~ Operating Results at High End of
Previously Issued Guidance ~
New York & Company, Inc. (NYSE:NWY), a specialty
apparel chain with 486 retail stores, today announced results for
the second quarter ended July 30, 2016.
Gregory Scott, New York & Company’s CEO stated: “Our second
quarter results were highlighted by positive comp sales in line
with our guidance and earnings at the high end of
guidance. Our second quarter sales performance accelerated
from the trend we experienced in Q1 and early May, which we
attribute to more seasonal weather, enhanced flexibility within our
go to market process, our targeted marketing efforts, and the
ongoing benefits from our omni-channel and credit card loyalty
initiatives. During the quarter, we experienced strong trends
across our seasonal categories of dresses, shorts and tops while
continuing to drive strong sales growth from our Eva Mendes and
Jennifer Hudson celebrity collaborations.”
“In July, we were excited to enter into a new ten-year agreement
with Alliance Data Services Corporation to continue managing our
private label credit card. We expect this new agreement to allow us
to further drive brand loyalty and private label credit card sales.
We continue to expect our successful strategy to position New York
& Company for increased sales productivity and profitability
during the balance of the year.”
Second Quarter Fiscal Year 2016 Results (13-weeks ended July
30, 2016 compared to the 13-weeks ended August 1, 2015):
- Net sales were $232.8 million, as
compared to $235.7 million in the prior year.
- Comparable store sales
increased 0.3% driven by strength in the Company’s eCommerce
business and increased royalty and related revenue from its new
private label credit card agreement.
- Gross profit as a percentage of net
sales increased 30 basis points to 28.8% versus the fiscal year
2015 second quarter gross profit percentage of 28.5%. This increase
reflects benefits from the new private label credit card agreement,
ongoing benefits of Project Excellence through reduced product
costs, and a 90 basis point improvement in the leverage of buying
and occupancy costs, partially offset by decreases in product
margins due to higher promotional markdowns and increased shipping
costs from the Company’s growing eCommerce business.
- Selling, general and administrative
expenses were $65.7 million, as compared to $66.7 million in the
prior year period. Excluding non-operating charges of $2.0 million
from the prior year period, selling, general and administrative
expenses were $64.7 million in the prior year. The decrease in
selling, general, and administrative expenses on a GAAP basis
reflects decreases in marketing, reductions in performance-based
compensation expense, and the elimination of the non-operating
charges incurred in the prior year, partially offset by significant
increases in variable expenses associated with the growth in
eCommerce sales.
- GAAP operating income increased to $1.3
million, as compared to the prior year’s second quarter GAAP
operating income of $0.4 million. Excluding $2.0 million of
non-operating charges, the non-GAAP adjusted operating income in
the prior year’s second quarter was $2.5 million. There were no
non-operating charges during the three months ended July 30,
2016.
- GAAP net income for the second quarter
of fiscal year 2016 was $0.9 million, or earnings per diluted share
of $0.01. This compares to the prior year’s GAAP net loss of $0.1
million, or essentially breakeven per diluted share. Excluding $2.0
million of non-operating charges, the prior year’s second quarter
non-GAAP adjusted net income was $1.9 million, or earnings per
diluted share of $0.03.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. There were no non-GAAP adjustments
affecting comparability during the three and six months ended July
30, 2016. GAAP is defined as Generally Accepted Accounting
Principles.
- Total quarter-end inventory decreased
2.7%, as compared to the end of last year’s second quarter, due to
significantly lower levels of inventory in-transit as the Company
changed shipping terms with certain vendors to take title later in
the supply chain, partially offset by higher levels of on-hand
inventory.
- Capital spending for the second quarter
of fiscal year 2016 was $7.4 million, as compared to $7.3 million
in last year’s second quarter, primarily reflecting continued spend
on real estate and the Company’s information technology
infrastructure.
