New York & Company, Inc. Announces Third Quarter 2009 Results
New York & Company, Inc. [NYSE:NWY], a specialty apparel chain with 592
retail stores, today announced results for the third quarter ended
October 31, 2009. For the third quarter of fiscal year 2009, net sales
were $227.9 million, as compared to $249.0 million for the third quarter
of fiscal year 2008. Comparable store sales for the third quarter of
fiscal year 2009 decreased 8.4%, compared to a 14.0% decrease in the
prior year third quarter. Net loss from continuing operations for the
third quarter of fiscal year 2009 was $6.3 million, or $0.11 per diluted
share, and included a non-operating charge of approximately $0.01 per
diluted share related to the restructuring of the Company’s real estate
group. This compares to a net loss from continuing operations in the
prior year of $8.0 million, or $0.13 per diluted share, which included a
previously disclosed, non-operating charge of approximately $0.03 per
diluted share related to management changes.
For the nine months ended October 31, 2009, net sales were $708.6
million, as compared to $814.8 million for the nine months ended
November 1, 2008. Comparable store sales decreased 13.5% for the nine
months ended October 31, 2009, as compared to a 7.6% decrease in the
prior year period. Net loss from continuing operations for the nine
months ended October 31, 2009 was $16.0 million, or $0.27 per diluted
share, as compared to prior year net income from continuing operations
of $7.3 million, or $0.12 per diluted share.
Richard P. Crystal, New York & Company’s Chairman and Chief Executive
Officer, stated: "Third quarter results were in-line with our
expectations and reflected a sequential improvement in our comparable
store sales trend from the second quarter of this year. Merchandise
margins in the third quarter improved from the year-ago period, and
importantly were in-line with historical levels. Additionally, we
continued to stringently manage our inventory and expenses with
inventory per average store down 25% compared to last year. In October,
we experienced the start of what we hope is a turnaround as we posted
our strongest monthly sales comparisons in over twelve months, and this
momentum has continued into the first two weeks of November. As a
result, we remain on-track to achieve our plan for the fall season, as
we expect to achieve profitability in the fourth quarter and believe our
cumulative results for the fall season will approach breakeven levels."
During the quarter, the Company continued to maintain tight control over
inventory and remained focused on the execution of its restructuring and
cost reduction program. As a result of these efforts, the Company was
able to achieve the following:
--
Merchandise margins improved by 110 basis points on top of the prior
year results, which were in-line with historical levels. This
improvement reflected a positive customer response to the Company’s
fall merchandise assortment, continued sourcing efficiencies, and
controlled promotional activity.
--
Inventory continues to be managed conservatively with inventory per
average store down by 24.6%, as compared to the end of last year’s
third quarter.
--
Selling, general and administrative expenses declined by 8.8% on an
average store basis, as compared to third quarter last year.
--
The Company’s E-Commerce business experienced positive comparable
store sales versus the prior year, reflecting the success of this
sales channel in a challenging consumer spending environment.
--
The Company ended the quarter with $39.3 million of cash-on-hand and
no outstanding borrowings under its revolving credit facility.
Outlook
New York & Company continues to believe that the business environment
will remain challenging, and expects promotional activity to accelerate
throughout the key holiday selling period. Nevertheless, the Company
believes that it has planned appropriately and expects to end fiscal
year 2009 with significant cash and no borrowings under its revolving
credit facility. The Company remains focused on its long-term
performance. Therefore, the Company will continue to provide meaningful
trend information on business fundamentals, key metrics, and strategic
initiatives. Regarding expectations for the balance of fiscal year 2009,
the Company provided the following:
--
The comparable store sales trend for the fourth quarter is expected to
sequentially improve versus the third quarter due to the positive
customer response to the Company’s merchandise and strong inventory
management.
--
Merchandise margins are expected to significantly improve, as compared
with the prior year’s fourth quarter, resulting primarily from
sourcing efficiencies and significant decreases in the level of
promotional activities.
