New York & Company, Inc. (NYSE:NWY), a specialty
apparel chain with 532 retail stores, today announced results for
the fourth quarter and full fiscal year ended January 28, 2012
(“fiscal year 2011”).
Fourth Quarter and Fiscal Year Results
For the fourth quarter of fiscal year 2011, net sales were
$271.8 million, as compared to $303.2 million for the fourth
quarter of fiscal year 2010. Comparable store sales for the fourth
quarter of fiscal year 2011 decreased 6.3% compared to an
increase of 1.7% in the prior year fourth quarter.
Net loss from continuing operations in the fourth quarter of
fiscal year 2011 was $10.9 million, or $0.18 per diluted share,
which includes non-cash asset impairment charges totaling $2.2
million. This compares to net income from continuing operations in
the prior year fourth quarter of $14.9 million, or $0.24 per
diluted share, which included favorable non-operating tax
adjustments totaling $2.3 million.
Gregory Scott, New York & Company’s CEO, stated: “While we
are disappointed with our fourth quarter results, fiscal 2011 was
an important year for our Company. We gained valuable insight about
our customer, her lifestyle needs and what drives her purchasing
decisions in terms of merchandise, fashion, price points and
promotions – all while facing significant cost pressures within our
supply chain. We have already begun applying these key learnings to
our business planning in 2012.”
Mr. Scott continued: “Our top priority in 2012 is to deliver a
significant improvement in our operating performance versus last
year and bring us one step closer toward achieving our long-term
goal of high single-digit operating margins. To achieve this, we
are focused on six keys to success: Maximizing sales and
profitability particularly during peak traffic times of the year;
increasing our marketing efforts to grow traffic in stores and
on-line; maintaining our dominance in wear-to-work, while
redefining our casual assortment; improving our average unit cost;
optimizing our real estate portfolio; and expanding our growing
eCommerce and Outlet businesses.”
During the fourth quarter:
- The Company’s eCommerce business
produced strong results with sales up 22% from the same period in
the prior year and reaching more than 8% of total net sales in the
quarter.
- Gross profit as a percentage of net
sales declined by 730 basis points versus the prior year,
reflecting significantly higher levels of promotional activity
necessary to drive traffic, increase sales, and liquidate non
go-forward holiday inventory, and to ensure that inventories were
clean entering the Spring season. The gross profit decline was
partially offset by reductions in occupancy costs as the Company
continues to reduce its rent expense.
- Selling, general and administrative
expenses were $70.0 million, or 25.8% of net sales, which includes
$2.2 million of non-cash charges related to the impairment of store
assets. Excluding these charges, selling, general and
administrative expenses were $67.8 million, or 25.0% of net sales.
This compares to year-ago selling, general and administrative
expenses of $76.0 million, or 25.1% of net sales, and reflects the
Company’s continued benefits from its expense control initiatives
along with a reduction in the number of stores from the prior year
period.
- Total year-end inventories were flat
compared to last year-end. On-hand inventory, which excludes
inventory in-transit, decreased $7.7 million, or 13.0%, due to a
significant reduction in clearance inventory. The increase in goods
in-transit reflects a shift in the timing of an early Spring
floorset. Adjusting for this shift, inventory levels are expected
to be down throughout the first quarter of fiscal year 2012 versus
last year’s first quarter.
- The Company ended the year with $50.8
million of cash-on-hand with no outstanding borrowings under its
revolving credit facility.
- During the fourth quarter, the Company
remodeled one existing store and closed 10 stores, ending the year
with 532 stores, including 26 Outlet stores, and 2.9 million
selling square feet in operation. For the year, the Company
remodeled 11 existing stores and closed 23 stores.