- The Company opened 1 New York &
Company store, remodeled 2 stores, and closed 2 New York &
Company stores and 1 Outlet store during the second quarter, ending
the second quarter with 486 stores, including 131 Outlet stores and
2.5 million selling square feet in operation.
- The Company ended the quarter with
$63.8 million of cash-on-hand and no outstanding borrowings under
its revolving credit facility.
Outlook:
Regarding expectations for the third quarter of fiscal year
2016, the Company is providing the following guidance:
- Net sales and comparable store sales
are expected to be flat to up in the low single-digit range.
- Gross margin is expected to be up by
approximately 50 basis points to 150 basis points reflecting
benefits from our new private label credit card agreement,
reductions in product costs and agent expenses resulting from
Project Excellence, and reductions in occupancy costs, partially
offset by increased shipping costs associated with the growing
omni-channel business.
- Selling, general and administrative
expenses on a GAAP basis are expected to increase by approximately
$1 million to $2 million versus the prior year’s third quarter,
reflecting an increase in marketing (partially due to a shift in
benefits from our new private label credit card agreement to
revenue, as compared to the prior year which reflected these
benefits as a reduction of marketing expense), and an increase in
selling expenses largely driven by increases in eCommerce variable
costs, partially offset by the elimination of non-operating charges
which occurred in the prior year.
- While operating results on a GAAP basis
for the third quarter of fiscal year 2016 are expected to reflect a
loss, the Company anticipates that the results will improve from
the prior year operating loss of $4.9 million.
Additional Outlook:
- Total inventory at the end of the third
quarter is expected to be approximately flat to the prior year
third quarter.
- Capital expenditures for the third
quarter of fiscal year 2016 are projected to be between $8 million
and $9 million, as compared to $6.8 million of capital expenditures
in the third quarter of last year.
- Depreciation expense for the third
quarter of fiscal year 2016 is estimated to be approximately $6
million.
- During the third quarter, the Company
expects to open 1 New York & Company store and close 3 New York
& Company stores, ending the third quarter of fiscal year 2016
with 484 stores, including 131 Outlet stores. For the fourth
quarter of fiscal year 2016, the Company expects to close between
20 and 25 stores, ending the year with between 459 and 464 stores,
including approximately 125 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 and private label credit card
royalties and related revenue are included in comparable store
sales.
Conference Call Information
A conference call to discuss second quarter of fiscal year
2016 results is scheduled for today, Thursday, August 18, 2016
at 4:30 p.m. Eastern Time. Investors and analysts interested in
participating in the call are invited to dial (888) 428-9473 and
reference conference ID number 6938572 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 18, 2016 until
11:59 p.m. Eastern Time on August 25, 2016 and can be accessed by
dialing (877) 870-5176 and entering conference ID number
6938572.
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 fashion 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 486 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 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, including information under “Outlook” and “Additional
Outlook” above, are subject to various risks and uncertainties that
could cause actual results to differ materially. These include, but
are not limited to: (i) market conditions impacting the Company’s
stock; (ii) the impact of general economic conditions and their
effect on consumer confidence and spending patterns; (iii) changes
in the cost of raw materials, distribution services or labor; (iv)