--
Buying and occupancy costs are expected to decrease during the fourth
quarter, as compared to the same period last year, due to the success
of the Company’s restructuring and cost reduction program; however,
the Company expects to de-leverage these costs based on anticipated
sales levels.
--
Gross margins are expected to significantly improve during the fourth
quarter, as compared to the same period last year, reflecting sourcing
efficiencies, less promotional activity and the impact of the
restructuring and cost reduction program.
--
Selling, general and administrative expenses (SG&A) are expected to
decrease by a low to mid single-digit percentage during the fourth
quarter, as compared to the same period last year, reflecting the
benefits of the Company’s restructuring and cost reduction program
partially offset by continued investment into growth areas of the
organization.
--
The Company continues to expect to exceed the $30 million pre-tax
savings target for fiscal year 2009 established when it initiated its
restructuring and cost reduction program in January 2009. As
previously announced, these savings will be realized in the Company’s
financial results through a combination of selling, general and
administration expenses and buying and occupancy costs.
--
Inventory will continue to be managed tightly with inventory per
average store at the end of the fourth quarter expected to be
approximately flat as compared to last year’s fourth quarter.
--
Cash-on-hand at the end of year is expected to be higher than the cash
balance at the end of last year, reflecting no cash drain during an
extremely difficult year.
Share Repurchases
As previously announced, the Company’s Board of Directors has authorized
the repurchase of up to 3,750,000 shares over a 12-month period ending
on November 23, 2009. During the third quarter ended October 31, 2009,
the Company did not repurchase any shares under this program. As of
October 31, 2009, the Company has repurchased a total of 1,000,000
shares under this program with a total purchase price of $3.4 million.
Separately, on November 18, 2009 the Company’s Board of Directors
authorized the extension of the existing repurchase plan for an
additional 12-month period ending on November 23, 2010. Repurchases, if
any, will be made from time to time in a manner the Company believes is
appropriate through open market or private transactions including
through pre-established trading plans.
Conference Call Information
A conference call to discuss the third quarter of fiscal year
2009 results is scheduled for today, Thursday, November 19, 2009 at 8:00
am Eastern Time. Investors and analysts interested in participating in
the call are invited to dial 800-922-9655, referencing conference ID
number 40802515, 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 until midnight on November 26,
2009 and can be accessed by dialing 800-642-1687 and entering conference
ID number 40802515.
Forward Looking Statements: This press release contains certain forward
looking statements. Some of these statements can be identified by terms
and phrases such as "anticipate," "believe," "intend," "estimate,"
"expect," "continue," "could," "may," "plan," "project," "predict", and
similar expressions and include references to assumptions that we
believe are reasonable and relate to our 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, which have deteriorated significantly and may continue to do
so for the foreseeable future; (ii) our ability to successfully
integrate our restructuring and cost reduction program; (iii) the
deteriorating economic conditions could negatively impact the Company’s
merchandise vendors and their ability to deliver products; (iv) our
ability to open and operate stores successfully; (v) seasonal
fluctuations in our business; (vi) our ability to anticipate and respond
to fashion trends; (vii) our dependence on mall traffic for our sales;
(viii) competition in our market, including promotional and pricing
competition; (ix) our ability to retain, recruit and train key
personnel; (x) our reliance on third parties to manage some aspects of
our business; (xi) our reliance on foreign sources of production; (xii)
our ability to protect our trademarks and other intellectual property
rights; (xiii) our ability to maintain, and our reliance on, our
information technology infrastructure; (xiv) the effects of government
regulation; (xv) the control of the company by our sponsors and any
potential change of ownership of those sponsors; and (xvi) other risks
and uncertainties as described in our documents filed with the SEC,
including our Annual Report on Form 10-K and Quarterly Reports on Form
10-Q. We undertake no obligation to revise the forward looking
statements included in this press release to reflect any future events
or circumstances.
About New York & Company, Inc.
New York & Company, Inc., founded in 1918, is a leading specialty
retailer of fashion oriented, moderately priced women’s apparel. The
Company’s proprietary branded New York & Company (TM)
merchandise is sold exclusively through its national network of retail
stores and E-commerce store at www.nyandcompany.com.