For fiscal year 2011, net sales were $956.5 million, as compared
to $1,021.7 million for fiscal year 2010, and comparable store
sales decreased 3.3% for fiscal year 2011 versus an increase of
1.6% in fiscal year 2010. Gross profit for fiscal year 2011
decreased $11.7 million to $221.6 million, or 23.2% of net sales,
as compared to $233.3 million, or 22.8% of net sales, in fiscal
year 2010. Selling, general and administrative expenses for fiscal
year 2011 decreased $41.2 million to $257.2 million, or 26.9% of
net sales, as compared to $298.4 million, or 29.2% of net sales,
for fiscal year 2010. Net loss from continuing operations was $38.9
million, or $0.64 per diluted share, for fiscal year 2011, which
includes non-cash asset impairment charges totaling $3.1 million,
or $0.05 per diluted share. This compares to a net loss from
continuing operations of $76.5 million, or $1.29 per diluted share,
for fiscal year 2010, which includes previously disclosed
non-operating adjustments totaling a loss of $0.81 per diluted
share.
Outlook
Regarding its expectations for the first quarter of fiscal year
2012, the Company provided the following:
- Comparable store sales for the first
quarter of fiscal year 2012 are expected to be down in the low
single-digit range, and the Company expects to have 11 fewer stores
in operation since the first quarter of fiscal year 2011.
- Gross profit margin is expected to
improve by 100 to 150 basis points versus the first quarter of last
year reflecting higher initial markups resulting in merchandise
margin increases.
- Selling, general and administrative
expenses are expected to be up slightly in dollars versus the prior
year’s first quarter reflecting investments in marketing. In
addition, the Company has increased certain variable expenses in
its growing eCommerce and Outlet businesses which are partially
offset by decreases in other variable expenses due to the closure
of certain New York & Company stores.
- The Company expects the effective tax
rate for the first quarter of fiscal year 2012 to be 0%. As
previously announced, the Company continues to provide for
adjustments to the deferred tax valuation allowance recorded in the
second quarter of fiscal year 2010 offsetting any future tax
provisions or benefits resulting in a 0% effective tax rate for
GAAP purposes.
- The Company expects inventory levels at
the end of the first quarter of fiscal year 2012 to be down in the
mid single-digit range as compared to the prior year. On-hand
inventory is expected to be down in the high single-digit to low
double-digit range throughout the quarter with increases expected
toward the end of the second quarter of fiscal year 2012.
- The Company has no outstanding
borrowings under its revolving credit facility and does not
anticipate the need to borrow against the facility during the first
half of fiscal year 2012.
- Capital expenditures are expected to be
approximately $6.2 million for the first quarter of fiscal year
2012, as compared to $2.2 million in the prior year’s first
quarter, reflecting the expansion of the Company’s Outlet business.
For fiscal year 2012, capital expenditures are expected to be in
the range of $20 million to $23 million, as compared to $12.2
million in fiscal year 2011. Depreciation expense for the first
quarter of fiscal year 2012 is estimated at approximately $9
million. For fiscal year 2012, depreciation expense is expected to
be approximately $35 million.
- During the first quarter of fiscal year
2012, the Company expects to open 12 new stores (including 11
Outlet locations), remodel four existing locations, and close two
stores, ending the first quarter of fiscal year 2012 with 542
stores, including 37 Outlet stores. For fiscal year 2012, the
Company expects to open 15 to 20 new stores, remodel 10 to 15
existing locations, and close between 25 and 30 stores, ending the
year with between 517 to 527 stores, including 41 to 46 Outlet
stores.
Conference Call Information
A conference call to discuss the fourth quarter of fiscal year
2011 results is scheduled for today Thursday, March 15, 2012
at 4:30 pm Eastern Time. Investors and analysts interested in
participating in the call are invited to dial 888-442-4145,
referencing conference ID number 6421848, 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 beginning at 7:30 pm ET on
March 15, 2012 until midnight on March 22, 2012 and can be accessed
by dialing 877-870-5176 and entering conference ID number
6421848.
