and administrative
expenses were $68.6 million, as compared to $66.8 million in the
prior year period. Included in fiscal year 2015 third quarter are
$2.3 million of non-operating charges resulting primarily from the
settlement of a wage and hour class action lawsuit in the state of
California.
- Excluding non-operating charges of $2.3
million and $2.8 million for the three months ended October 31,
2015 and November 1, 2014, respectively, selling, general and
administrative expenses were $66.3 million, as compared to $64.0
million in the prior year. The increase in selling, general, and
administrative expenses is primarily attributable to increases in
variable-based compensation accruals, increases in rent and
depreciation and increased expenses associated with the growth in
eCommerce and Outlets, partially offset by reductions in marketing
and payroll.
- GAAP operating loss was $4.9 million,
as compared to the prior year’s third quarter GAAP operating loss
of $9.5 million. On a non-GAAP basis, excluding $2.3 million of
non-operating charges, adjusted operating loss was $2.6 million, an
improvement of $4.1 million from the prior year’s non-GAAP
operating loss of $6.7 million, which excluded $2.8 million of
non-operating charges.
- GAAP net loss for the third quarter of
fiscal year 2015 was $5.3 million, or $0.08 per diluted share. This
compares to the prior year’s GAAP net loss of $9.7 million, or
$0.15 per diluted share. On a non-GAAP basis, the Company’s third
quarter 2015 adjusted net loss was $3.0 million, or $0.05 per
diluted share. This compares to the prior year’s third quarter
non-GAAP adjusted net loss of $6.9 million, or $0.11 per diluted
share.Please refer to the “Reconciliation of GAAP to Non-GAAP
Financial Measures” in Exhibits 5 and 6 of this press release,
which delineates the non-operating charges for the three and nine
months ended October 31, 2015 and November 1, 2014, respectively.
GAAP is defined as Generally Accepted Accounting Principles.
- Total quarter-end inventory increased
3.4%, as compared to the end of last year’s third quarter, which
was in line with the Company’s expectations.
- Capital spending for the third quarter
of fiscal year 2015 was $6.8 million, as compared to $10.3 million
in last year’s third quarter, primarily reflecting less spend on
the opening of new Outlet stores and the remodeling of existing
locations. This was in line with the Company’s previously issued
guidance.
- The Company opened 5 new stores, (2 New
York & Company stores and 3 Outlet stores), converted 3 New
York & Company stores to Outlet stores, remodeled 2 New York
& Company stores, and closed 1 store during the third quarter,
ending the fiscal quarter with 508 stores, including 82 Outlet
stores, and 2.6 million selling square feet in operation.
- The Company ended the quarter with
$45.0 million of cash-on-hand and no outstanding borrowings under
its revolving credit facility, as compared to $55.5 million of
cash-on-hand at the end of last year’s third quarter.
For the nine months ended October 31, 2015:
Net sales were $678.8 million, as compared to $656.0 million for
the nine months ended November 1, 2014. Comparable store sales
increased 3.5%, as compared to a decrease of 1.1% in the prior year
period. GAAP operating loss was $8.7 million. On a non-GAAP basis,
adjusted operating loss was $1.6 million. This compares to a GAAP
operating loss of $9.2 million and a non-GAAP, adjusted operating
loss of $6.4 million for the nine months ended November 1, 2014.
Net loss was $10.2 million, or a loss of $0.16 per diluted share.
On a non-GAAP basis, adjusted net loss was $3.0 million, or a loss
of $0.05 per diluted share. This compares to the prior year
period’s net loss of $10.2 million, or a loss of $0.16 per diluted
share. On a non-GAAP basis, prior year period’s adjusted net loss
was $7.4 million, or a loss of $0.12 per diluted share.
Outlook:
Regarding expectations for the fourth 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.
- Gross margin is expected to increase in
the range of 50-150 basis points from the prior year’s fourth
quarter rate reflecting improved product costs, decreases in
markdowns, reductions in buying costs and improved leverage of
occupancy costs, partially offset by increased shipping costs
associated with the growing omni-channel business.