The Company currently operates 592 stores in 44 states. Additionally,
certain product, press release and SEC filing information concerning the
Company are available at the Company’s website: www.nyandcompany.com.
Exhibit (1)
New York & Company, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except per share amounts) Three months % Three months %
ended of ended of
October 31, net November 1, net
2009 sales 2008 sales
Net sales $ 227,949 100.0 % $ 249,027 100.0 %
Cost of goods sold, buying and occupancy costs 170,219 74.7 % 186,089 74.7 %
Gross profit 57,730 25.3 % 62,938 25.3 %
Selling, general and administrative expenses 68,656 30.1 % 76,070 30.6 %
Operating loss (10,926 ) (4.8 )% (13,132 ) (5.3 )%
Interest expense, net of interest income 179 0.1 % 232 0.1 %
Loss from continuing operations before income taxes (11,105 ) (4.9 )% (13,364 ) (5.4 )%
Benefit for income taxes (4,803 ) (2.1 )% (5,372 ) (2.2 )%
Loss from continuing operations (6,302 ) (2.8 )% (7,992 ) (3.2 )%
Income from discontinued operations, net of taxes -- -- % 68 -- %
Net loss $ (6,302 ) (2.8 )% $ (7,924 ) (3.2 )%
Basic loss per share from continuing operations $ (0.11 ) $ (0.13 )
Basic earnings per share from discontinued operations -- --
Basic loss per share $ (0.11 ) $ (0.13 )
Diluted loss per share from continuing operations $ (0.11 ) $ (0.13 )
Diluted earnings per share from discontinued operations -- --
Diluted loss per share $ (0.11 ) $ (0.13 )
Weighted average shares outstanding:
Basic shares of common stock 59,161 59,858
Diluted shares of common stock 59,161 59,858
Selected operating data for continuing operations:
(Dollars in thousands, except square foot data)
Comparable store sales decrease (8.4 )% (14.0 )%
Net sales per average selling square foot (a) $ 69 $ 74
Net sales per average store (b) $ 385 $ 416
Average selling square footage per store (c) 5,568 5,620
(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) Nine months % Nine months %
ended of ended of
October 31, net November 1, net
2009 sales 2008 sales
Net sales $ 708,629 100.0 % $ 814,764 100.0 %
Cost of goods sold, buying and occupancy costs 535,953 75.6 % 579,503 71.1 %
Gross profit 172,676 24.4 % 235,261 28.9 %
Selling, general and administrative expenses 200,024 28.3 % 222,573 27.3 %
Operating (loss) income (27,348 ) (3.9 )% 12,688 1.6 %
Interest expense, net of interest income 568 0.1 % 412 0.1 %
(Loss) income from continuing operations before income taxes (27,916 ) (4.0 )% 12,276 1.5 %
(Benefit) provision for income taxes (11,897 ) (1.7 )% 4,935 0.6 %
(Loss) income from continuing operations (16,019 ) (2.3 )% 7,341 0.9 %
Income from discontinued operations, net of taxes 3 -- % 235 -- %
Net (loss) income $ (16,016 ) (2.3 )% $ 7,576 0.9 %
Basic (loss) earnings per share from continuing operations $ (0.27 ) $ 0.12
Basic earnings per share from discontinued operations -- 0.01
Basic (loss) earnings per share $ (0.27 ) $ 0.13
Diluted (loss) earnings per share from continuing operations $ (0.27 ) $ 0.12
Diluted earnings per share from discontinued operations -- --
Diluted (loss) earnings per share $ (0.27 ) $ 0.12
Weighted average shares outstanding:
Basic shares of common stock 59,508 59,520
Diluted shares of common stock 59,508 61,398
Selected operating data for continuing operations:
(Dollars in thousands, except square foot data)
Comparable store sales decrease (13.5 )% (7.6 )%
Net sales per average selling square foot (a) $ 215 $ 243
Net sales per average store (b) $ 1,199 $ 1,383
Average selling square footage per store (c) 5,568 5,620
(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, January 31, November 1,