the potential for current economic conditions to negatively impact
the Company's merchandise vendors and their ability to deliver
products; (v) the Company’s ability to open and operate stores
successfully; (vi) the Company’s ability to fully recognize the
potential savings identified through Project Excellence; (vii)
seasonal fluctuations in the Company’s business; (viii) the
Company’s ability to anticipate and respond to fashion trends; (ix)
the Company’s dependence on mall traffic for its sales; (x)
competition in the Company’s market, including promotional and
pricing competition; (xi) the Company’s ability to retain, recruit
and train key personnel; (xii) the Company’s reliance on third
parties to manage some aspects of its business; (xiii) the
Company’s reliance on foreign sources of production; (xiv) the
Company’s ability to protect its trademarks and other intellectual
property rights; (xv) the Company’s ability to maintain, and its
reliance on, its information technology infrastructure; (xvi) the
effects of government regulation; (xvii) the control of the Company
by its sponsors and any potential change of ownership of those
sponsors; and (xviii) 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
July 30, 2016
% ofnet sales Three monthsended
August 1, 2015
% ofnet sales Net sales $ 232,819 100.0 % $ 235,696
100.0 % Cost of goods sold, buying and occupancy costs
165,769 71.2 % 168,563 71.5 % Gross profit 67,050 28.8 %
67,133 28.5 % Selling, general and administrative expenses
65,710 28.2 % 66,698 28.3 % Operating income 1,340 0.6 % 435
0.2 % Interest expense, net of interest income 308 0.2 % 309
0.2 % Income before income taxes 1,032 0.4 % 126 — %
Provision for income taxes 87 — % 272 0.1 % Net income
(loss) $ 945 0.4 % $ (146) (0.1) % Basic earnings
(loss) per share $ 0.01 $ (0.00) Diluted earnings (loss) per
share $ 0.01 $ (0.00) Weighted average shares outstanding:
Basic shares of common stock 63,461 63,174 Diluted shares of common
stock 63,936 63,174
Selected operating data:
(Dollars in thousands, except square foot data)
Comparable store sales increase 0.3 % 3.8 % Net sales per
average selling square foot (a)(d) $ 93 $ 91 Net sales per average
store (b)(d) $ 477 $ 468 Average selling square footage per store
(c) 5,120 5,132 Ending store count 486 504
___________________________________________________________________________
(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 from a two-point average calculation. Prior
period metrics have been restated resulting in an immaterial
impact.
Exhibit (2)
New York & Company, Inc. and
Subsidiaries
Condensed Consolidated Statements of
Operations
(Unaudited)
(Amounts in thousands,
except per share amounts) Six
monthsended
July 30, 2016
% ofnet sales Six monthsended
August 1, 2015
% ofnet sales Net sales $ 448,857 100.0 % $ 459,086
100.0 % Cost of goods sold, buying and occupancy costs
321,920 71.7 % 327,706 71.4 % Gross profit 126,937 28.3 %
131,380 28.6 % Selling, general and administrative expenses
130,995 29.2 % 135,190 29.4 % Operating loss (4,058) (0.9) %
(3,810) (0.8) % Interest expense, net of interest income 605
0.2 % 598 0.1 % Loss before income taxes (4,663) (1.1) %
(4,408) (0.9) % Provision for income taxes 108 — % 409 0.1 %
Net loss $ (4,771) (1.1) % $ (4,817) (1.0) %
Basic loss per share $ (0.08) $ (0.08) Diluted loss per
share $ (0.08) $ (0.08) Weighted average shares outstanding:
Basic shares of common stock 63,369 63,079 Diluted shares of common
stock 63,369 63,079
Selected operating data:
(Dollars in thousands, except square foot data)
Comparable store sales (decrease) increase (0.9) % 2.9 % Net
sales per average selling square foot (a)(d) $ 180 $ 177 Net sales
per average store (b)(d) $ 920 $ 913 Average selling square footage
per store (c) 5,120 5,132
___________________________________________________________________________
(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 from a two-point average calculation. Prior
period metrics have been restated resulting in an immaterial
impact.
