~ Reports Operating Results In Line with
Guidance ~~ Launched Two New Digital Businesses in the
Quarter ~~ Reports $83.2 Million in Cash / $1.27 Per Diluted
Share with No Debt Outstanding ~
RTW Retailwinds, Inc. [NYSE:RTW], an omni-channel specialty
apparel retail platform for powerful celebrity and consumer brands,
today announced results for the first quarter of fiscal year 2019
ended May 4, 2019.
“For the first quarter, we executed against our strategic plan
of growing our multi-brand portfolio by continuing to build our
Fashion to Figure business and by bringing to market digitally
native brands that address customer opportunities. Regarding
Fashion to Figure, we are pleased to see the ongoing implementation
of our strategic plan resonate with the customer, as reflected in
the brand’s 30% comp for the quarter. In addition, on April 4th we
introduced Happy x Nature, Kate Hudson’s first ready-to-wear
collection supported by Kate’s active and engaged social
network. On April 25th, we introduced Uncommon Sense, a
lingerie lifestyle brand which solves the challenges many women
face in their lingerie choices through smarter fits, technology,
and support that looks great and feels amazing,” said Gregory
Scott, RTW Retailwinds, Inc. CEO.
“That said, we were disappointed by our first quarter
performance in our core New York & Company business with
February performance being particularly challenging, though we did
experience sequential improvement throughout the quarter during the
combined March and April period,” Mr. Scott continued. “Traffic,
along with new customer acquisition and weak results from our SoHo
Jeans sub-brand contributed to the overall disappointing results in
the first quarter.”
“Moving on to the second quarter, we did experience improved
performance during the first two weeks of May, including the
Mother’s Day holiday. This improvement is reflected in our guidance
for the second quarter, which includes the continued investments in
our new businesses,” said Mr. Scott
“Looking ahead to our long term growth, as announced today we
are pleased to announce that Traci Inglis will be joining RTW in
June as our President, Chief Marketing and Customer Officer. In
this newly created position, Traci brings exactly what we are
looking for with her track record in translating customer data,
analytics, and insights into innovative, customer-first strategies.
She joins us at an important time in our multi-brand evolution and
her experience will be incredibly important to our portfolio of
brands as we work to reinvent the way we market and deliver
experiences to our customers across all channels. Traci is the
ideal leader to leverage the power of our information to engage
customers and build digital brands through optimized customer
experiences and new customer acquisition. I look forward to working
with her on building for the future of RTW and transforming our
customer journey across our portfolio of brands,” according to Mr.
Scott.
For the first quarter of fiscal year 2019, the Company reported
the following:
- Net sales were $201.0 million, as
compared to $218.8 million in the prior year, reflecting a 5.3%
decrease in comparable store sales, which reflects a reduction in
store count by 22 closed stores from the prior year first quarter,
partially offset by the inclusion of sales from Fashion to
Figure.
- Gross profit as a percentage of net
sales decreased 80 basis points to 31.2% versus fiscal year 2018
first quarter gross profit percentage of 32.0%. The decrease
reflects increases in shipping rates and decreases in leverage of
buying and occupancy costs.
- Selling, general and administrative
expenses decreased by $1.4 million to $65.1 million, or 32.4% of
net sales, as compared to $66.5 million, or 30.4% of net sales in
the first quarter of fiscal year 2018. Included in selling, general
and administrative expenses in the first quarter of fiscal year
2019 is $2.3 million of incremental spending incurred in connection
with the incubation of three new businesses (Fashion to Figure,
Happy x Nature, and Uncommon Sense), which was offset by a
reduction in variable compensation and store selling expenses.
- Operating loss for the first quarter of
fiscal year 2019 was $2.5 million, inclusive of $1.5 million of
losses from three new businesses. This compares to operating income
of $3.5 million for the first quarter of fiscal year 2018. There
was no impact on operating income for the first quarter of fiscal
year 2018 from the Company’s new businesses.