2009 2009 2008
(Unaudited) (Audited) (Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 39,297 $ 54,280 $ 41,152
Accounts receivable 14,194 11,993 15,605
Income taxes receivable 4,947 10,202 4,274
Inventories, net 117,438 104,861 157,906
Prepaid expenses 23,229 24,610 29,887
Other current assets 2,506 2,390 3,663
Current assets of discontinued operations 108 110 305
Total current assets 201,719 208,446 252,792
Property and equipment, net 194,868 217,248 247,547
Intangible assets 14,879 14,879 14,879
Deferred income taxes 21,926 14,897 --
Other assets 1,086 1,343 1,260
Total assets $ 434,478 $ 456,813 $ 516,478
Liabilities and stockholders’ equity
Current liabilities:
Current portion - long-term debt $ 6,000 $ 6,000 $ 6,000
Accounts payable 79,989 68,431 101,400
Accrued expenses 51,443 61,121 53,916
Deferred income taxes 2,774 2,020 3,546
Current liabilities of discontinued operations 265 275 757
Total current liabilities 140,471 137,847 165,619
Long-term debt, net of current portion 9,000 13,500 15,000
Deferred income taxes -- -- 2,824
Deferred rent 73,203 75,848 77,060
Other liabilities 7,101 7,122 4,680
Total liabilities 229,775 234,317 265,183
Total stockholders’ equity 204,703 222,496 251,295
Total liabilities and stockholders’ equity $ 434,478 $ 456,813 $ 516,478
Exhibit (4)
New York& Company,Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands) Nine months Nine months
ended ended
October 31, November 1,
2009 2008
Operating activities
Net (loss) income $ (16,016 ) $ 7,576
Less: Income from discontinued operations, net of taxes 3 235
(Loss) income from continuing operations (16,019 ) 7,341
Adjustments to reconcile net (loss) income to net cash provided by
operating
activities of continuing operations:
Depreciation and amortization 31,383 32,130
Amortization of deferred financing costs 162 133
Share-based compensation expense 1,387 1,274
Deferred income taxes (6,275) (1,305 )
Changes in operating assets and liabilities:
Accounts receivable (2,201 ) 2,918
Income taxes receivable 5,255 7,456
Inventories, net (12,577 ) (53,983 )
Prepaid expenses 1,381 (7,896 )
Accounts payable 11,558 24,223
Accrued expenses (9,678 ) 298
Deferred rent (2,645 ) 4,523
Other assets and liabilities (142 ) (1,750 )
Net cash provided by operating activities of continuing operations 1,589 15,362
Investing activities
Acquisition of trademarks -- (36 )
Proceeds from sale of fixed assets -- 260
Capital expenditures (8,903 ) (40,253 )
Net cash used in investing activities of continuing operations (8,903 ) (40,029 )
Financing activities
Repayment of debt (4,500 ) (4,500 )
Purchase of treasury stock (3,417 ) --
Proceeds from exercise of stock options 74 148
Excess tax benefit from exercise of stock options 179 2,336
Net cash used in financing activities of continuing operations (7,664 ) (2,016 )
Cash flows from discontinued operations
Operating cash flows (6 ) (6,122 )
Investing cash flows -- --
Financing cash flows -- --
Net cash used in discontinued operations (6 ) (6,122 )
Net decrease in cash and cash equivalents (14,984 ) (32,805 )
Cash and cash equivalents at beginning of period (including cash at 54,281 73,957
discontinued
operations of $1 and $223, respectively)
Cash and cash equivalents at end of period (represents cash at $ 39,297 $ 41,152
continuing
operations)
SOURCE: New York & Company, Inc.
New York & Company, Inc.
Suzanne Rosenberg, 212-884-2140
Director, Investor Relations
or
Investor/Media Contact:
Integrated Corporate Relations
Investor: Allison Malkin, 203-682-8200
Media: Kellie Baldyga, 203-682-8200