About New York & Company
New York & Company, Inc. is a leading 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 an amazing value. The Company's proprietary
branded New York & Company® merchandise is sold exclusively
through its national network of retail stores and eCommerce store
at www.nyandcompany.com. The Company currently operates 532 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. 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 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) seasonal
fluctuations in the Company’s business; (vi) the Company’s ability
to anticipate and respond to fashion trends; (vii) the Company’s
dependence on mall traffic for its sales; (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
sponsors and any potential change of ownership of those sponsors;
and (xvi) other risks and uncertainties as described in the
Company’s documents filed with the SEC, including its Annual Report
on Form 10-K and 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
January 28, 2012
%ofnetsales Three
monthsendedJanuary 29, 2011
%ofnetsales Net sales $ 271,837 100.0 %
$ 303,179 100.0
%
Cost of goods sold, buying and occupancy costs 212,643
78.2 % 214,927 70.9
%
Gross profit 59,194 21.8 % 88,252 29.1
%
Selling, general and administrative expenses 70,002 25.8 %
75,953 25.1
%
Restructuring charges — — % (37 ) (0.1
)%
Operating (loss) income (10,808
)
(4.0 )% 12,336 4.1
%
Interest expense, net of interest income 122 — % 157
0.1
%
(Loss) income from continuing operations before income taxes
(10,930
)
(4.0 )% 12,179 4.0
%
Benefit for income taxes (40 ) — % (2,757
)
(0.9
)%
(Loss) income from continuing operations (10,890
)
(4.0 )% 14,936 4.9
%
Income from discontinued operations, net of taxes — —
% 81 0.1
%
Net (loss) income $ (10,890
)
(4.0 )% $ 15,017 5.0
%
Basic (loss) earnings per share from continuing
operations $ (0.18
)
$ 0.25 Basic earnings per share from discontinued operations
— — Basic (loss) earnings per share $ (0.18
)
$ 0.25 Diluted (loss) earnings per share from
continuing operations $ (0.18
)
$ 0.24 Diluted earnings per share from discontinued operations
— 0.01 Diluted (loss) earnings per
share $ (0.18
)
$ 0.25 Weighted average shares outstanding: Basic
shares of common stock 61,189 59,537 Diluted shares
of common stock 61,189 61,126
Selected
operating data for continuing operations: (Dollars in
thousands, except square foot data) Comparable store sales
(decrease) increase (6.3 ) % 1.7
%
Net sales per average selling square foot (a) $ 94 $ 98 Net sales
per average store (b) $ 506 $ 535 Average selling square footage
per store (c) 5,401
5,453
(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)
Fiscal Yearended
January 28, 2012
%ofnetsales Fiscal
YearendedJanuary 29, 2011
%ofnetsales Net sales $ 956,456 100.0 %
$ 1,021,699 100.0
%
Cost of goods sold, buying and occupancy costs 734,838
76.8 % 788,378 77.2
%
Gross profit 221,618 23.2 % 233,321 22.8
%
Selling, general and administrative expenses 257,188 26.9 %
298,419 29.2
%
Restructuring charges — — % 1,281 0.1
%
Operating loss (35,570
)
(3.7 )% (66,379 ) (6.5
)%
Interest expense, net of interest income 495 0.1 % 697 0.1
%
Loss on modification and extinguishment of debt 144 —
% — —
%
Loss from continuing operations before income taxes (36,209
)
(3.8 )% (67,076 ) (6.6
)%
Provision for income taxes 2,728 0.3 % 9,466 0.9
%
Loss from continuing operations (38,937
)
(4.1 )% (76,542 ) (7.5
)%
Income from discontinued operations, net of taxes — —
% 81 —
%
Net loss $ (38,937
)
(4.1 )% $ (76,461 ) (7.5
)%
Basic loss per share from continuing operations $
(0.64
)
$ (1.29 ) Basic earnings per share from discontinued operations
— — Basic loss per share $ (0.64
)
$ (1.29 ) Diluted loss per share from continuing operations