- Selling, general and administrative
expenses are expected to decrease by approximately $3 million to $5
million, as compared to the prior year period; however, non-GAAP
adjusted SG&A excluding charges of $6.4 million from the prior
year are expected to increase by approximately $1.5 million to $3.5
million. This increase is primarily due to an insurance credit
which reduced expenses in the prior year, as well as increases in
the following areas of the Company’s business: (i) increases in
variable-based compensation accruals as compared to last year; (ii)
increases in variable costs associated with the growing eCommerce
business; and (iii) increased rent and depreciation expense related
to the Company’s new corporate headquarters and information
technology investments. This change is partially offset by
anticipated savings in marketing, in addition to savings in payroll
as a result of the Company’s organizational realignment completed
in July of 2015.
- Operating results on a GAAP basis for
the fourth quarter of fiscal year 2015 are expected to improve
significantly, reflecting operating income between $1 million and
$3 million.
- Business
Process Improvement Plan UpdateAs previously announced,
the Company continues to expect its productivity initiative,
Project Excellence, to produce annualized savings of approximately
$30 million, approximately half of which will benefit fiscal year
2015 results largely in the form of payroll reductions, mitigating
increases in certain fixed costs and investments and growth in
variable expenses in the Company’s expanding eCommerce and Outlet
businesses. The remaining savings, which are largely comprised of
reductions in product costs and to a lesser extent payroll
reductions, are expected to benefit fiscal year 2016, improving
profitability and increasing gross profit margin by approximately
150 basis points, as compared to fiscal year 2015.
Additional Outlook:
- Total inventory is expected to increase
in the low to mid single-digit percentage range, reflecting higher
levels of in-store inventory as we position inventory for the
Spring selling period.
- Capital expenditures for the fourth
quarter of fiscal year 2015 are projected to be between $6 million
and $7 million, as compared to $5.8 million of capital expenditures
in the fourth quarter of last year. Capital expenditures are
projected to include the following:
- Real Estate capital expenditures of $1
million to $2 million; and
- Investments of approximately $5 million
in information technology and eCommerce.
- Depreciation expense for the fourth
quarter of fiscal year 2015 is estimated to be approximately $6
million.
- The Company plans to end the full
fiscal year 2015 having opened 12 new stores, (4 New York &
Company stores and 8 Outlet stores), converted 12 New York &
Company stores to Outlet stores, remodeled 8 existing stores and
closed approximately 24 stores, ending the fiscal year with roughly
492 stores, including 82 Outlet stores, and approximately 2.5
million selling square feet.
Conference Call Information
A conference call to discuss third quarter of fiscal year
2015 results is scheduled for today, Wednesday, December 2,
2015 at 4:30 p.m. Eastern Time. Investors and analysts
interested in participating in the call are invited to dial (888)
437-9445 and reference conference ID number 947238 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 December
2, 2015, until 11:59 p.m. Eastern Time on December 9, 2015 and can
be accessed by dialing (877) 870-5176 and entering conference ID
number 947238.
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 508 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
SubsidiariesCondensed Consolidated Statements of
Operations(Unaudited)
(Amounts in thousands, except per share amounts)
Three monthsended October
31, 2015
%ofnetsales
Three monthsended
November 1, 2014
%ofnetsales
Net sales $ 219,750 100.0 % $ 210,314 100.0 % Cost of goods
sold, buying and occupancy costs 156,055 71.0 % 153,037 72.8 %
Gross profit 63,695 29.0 % 57,277 27.2 % Selling,
general and administrative expenses 68,612 31.2 % 66,751 31.7 %
Operating loss (4,917) (2.2) % (9,474) (4.5) %
Interest expense, net of interest income 325 0.1 % 112 — %
Loss before income taxes (5,242) (2.3) % (9,586) (4.5) %
Provision for income taxes 94 0.1 % 150 0.1 % Net loss $
(5,336) (2.4) % $ (9,736) (4.6) % Basic loss per
share $ (0.08) $ (0.15) Diluted loss per share $ (0.08) $
(0.15) Weighted average shares outstanding: Basic shares of
common stock 63,224 62,911 Diluted shares of common stock 63,224
62,911
Selected operating data: (Dollars in
thousands, except square foot data) Comparable store sales
increase (decrease) 4.9 % (3.4) % Net sales per average selling
square foot (a) $ 85 $ 80 Net sales per average store (b) $ 434 $
