New York & Company, Inc. (NYSE:NWY), a specialty
apparel chain with 488 retail stores, today announced results for
the first quarter ended April 30, 2016.
Gregory Scott, New York & Company’s CEO stated: “We began
the quarter with positive sales trends; however, as we entered the
last week of March, we experienced a slowdown in traffic to our
brick-and-mortar stores, that continued into April, and led to
sales and profitability below our expectations. This change in
traffic was inconsistent with our quarter-to-date trend, and
impacted our performance heading into the Easter Holiday. While we
continued to experience strength in traffic and sales in our
eCommerce business, along with positive sales trends in our
celebrity backed sub-brands, Eva Mendes and Soho Jeans featuring
Jennifer Hudson, these positives were not enough to overcome the
negative traffic in stores, and weakness for seasonal categories,
including crops, shorts, t-shirts and dresses.”
“As we move into the second quarter, and for the balance of the
year, we are adjusting our gameplan so that we leverage what is
working, and at the same time improve our traffic trends to our
stores. Specifically:
1. In the second quarter, we will invest in marketing
to support the launch of the new Jennifer Hudson Jeans line in late
July, and we will continue to grow the Eva Mendes business with one
additional delivery. At the same time, we will continue to focus on
our credit loyalty customers who drive increased sales to the
brand. We also have an incremental Summer Kick-Off Event planned
for mid-June. 2. We will continue to invest in digital
marketing to support the continued double-digit growth in traffic
and sales of our eCommerce business and expect our digital business
to become an increasing percentage of our overall business.
3. Finally, we will continue to invest in differentiated product
with our celebrity collaborations and sub-brands, as the customer
continues to respond to fashion relevant product while core
seasonal basics seem to be less important. ”
“Overall we remain confident in our long-term strategy, we
believe that the continued expansion of our differentiated
celebrity sub-brands, along with our consistent ability to deliver
great trends and value and our enhanced omni-channel capabilities,
including growth of mobile, have us poised to deliver long-term
profitable growth and increased value for our shareholders.”
First Quarter Fiscal Year 2016 Results (13-weeks ended April
30, 2016 compared to the 13-weeks ended May 2, 2015):
- Net sales were $216.0 million, as
compared to $223.4 million in the prior year.
- Comparable store sales
decreased 2.3% and total net sales decreased by 3.3%,
reflecting the operation of 488 stores this year, as compared to
504 in the first quarter of 2015.
- Gross profit as a percentage of net
sales decreased 110 basis points to 27.7% versus the fiscal year
2015 first quarter gross profit percentage of 28.8%. This reflects
a 40 basis point decrease in product margins primarily due to
increased markdowns, partially offset by lower product costs
resulting from our business re-engineering program (“Project
Excellence”) initiatives, a 60 basis point increase in other cost
of goods sold, related largely to shipping costs associated with
the significant growth in the Company’s eCommerce sales, and a 10
basis point decline in the leverage of buying and occupancy expense
due to lower sales.
- Selling, general and administrative
expenses were $65.3 million, as compared to $68.5 million in the
prior year period. Excluding non-operating charges of $2.9 million
from the prior year period, selling, general and administrative
expenses were $65.6 million in the prior year. The decrease in
selling, general, and administrative expenses, excluding the
non-operating charges, reflects significant increases in variable
expenses associated with the growth in eCommerce sales and
increases in severance not related to Project Excellence, offset by
decreases in marketing and reductions in performance-based
compensation expenses.
- GAAP operating results declined to a
loss of $5.4 million, as compared to the prior year’s first quarter
GAAP operating loss of $4.2 million. Excluding $2.9 million of
non-operating charges, the non-GAAP adjusted operating loss in the
prior year’s first quarter was $1.4 million. There were no
non-operating charges during the three months ended April 30,
2016.
- GAAP net loss for the first quarter of
fiscal year 2016 was $5.7 million, or a loss of $0.09 per diluted
share. This compares to the prior year’s GAAP net loss of $4.7
million, or a loss of $0.07 per diluted share. Excluding $2.9
million of non-operating charges, the prior year’s first quarter
non-GAAP 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 three months
ended May 2, 2015. There were no non-GAAP adjustments during the
three months ended April 30, 2016. GAAP is defined as Generally
Accepted Accounting Principles.
- Total quarter-end inventory increased
2.1%, as compared to the end of last year’s first quarter, due to
increased levels of in-store inventory offset by lower levels of
inventory in-transit as the Company changed shipping terms with
certain vendors to take title later in the supply chain. Inventory
per average store increased 5.4% as the Company positioned
inventory for the Summer selling period.
- Capital spending for the first quarter
of fiscal year 2016 was $1.9 million, as compared to $6.7 million
in last year’s first quarter, primarily reflecting decreased spend
on real estate and the Company’s information technology
infrastructure.