Exhibit (3)
New York & Company, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(Amounts in
thousands) July 30, 2016 January 30,
2016* August 1, 2015 (Unaudited)
(Unaudited) Assets Current assets: Cash and cash
equivalents $ 63,798 $ 61,432 $ 60,122 Restricted cash — — 1,509
Accounts receivable 37,394 8,208 12,682 Income taxes receivable 47
47 73 Inventories, net 83,585 87,777 85,896 Prepaid expenses 19,519
19,442 19,559 Other current assets 899 858 1,320 Total current
assets 205,242 177,764 181,161 Property and equipment, net
89,315 88,831 86,882 Intangible assets 14,879 14,879 14,879
Deferred income taxes (a) — — 6,421 Other assets 2,046 1,986 1,531
Total assets $ 311,482 $ 283,460 $ 290,874
Liabilities and
stockholders’ equity Current liabilities: Current
portion—long-term debt $ 841 $ 841 $ 839 Accounts payable 75,553
82,225 81,453 Accrued expenses 55,549 52,424 48,750 Income taxes
payable 109 239 564 Deferred income taxes (a) — — 6,421 Total
current liabilities 132,052 135,729 138,027 Long-term debt,
net of current portion 11,905 12,326 12,738 Deferred rent 32,306
34,351 36,836 Other liabilities 43,933 7,283 7,034 Total
liabilities 220,196 189,689 194,635 Total stockholders’
equity 91,286 93,771 96,239 Total liabilities and stockholders’
equity $ 311,482 $ 283,460 $ 290,874
___________________________________________________________________________
* Derived from the audited consolidated financial statements
included in the Company’s Annual Report on Form 10-K for the fiscal
year ended January 30, 2016. (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.
The Company’s net deferred tax assets are netted against a full
valuation allowance. 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 (4)
New York & Company, Inc.
and Subsidiaries
Condensed Consolidated Statements of
Cash Flows
(Unaudited)
(Amounts in thousands)
Six
months
ended
July 30,
2016
Six
months
ended
August 1,
2015
Operating activities Net loss $ (4,771) $ (4,817)
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation and amortization 11,326 12,333 Loss from
impairment charges — 232 Amortization of deferred financing costs
94 92 Share-based compensation expense 2,070 1,782 Changes in
operating assets and liabilities: Accounts receivable (29,186)
(5,276) Income taxes receivable — 26 Inventories, net 4,192 7,895
Prepaid expenses (77) 1,022 Accounts payable (6,672) (5,028)
Accrued expenses 2,578 (3,865) Income taxes payable (130) (146)
Deferred rent (2,045) 1,667 Other assets and liabilities
35,116 (86) Net cash provided by operating activities
12,495 5,831
Investing activities Capital
expenditures (9,235) (13,993) Net cash used in
investing activities (9,235) (13,993)
Financing activities Repayment of long-term debt (500) (500)
Payment of financing costs — (22) Proceeds from exercise of stock
options 120 16 Shares withheld for payment of employee payroll
taxes (91) (247) Principal payments on capital lease obligations
(423) (256) Net cash used in financing activities
(894) (1,009) Net increase (decrease) in cash
and cash equivalents 2,366 (9,171) Cash and cash equivalents at
beginning of period 61,432 69,293 Cash and cash
equivalents at end of period $ 63,798 $ 60,122 Non-cash capital
lease transactions $ 2,575 $ 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 income (loss), net
income (loss) and earnings (loss) per diluted share for the three
and six months ended August 1, 2015 is indicated below. There were
no non-GAAP adjustments affecting comparability in the three and
six months ended July 30, 2016. 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.
Three months ended August 1,
2015
(Amounts in thousands, except per share amounts)
Selling, general and
administrative
expenses
Operating
income
Net
(loss)
income
(Loss) earnings
per diluted
share
GAAP as reported $ 66,698 $ 435 $ (146) $ (0.00)
Adjustments
affecting comparability
Consulting expense – Project Excellence 572 572 572 Certain
severance expenses 860 860 860 Moving expenses for new headquarters
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 and
administrative
expenses
Operating
(loss) income
Net
(loss)
income
(Loss) earnings
per diluted
share
GAAP as reported $ 135,190 $ (3,810) $ (4,817) $ (0.08)
Adjustments
affecting comparability
Consulting expense – Project Excellence 3,028 3,028 3,028 Certain
severance expenses 1,584 1,584 1,584 Net reduction of moving
expenses for new headquarters (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 $4.9 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.
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Investors:ICR, Inc.Allison Malkin, 203-682-8200
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