412 Average selling square footage per store (c) 5,117 5,155 Ending
store count 508 512 (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
SubsidiariesCondensed Consolidated Statements of
Operations(Unaudited)
(Amounts in thousands, except per share amounts)
Nine monthsended October
31, 2015
%ofnetsales
Nine monthsended November
1, 2014
%ofnetsales Net sales $ 678,836 100.0 %
$ 655,973 100.0 % Cost of goods sold, buying and occupancy
costs 483,761 71.3 % 474,574 72.3 % Gross profit 195,075
28.7 % 181,399 27.7 % Selling, general and administrative
expenses 203,802 30.0 % 190,632 29.1 % Operating loss
(8,727) (1.3) % (9,233) (1.4) % Interest expense, net of
interest income 923 0.1 % 281 — % Loss before income taxes
(9,650) (1.4) % (9,514) (1.4) % Provision for income taxes
503 0.1 % 651 0.1 % Net loss $ (10,153) (1.5) % $ (10,165)
(1.5) % Basic loss per share $ (0.16) $ (0.16)
Diluted loss per share $ (0.16) $ (0.16) Weighted average
shares outstanding: Basic shares of common stock 63,127 62,789
Diluted shares of common stock 63,127 62,789
Selected
operating data: (Dollars in thousands, except square foot
data) Comparable store sales increase (decrease) 3.5 % (1.1) %
Net sales per average selling square foot (a) $ 261 $ 249 Net sales
per average store (b) $ 1,342 $ 1,286 Average selling square
footage per store (c) 5,117 5,155 (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) October 31, 2015
January 31, 2015 November 1, 2014
(Unaudited) (Audited) (Unaudited)
Assets Current assets: Cash and cash equivalents $ 44,980 $
69,293 $ 55,545 Restricted cash 1,509 1,509 2,135 Accounts
receivable 12,630 7,406 10,018 Income taxes receivable 73 99 99
Inventories, net 129,006 93,791 124,785 Prepaid expenses 19,669
20,581 20,915 Other current assets 1,335 1,121 1,516 Total current
assets 209,202 193,800 215,013 Property and equipment, net
87,412 84,374 82,833 Intangible assets 14,879 14,879 14,879
Deferred income taxes 6,316 6,660 6,675 Other assets 2,128 2,167
1,510 Total assets $ 319,937 $ 301,880 $ 320,910
Liabilities and
stockholders’ equity Current liabilities: Current
portion—long-term debt $ 1,000 $ 1,000 $ 1,000 Accounts payable
107,139 86,481 109,566 Accrued expenses 54,871 52,418 41,783 Income
taxes payable 599 710 710 Deferred income taxes 6,316 6,660 6,675
Total current liabilities 169,925 147,269 159,734 Long-term
debt, net of current portion 13,000 13,750 14,000 Deferred rent
37,791 35,169 35,953 Other liabilities 6,996 6,333 4,808 Total
liabilities 227,712 202,521 214,495 Total stockholders’
equity 92,225 99,359 106,415 Total liabilities and stockholders’
equity $ 319,937 $ 301,880 $ 320,910
Exhibit (4)
New York & Company, Inc.
and SubsidiariesCondensed Consolidated Statements of Cash
Flows
(Amounts in thousands)
Nine months ended October
31, 2015
Nine monthsended November
1, 2014
(Unaudited) (Unaudited) Operating activities
Net loss $ (10,153) $ (10,165) Adjustments to reconcile net loss to
net cash used in operating activities: Depreciation and
amortization 18,590 20,835 Loss from impairment charges 287 911
Amortization of deferred financing costs 154 92 Share-based
compensation expense 2,948 3,210 Changes in operating assets and
liabilities: Restricted cash — (2,135) Accounts receivable (5,224)
(2,992) Income taxes receivable 26 — Inventories, net (35,215)
(41,306) Prepaid expenses 912 226 Accounts payable 20,658 33,692
Accrued expenses 2,256 (5,097) Income taxes payable (111) (365)
Deferred rent 2,622 (3,972) Other assets and liabilities 198
(1,207) Net cash used in operating activities (2,052)
(8,273)
Investing activities Capital
expenditures (20,835) (21,026) Insurance recoveries 146
254 Net cash used in investing activities
(20,689) (20,772)
Financing
activities Proceeds from issuance of long-term debt — 15,000
Repayment of long-term debt (750) — Payment of financing costs
(161) (188) Proceeds from exercise of stock options 16 299 Shares
withheld for payment of employee payroll taxes (267) (244)
Principal payments on capital lease obligations (410)
— Net cash (used in) provided by financing activities
(1,572) 14,867 Net decrease in cash and cash
equivalents (24,313) (14,178) Cash and cash equivalents at
beginning of period 69,293 69,723 Cash and cash
equivalents at end of period $ 44,980 $ 55,545 Non-cash capital
lease transactions $ 1,080 $ —
Exhibit (5)
New York & Company, Inc. and
Subsidiaries
Reconciliation 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 and nine months ended October
31, 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 associated with Project Excellence, certain
severance expenses, and charges related to a settlement of a wage
and hour class action lawsuit in the state of California. 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.