- The Company converted 50 New York &
Company stores to Outlet stores and closed 2 New York & Company
stores during the first quarter, ending the first quarter with 488
stores, including 132 Outlet stores and 2.5 million selling square
feet in operation.
- The Company ended the quarter with
$47.6 million of cash-on-hand and no outstanding borrowings under
its revolving credit facility.
Outlook:
Regarding expectations for the second quarter of fiscal year
2016, the Company is providing the following guidance:
- Net sales and comparable store sales
are expected to be flat to slightly negative.
- Gross margin is expected to be flat to
up 50 basis points from the prior year’s second quarter rate
reflecting reductions in product costs and agent expenses resulting
from Project Excellence combined with reductions in buying payroll
and reductions in 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’s
second quarter.
- Operating results on a GAAP basis for
the second quarter of fiscal year 2016 are expected to be in the
range of approximately breakeven to $1 million of operating income,
as compared to operating income of $0.4 million in the prior year,
reflecting anticipated diluted earnings per share in the range of
$0.00 to $0.01.
Additional Outlook:
- Total inventory at the end of the
second quarter is expected to increase over the prior year second
quarter in the mid single-digit percentage range, reflecting higher
levels of in-store inventory as the Company positions inventory for
the Fall selling period.
- Capital expenditures for the second
quarter of fiscal year 2016 are projected to be between $9 million
and $10 million, as compared to $7.3 million of capital
expenditures in the second quarter of last year.
- Depreciation expense for the second
quarter of fiscal year 2016 is estimated to be approximately $6
million.
- During the second quarter, the Company
expects to open one New York & Company store, remodel two New
York & Company stores, and close two New York & Company
stores, ending the second quarter of fiscal year 2016 with 487
stores, including 132 Outlet stores.
Comparable Store Sales:
A store is included in the comparable store sales calculation
after it has completed 13 full fiscal months of operations from the
store's opening date or once it has been reopened after remodeling
if the gross square footage did not change by more than 20%. Sales
from the Company's eCommerce store are included in comparable store
sales.
Conference Call Information
A conference call to discuss first quarter of fiscal year
2016 results is scheduled for today, Thursday, May 19, 2016 at
4:30 p.m. Eastern Time. Investors and analysts interested in
participating in the call are invited to dial (888) 395-3227 and
reference conference ID number 3423459 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 19, 2016 until 11:59
p.m. Eastern Time on May 26, 2016 and can be accessed by dialing
(877) 870-5176 and entering conference ID number 3423459.
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. New York
& Company, Inc. helps its customers feel confident,
put-together, attractive and stylish by providing affordable
fashion. The Company's proprietary branded New York & Company®
merchandise is sold through its national network of retail stores
and online at www.nyandcompany.com. The Company operates 488 stores
in 41 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
monthsended
April 30, 2016
%ofnetsales
Three monthsended
May 2, 2015
%ofnetsales Net sales $
216,038 100.0 % $ 223,390 100.0 % Cost of goods sold, buying
and occupancy costs 156,151 72.3 % 159,143
71.2 % Gross profit 59,887 27.7 % 64,247 28.8 %
Selling, general and administrative expenses 65,285
30.2 % 68,492 30.7 % Operating loss
(5,398 ) (2.5 ) % (4,245 ) (1.9 ) % Interest expense, net of
interest income 297 0.1 % 289 0.1 %
Loss before income taxes (5,695 ) (2.6 ) % (4,534 ) (2.0 ) %
Provision for income taxes 21 — % 137
0.1 % Net loss $ (5,716 ) (2.6 ) % $ (4,671 ) (2.1 )
% Basic loss per share $ (0.09 ) $ (0.07 )
Diluted loss per share $ (0.09 ) $ (0.07 ) Weighted average
shares outstanding: Basic shares of common stock 63,277
62,983 Diluted shares of common stock 63,277 62,983
Selected operating data: (Dollars in
thousands, except square foot data) Comparable store sales
(decrease) increase (2.3 ) % 1.8 % Net sales per average selling
square foot (a)(d) $ 86 $ 86 Net sales per average store (b)(d) $
442 $ 444 Average selling square footage per store (c) 5,112 5,155
Ending store count 488 504 (a) Net sales per
average selling square foot is defined as net sales divided by the
average of beginning and monthly end of period selling square feet.
(b) Net sales per average store is defined as net sales divided by
the average of beginning and monthly 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. (d) Effective first quarter of fiscal year 2016, the
Company transitioned to a monthly average calculation. Prior period
metrics have been restated resulting in an immaterial impact.