- Net loss for the first quarter of
fiscal year 2019 was $2.2 million, or a loss of $0.04 per diluted
share, as compared to net income of $3.1 million, or earnings of
$0.05 per diluted share in the first quarter of fiscal year
2018.
Other Financial and Operational Highlights for the First
Quarter of Fiscal Year 2019:
- Total quarter end inventory increased
4.3%, as compared to the end of the prior year period, to support
the new businesses and shifts in the timing of receipts.
- Capital expenditures were $0.9 million,
as compared to $0.3 million in the prior year period, reflecting
continued spending to support new stores and the remodel/refresh of
existing stores and investments in the IT infrastructure to support
new businesses.
- The Company opened 1 New York &
Company store, closed 1 New York & Company store, and
remodeled/refreshed 2 New York & Company stores and 1 Outlet
store, ending the first quarter with 410 stores, including 119
Outlet stores (of which 58 are clearance stores), with 2.0 million
selling square feet in operation. The Company continues to maintain
a highly flexible lease portfolio with approximately 70% of its
leases expiring in 2 years or less.
- The Company ended the first quarter
with $83.2 million of cash on-hand versus $78.0 million at the end
of the first quarter of fiscal year 2018, with no outstanding
borrowings under its revolving credit facility and no long-term
debt.
Outlook:
Regarding expectations for fiscal year 2019, the Company
continues to focus on growth and focus on improving its operating
results to drive increases in comparable store sales and annual
operating income.
For the second quarter of fiscal year 2019:
- Net sales are expected to decrease in
the low single-digit percentage range, reflecting the combination
of reduced store count, and comparable store sales which are
expected to be down slightly.
- Gross margin is expected to be down
slightly, primarily reflecting increased shipping costs, partially
offset by increased leverage of buying and occupancy costs.
- Selling, general and administrative
expenses are expected to decrease by approximately $1 million
versus the prior year’s second quarter. This reflects reductions in
variable compensation and reduced payroll, partially offset by an
increase in marketing expenses and an increase in selling expenses,
driven by growth in eCommerce variable costs and the costs to
support new businesses.
- Operating income for the second quarter
is expected to be approximately breakeven, which includes
approximately $1.5 million of losses associated with the three new
businesses.
Additional Outlook:
- On-hand inventory at the end of the
second quarter of fiscal year 2019 in the core New York &
Company business is expected to be down in the low single digit
percentage range, offset by increased in-transit levels due to the
timing of receipts and inventory to support the new businesses with
total inventory expected to be up in the low single digit
percentage range.
- Capital expenditures for the second
quarter of fiscal year 2019 are projected to be approximately $5
million to support new stores and the remodel/refresh of existing
stores, investments in IT infrastructure, and investments in new
businesses, as compared to $1.4 million of capital expenditures in
the second quarter of 2018. For fiscal year 2019, capital
expenditures are projected to be $12 million to $13 million, as
compared to $8.5 million in capital expenditures in fiscal year
2018.
- Depreciation and amortization expense
for the second quarter of fiscal year 2019 is estimated to be
approximately $16 million, with approximately $11 million
attributable to amortization of the Company’s right-of-use asset
resulting from the adoption of Accounting Standards Codification
842, “Leases” on the first day of fiscal year 2019.
- During the second quarter of fiscal
year 2019, the Company expects to open 5 New York & Company
stores and 2 Fashion to Figure stores, convert 2 New York &
Company stores to Outlet stores, remodel/refresh 2 New York &
Company stores, and close 1 New York & Company store.
- For fiscal year 2019, the Company
expects to open approximately 8 New York & Company stores
and 2 Fashion to Figure stores, convert 2 New York & Company
stores to Outlet stores, and remodel/refresh 7 New York &
Company stores and 2 Outlet stores, and close 12 to 17 New York
& Company stores and up to 3 Outlet stores. The Company plans
to end fiscal year 2019 with roughly 400 to 405 stores, and
approximately 2.0 million of selling square feet.