Three months ended October 31,
2015
(Amounts in thousands, except per share amounts)
Selling, general and
administrativeexpenses
Operating loss Net loss
Loss perdiluted share
GAAP as reported $ 68,612 $ (4,917 ) $ (5,336 ) $ (0.08 )
Adjustments
affecting comparability
Consulting expense 77 77 77 Net reduction of severance expense (7 )
(7 ) (7 ) BHQ moving expenses 12 12 12 Legal expense 2,211
2,211 2,211 Total adjustments
(1) 2,293 2,293 2,293
0.03
Non-GAAP as adjusted
$ 66,319 $ (2,624 ) $ (3,043 ) $ (0.05 )
Nine months ended October 31,
2015
(Amounts in thousands, except per share amounts)
Selling, general
andadministrativeexpenses
Operating loss Net loss
Loss perdiluted share
GAAP as reported $ 203,802 $ (8,727 ) $ (10,153 ) $ (0.16 )
Adjustments
affecting comparability
Consulting expense 3,105 3,105 3,105 Severance expense 1,577 1,577
1,577 Net reduction of BHQ moving expenses (104 ) (104 ) (104 )
Legal expense 2,597 2,597 2,597
Total adjustments (1) 7,175 7,175
7,175 0.11
Non-GAAP as adjusted
$ 196,627 $ (1,552 ) $ (2,978 ) $ (0.05 ) (1)
The tax effect of $2.3 million and $7.2 million of expenses during
the three and nine months ended October 31, 2015, respectively, is
offset by a full valuation allowance against deferred tax assets.
Exhibit (6)
New York & Company, Inc. and
Subsidiaries
Reconciliation 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 and nine months ended
November 1, 2014 is indicated below. This information reflects, on
a non-GAAP adjusted basis, the Company’s operating results after
excluding certain non-operating charges consisting of consulting
fees associated with Project Excellence, certain severance
expenses, duplicative rent expense related to the relocation of the
Company’s corporate headquarters, and executive recruiting
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 or
second quarters of fiscal year 2014.
Three months ended November 1,
2014
(Amounts in thousands, except per share amounts)
Selling, general
andadministrativeexpenses
Operating loss Net loss
Loss per diluted share
GAAP as reported $ 66,751 $ (9,474 ) $ (9,736 ) $ (0.15 )
Adjustments
affecting comparability
Consulting expense 1,000 1,000 1,000 Executive severance expense
732 732 732 Duplicative rent expense – new BHQ office space 962 962
962 Executive recruiting expense 102 102 102
Total adjustments (1) 2,796 2,796 2,796 0.04
Non-GAAP as adjusted
$ 63,955 $ (6,678 ) $ (6,940 ) $ (0.11 )
Nine months ended November 1,
2014
(Amounts in thousands, except per share amounts)
Selling, general
andadministrativeexpenses
Operating loss Net loss
Loss per diluted share
GAAP as reported $ 190,632 $ (9,233 ) $
(10,165 ) $ (0.16 )
Adjustments
affecting comparability
Consulting expense 1,000 1,000 1,000 Executive severance expense
732 732 732 Duplicative rent expense – new BHQ office space 962 962
962 Executive recruiting expense 102 102 102
Total adjustments (1) 2,796 2,796 2,796
0.04
Non-GAAP as adjusted
$ 187,836 $ (6,437 ) $ (7,369 ) $ (0.12 ) (1) The tax
effect of $2.8 million of expenses is offset by a full valuation
allowance against deferred tax assets.
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Investors/Media:ICR, Inc.Allison Malkin, 203-682-8200
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