Exhibit (2)
New York & Company, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(Amounts in thousands)
April 30, 2016 January 30,
2016 May 2, 2015 (Unaudited)
(Audited) (Unaudited) Assets Current assets:
Cash and cash equivalents $ 47,628 $ 61,432 $ 48,407 Restricted
cash — — 1,509 Accounts receivable 17,011 8,208 16,051 Income taxes
receivable 47 47 73 Inventories, net 102,764 87,777 100,648 Prepaid
expenses 18,998 19,442 19,991 Other current assets 831 858 1,277
Total current assets 187,279 177,764 187,956 Property and
equipment, net 86,136 88,831 84,703 Intangible assets 14,879 14,879
14,879 Deferred income taxes (a) — — 6,469 Other assets 1,966 1,986
1,547 Total assets $ 290,260 $ 283,460 $ 295,554
Liabilities and
stockholders’ equity Current liabilities: Current
portion—long-term debt $ 841 $ 841 $ 839 Accounts payable 91,158
82,225 82,141 Accrued expenses 55,388 52,424 54,776 Income taxes
payable 63 239 737 Deferred income taxes (a) — — 6,469 Total
current liabilities 147,450 135,729 144,962 Long-term debt,
net of current portion 12,115 12,326 12,949 Deferred rent 33,131
34,351 35,876 Other liabilities 8,246 7,283 6,306 Total liabilities
200,942 189,689 200,093 Total stockholders’ equity 89,318
93,771 95,461 Total liabilities and stockholders’ equity $ 290,260
$ 283,460 $ 295,554 (a) In November 2015, the
Financial Accounting Standards Board issued Accounting Standards
Update 2015-17, “Balance Sheet Classification of Deferred Taxes”
(“ASU 2015-17”), which requires an entity to classify deferred tax
liabilities and assets, and any related valuation allowance, as
non-current within a classified statement of financial position. On
January 30, 2016, the Company adopted ASU 2015-17 prospectively.
Prior periods were not retrospectively adjusted. The Company
continues to maintain a valuation allowance against its deferred
tax assets until the Company believes it is more likely than not
that these assets will be realized in the future.
Exhibit (3)
New York & Company, Inc.
and Subsidiaries
Condensed Consolidated Statements of
Cash Flows
(Unaudited)
(Amounts in thousands)
Three months
ended
April 30, 2016
Three months
ended
May 2, 2015
Operating activities Net loss $ (5,716 ) $ (4,671 )
Adjustments to reconcile net loss to net cash used in operating
activities: Depreciation and amortization 5,863 6,373 Amortization
of deferred financing costs 47 45 Share-based compensation expense
1,107 943 Changes in operating assets and liabilities: Accounts
receivable (8,803 ) (8,645 ) Income taxes receivable — 26
Inventories, net (14,987 ) (6,857 ) Prepaid expenses 444 590
Accounts payable 8,933 (4,340 ) Accrued expenses 2,664 2,358 Income
taxes payable (176 ) 27 Deferred rent (1,220 ) 707 Other assets and
liabilities 270 (158 ) Net cash used in
operating activities (11,574 ) (13,602 )
Investing activities Capital expenditures (1,869 )
(6,700 ) Net cash used in investing activities
(1,869 ) (6,700 )
Financing
activities Repayment of long-term debt (250 ) (250 ) Proceeds
from exercise of stock options 120 16 Shares withheld for payment
of employee payroll taxes (73 ) (247 ) Principal payments on
capital lease obligations (158 ) (103 ) Net cash used
in financing activities (361 ) (584 ) Net
decrease in cash and cash equivalents (13,804 ) (20,886 ) Cash and
cash equivalents at beginning of period 61,432
69,293 Cash and cash equivalents at end of period $ 47,628
$ 48,407 Non-cash capital lease transactions $ 1,299
$ —
Exhibit (4)
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 ended May 2, 2015 is
indicated below. There were no non-GAAP adjustments for the three
months ended April 30, 2016. This information reflects, on a
non-GAAP basis, the Company’s adjusted operating results after
excluding certain non-operating charges consisting of consulting
fees associated with Project Excellence and certain severance
expenses, partially offset by a reduction in moving expense related
to the relocation of the Company’s corporate headquarters. 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 May 2, 2015
(Amounts in thousands, except per share amounts)
Selling, general and
administrative
expenses
Operating loss
Net loss
Loss per
diluted share
GAAP as reported $ 68,492 $ (4,245 ) $ (4,671 ) $ (0.07 )
Adjustments
affecting comparability
Consulting expense – Project Excellence 2,456 2,456 2,456 Certain
severance expenses 724 724 724 Reduction of moving expenses - new
BHQ office space (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 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/20160519006612/en/
Investor:ICR, Inc.Allison Malkin, 203-682-8200
New York & Company (NYSE:NWY)
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