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 stores, and private label credit card
royalties and related revenue are included in comparable store
sales. In addition, in a year with 53 weeks, sales in the last week
of the year are not included in determining comparable store
sales.
Conference Call Information
A conference call to discuss fourth quarter results is scheduled
for today, Wednesday, May 29, 2019 at 4:30 p.m. Eastern Time.
Investors and analysts interested in participating in the call are
invited to dial (877) 407-0784 and reference conference ID number
13690146 approximately ten minutes prior to the start of the call.
The conference call will also be webcast live at
www.nyandcompany.com. A replay of this call will be available at
7:30 p.m. Eastern Time on May 29, 2019 until 11:59 p.m. Eastern
Time on June 5, 2019 and can be accessed by dialing (844) 512-2921
and entering conference ID number 13690146.
As a supplement to this press release, slides with information
regarding the first quarter results and outlook for second quarter
2019 will also be available at: www.nyandcompany.com at
approximately 4:20 p.m. Eastern Time on Wednesday, May 29,
2019.
About RTW Retailwinds
RTW Retailwinds, Inc. (together with its subsidiaries, the
"Company") is a specialty women's omni-channel and digitally
enabled retailer with a powerful multi-brand lifestyle platform
providing curated fashion solutions that are versatile, on-trend,
and stylish at a great value. The specialty retailer, first
incorporated in 1918, has grown to now operate 410 retail and
outlet locations in 35 states while also growing a substantial
eCommerce business. The Company's portfolio includes branded
merchandise from New York & Company, Fashion to Figure, Happy x
Nature, Uncommon Sense, and collaborations with Eva Mendes,
Gabrielle Union and Kate Hudson. The Company's branded merchandise
is sold exclusively at its retail locations and online at
www.nyandcompany.com, www.nyandcompanycloset.com,
www.fashiontofigure.com, www.happyxnature.com, and
www.uncommonsense.com. Additionally, certain product, press
releases 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) the Company’s dependence on mall traffic
for its sales and the continued reduction in the volume of mall
traffic; (ii) the Company’s ability to anticipate and respond to
fashion trends; (iii) the impact of general economic conditions and
their effect on consumer confidence and spending patterns; (iv)
changes in the cost of raw materials, distribution services or
labor; (v) the potential for economic conditions to negatively
impact the Company's merchandise vendors and their ability to
deliver products; (vi) the Company’s ability to open and operate
stores successfully; (vii) seasonal fluctuations in the Company’s
business; (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 largest shareholder and any potential change of ownership of
the Company including the shares held by its largest shareholder;
(xvi) the impact of tariff increases or new tariffs; 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) RTW
Retailwinds, Inc. and Subsidiaries Condensed Consolidated
Statements of Operations (Unaudited) (Amounts
in thousands, except per share amounts)
13 weeksendedMay 4,
2019
% ofnet sales
13 weeksendedMay 5,
2018
% ofnet sales
Net sales $ 200,963 100.0 % $ 218,829 100.0 % Cost of goods
sold, buying and occupancy costs 138,321 68.8 % 148,868 68.0 %
Gross profit 62,642 31.2 % 69,961 32.0 % Selling,
general and administrative expenses 65,092 32.4 % 66,486 30.4 %
Operating (loss) income (2,450) (1.2) % 3,475 1.6 %
Net interest (income) expense (315) (0.2) % 22 — % Loss on
extinguishment of debt — — % 239 0.1 % (Loss) income before
income taxes (2,135) (1.0) % 3,214 1.5 % Provision for
income taxes 114 0.1 % 128 0.1 % Net (loss) income $ (2,249)
(1.1) % $ 3,086 1.4 % Basic (loss) earnings per share
$ (0.04) $ 0.05 Diluted (loss) earnings per share $ (0.04) $
0.05 Weighted average shares outstanding: Basic shares of
common stock 64,193 63,527 Diluted shares of common stock 64,193
65,404
Selected operating data: (Dollars in
thousands, except square foot data) Comparable store sales
(decrease) increase (5.3) % 2.7 % Net sales per average selling
square foot (a) $ 98 $ 101 Net sales per average store (b) $ 490 $
504 Average selling square footage per store (c) 4,964 4,985 Ending
store count 410 432 (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.