$ (0.64
)
$ (1.29 ) Diluted earnings per share from discontinued operations
— — Diluted loss per share $ (0.64
)
$ (1.29 ) Weighted average shares outstanding: Basic shares
of common stock 60,824 59,443 Diluted shares of common stock
60,824 59,443
Selected operating data for
continuing operations: (Dollars in thousands, except square
foot data) Comparable store sales (decrease) increase (3.3 ) %
1.6 % Net sales per average selling square foot (a) $ 324 $ 329 Net
sales per average store (b) $ 1,758 $ 1,805 Average selling square
footage per store (c) 5,401
5,453
(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) January 28, 2012
January 29, 2011 (Unaudited) (Audited)
Assets Current assets: Cash and cash equivalents $ 50,787 $
77,392 Accounts receivable 7,269 9,756 Income taxes receivable 477
527 Inventories, net 81,328 82,062 Prepaid expenses 21,057 20,707
Other current assets 968 1,202 Current assets of discontinued
operations — 54 Total current assets 161,886 191,700
Property and equipment, net 115,280 144,561 Intangible assets
14,879 14,879 Deferred income taxes 4,361 3,362 Other assets 950
708 Total assets $ 297,356 $ 355,210
Liabilities and
stockholders’ equity Current liabilities: Current portion –
long-term debt $ — $ 7,500 Accounts payable 72,297 73,611 Accrued
expenses 55,146 64,072 Income taxes payable 3,064 260 Deferred
income taxes 4,361 3,362 Current liabilities of discontinued
operations — 130 Total current liabilities 134,868 148,935
Deferred rent 57,127 66,862 Other liabilities 5,256 5,576 Total
liabilities 197,251 221,373 Total stockholders’ equity
100,105 133,837 Total liabilities and stockholders’ equity $
297,356 $ 355,210
Exhibit (4)
New York & Company, Inc.
and Subsidiaries
Condensed Consolidated Statements of
Cash Flows
Fiscal year ended
(Amounts in thousands)
January 28,
2012
January 29,
2011
(Unaudited) (Audited) Operating
activities Net loss $ (38,937 ) $ (76,461 ) Less: Income from
discontinued operations, net of taxes — 81 Loss from continuing
operations (38,937 ) (76,542 ) Adjustments to reconcile net loss to
net cash (used in) provided by operating activities of continuing
operations: Depreciation and amortization 38,418 41,090 Loss from
impairment charges 3,055 16,283 Amortization of deferred financing
costs 167 216 Write-off of unamortized deferred financing costs 144
— Share-based compensation expense 3,719 2,474 Deferred income
taxes — 17,863 Changes in operating assets and liabilities:
Accounts receivable 2,487 (309 ) Income taxes receivable 50 2,473
Inventories, net 734 4,997 Prepaid expenses (350 ) 1,901 Accounts
payable (1,314 ) 1,592 Accrued expenses (9,056 ) 5,140 Income taxes
payable 2,804 (731 ) Deferred rent (9,735 ) (5,158 ) Other assets
and liabilities (740 ) (486 ) Net cash (used in)
provided by operating activities of continuing operations
(8,554 ) 10,803
Investing activities Capital
expenditures (12,158 ) (15,695 ) Proceeds from the sale of fixed
assets — 936 Net cash used in investing activities of
continuing operations (12,158 ) (14,759 )
Financing activities Proceeds from borrowings under
revolving credit facility 14,000 21,000 Repayment of borrowings
under revolving credit facility (14,000 ) (21,000 ) Repayment of
debt (7,500 ) (6,000 ) Payment of financing costs (595 ) — Proceeds
from exercise of stock options 2,202 95 Excess tax reduction from
exercise of stock options — (43 ) Net cash used in
financing activities of continuing operations (5,893 )
(5,948 ) Net decrease in cash and cash equivalents
(26,605 ) (9,904 ) Cash and cash equivalents at beginning of period
77,392 87,296 Cash and cash equivalents at end of
period $ 50,787 $ 77,392
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