Exhibit (2)
RTW Retailwinds, Inc. and Subsidiaries Condensed
Consolidated Balance Sheets (Amounts in
thousands) May 4, 2019 February 2, 2019* May
5, 2018 (Unaudited) (Unaudited) Assets
Current assets: Cash and cash equivalents $ 83,180 $ 95,542 $
78,019 Accounts receivable 11,729 9,879 14,850 Inventories, net
94,932 82,803 90,984 Prepaid expenses 11,862 16,921 16,557 Other
current assets 1,877 1,818 2,059 Total current assets 203,580
206,963 202,469 Property and equipment, net 59,795 63,791
72,701 Operating lease assets 227,342 — — Intangible assets 16,766
16,813 17,047 Other assets 883 1,311 1,469 Total assets $ 508,366 $
288,878 $ 293,686
Liabilities and stockholders’ equity
Current liabilities: Accounts payable $ 74,884 $ 77,050 $ 73,937
Accrued expenses 71,426 68,585 73,535 Current operating lease
liabilities 40,865 — — Income taxes payable 422 375 71 Total
current liabilities 187,597 146,010 147,543 Deferred rent —
25,090 26,353 Non-current operating lease liabilities 216,306 — —
Other liabilities 29,864 31,165 35,142 Total liabilities 433,767
202,265 209,038 Total stockholders’ equity 74,599 86,613
84,648 Total liabilities and stockholders’ equity $ 508,366 $
288,878 $ 293,686 * Derived from the audited
consolidated financial statements included in the Company’s Annual
Report on Form 10-K for the fiscal year ended February 2, 2019.
Exhibit (3) RTW Retailwinds,
Inc. and Subsidiaries Condensed Consolidated Statements of
Cash Flows (Unaudited)
(Amounts in thousands)
13 weeksended May 4,
2019
13 weeksended May 5,
2018
Operating activities Net (loss) income $ (2,249) $
3,086 Adjustments to reconcile net (loss) income to net cash used
in operating activities: Depreciation and amortization 4,880 5,479
Non-cash lease expense 11,029 — Loss from impairment charges 82 —
Amortization of intangible assets 47 78 Amortization of deferred
financing costs 8 34 Write-off of unamortized deferred financing
costs — 239 Share-based compensation expense 710 642 Changes in
operating assets and liabilities: Accounts receivable (1,251)
(2,506) Inventories, net (12,129) (6,486) Prepaid expenses (104)
(110) Accounts payable (2,166) 3,848 Accrued expenses 2,566 (3,022)
Income taxes payable 47 43 Deferred rent — (864) Operating lease
liabilities (11,645) — Other assets and liabilities (758)
(935) Net cash used in operating activities (10,933)
(474)
Investing activities Capital
expenditures (910) (274) Insurance recoveries — 184
Net cash used in investing activities (910) (90)
Financing activities Repayment of long-term debt —
(11,750) Principal payments on capital lease obligations (481)
(482) Shares withheld for payment of employee payroll taxes
(38) (93) Net cash used in financing activities (519)
(12,325) Net decrease in cash and cash equivalents
(12,362) (12,889) Cash and cash equivalents at beginning of period
95,542 90,908 Cash and cash equivalents at end of
period $ 83,180 $ 78,019
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190529005918/en/
Investor Relations:ICR, Inc.(203) 682-8200Allison
Malkin
RTW Retailwinds (NYSE:RTW)
Historical Stock Chart
From Mar 2024 to Apr 2024
RTW Retailwinds (NYSE:RTW)
Historical Stock Chart
From Apr 2023 to Apr 2024