Fourth Quarter Results Consistent with
Guidance
~ Company Introduces Q1 FY15 Guidance
~
New York & Company, Inc. [NYSE:NWY], a specialty
apparel chain with 504 retail stores, today announced results for
the fourth quarter and fiscal year ended January 31, 2015.
Fourth Quarter Fiscal Year 2014 Results: (13-weeks ended
January 31, 2015 compared to the 13-weeks ended February 1,
2014)
- Net sales were $267.4 million, as
compared to $271.0 million in the prior year.
- Comparable store sales
decreased 0.9%, following an increase of 1.2% for the same
period last year.
- Gross profit as a percentage of net
sales decreased 280 basis points versus the fiscal 2013 fourth
quarter. The decrease in gross profit margin primarily reflected
increased promotional activity and freight costs, partially offset
by an improvement in product costs. In addition, the Company
experienced deleveraging of fixed store occupancy costs on lower
net sales.
Consistent with previous guidance, during the fourth quarter of
fiscal year 2014, the Company incurred $6.4 million of
non-operating charges, which included $3.2 million of duplicative
rent expense and other moving expenses related to the relocation of
the Company’s corporate headquarters, $2.3 million of severance
expenses and $0.7 million of consulting fees incurred in connection
with the business re-engineering program initiated during the third
quarter, and a $0.2 million legal settlement. This resulted in $6.4
million of incremental selling, general and administrative expenses
in the fourth quarter of fiscal year 2014 and contributed to the
Company generating a net loss in the period. The fourth quarter
fiscal year 2014 “non-GAAP” figures referred to in this press
release exclude this impact. Please refer to the “Reconciliation of
GAAP to Non-GAAP Financial Measures” in Exhibit 5 of this press
release. There were no non-operating charges recorded during the
fourth quarter of fiscal year 2013.
- Selling, general and administrative
expenses on a GAAP basis increased by approximately $4.9 million,
as compared to the prior year period reflecting $6.4 million of
non-operating charges previously noted, partially offset by $1.5
million in savings primarily related to a reduction in
performance-based compensation expense. On a non-GAAP basis,
adjusted selling, general and administrative expenses, excluding
the non-operating charges, decreased as a percentage of net sales
to 25.6%, as compared to 25.7% in the prior year’s fourth
quarter.
- GAAP operating loss was $6.4 million.
On a non-GAAP basis, adjusted operating loss was breakeven, as
compared to the prior year’s fourth quarter GAAP operating income
of $7.2 million.
- GAAP net loss for the fourth quarter of
fiscal year 2014 was $6.7 million, or a loss of $0.11 per diluted
share. On a non-GAAP basis, the Company’s adjusted net loss was
$0.4 million, or a loss of $0.01 per diluted share. This compares
to the prior year’s GAAP net income of $6.9 million, or earnings
per diluted share of $0.11.
- Total quarter-end inventory increased
12.4%, as compared to the end of last year’s fourth quarter,
reflecting significantly higher levels of in-transit inventory and
a slight increase in in-store inventory. In-transit inventories
rose significantly due to the longer lead times associated with the
Company’s contingency plans surrounding the ongoing port delays.
The increase in on-hand inventory, as compared to the end of last
year’s fourth quarter, was due to the acceleration of certain
receipts to avoid port disruptions. January 31, 2015 inventory was
current and well positioned.
- Capital spending for the fourth quarter
of fiscal year 2014 was $5.8 million, as compared to $6.2 million
in last year’s fourth quarter, primarily reflecting investments in
the Company’s information technology infrastructure, including its
omni-channel retail strategy, and the build-out of the Company’s
corporate headquarters. The decrease in capital spending during the
fourth quarter of fiscal year 2014, compared to the Company’s
previously issued guidance on December 3, 2014, is primarily due to
cost savings recognized on the build-out of the Company’s new
corporate headquarters and a shift of approximately $6.2 million of
capital expenditures primarily related to our corporate
headquarters build out and information technology projects, which
were originally planned in 2014 but have shifted into 2015.
- The Company closed 8 stores during the
fourth quarter, ending the fiscal year with 504 stores, including
62 Outlet stores, and 2.6 million selling square feet in
operation.
- The Company ended the quarter with
$70.8 million of cash and no outstanding borrowings under its
revolving credit facility, as compared to $69.7 million in cash at
the end of last year’s fourth quarter.
Gregory Scott, New York & Company’s CEO, stated: “Our fourth
quarter performance was in line with the updated guidance we
provided in January reflecting soft demand for seasonal products,
including outerwear, sweaters, scarves and hats, which when
combined with product delivery delays driven by the disruption at
the West Coast ports, created top line sales pressures and an
increase in promotional activity. Despite these challenges we were
however, very pleased to advance our omni-channel initiatives with
'Buy Online Pick Up in Store' and 'Buy Online Ship from Store'
which contributed to significant growth in our eCommerce business.
Finally, the fourth quarter marked our third consecutive quarter of
positive traffic trends within both our eCommerce business and our
brick and mortar stores."
“Most importantly, we continued to evolve our New York &
Company store product offering to capitalize on our strengths and
reach new consumers, with the success of our Eva Mendes
collaboration and the expansion of our sub-brand focus as great
examples,” Mr. Scott continued, “As we look ahead, I firmly believe
that these initiatives combined with our enhanced omni-channel
capabilities position New York & Company for improved sales and
earnings momentum. Over the past four years we have worked to
stabilize our store fleet by closing underperforming locations, we
have focused on growth opportunities with a strong return on
investment, including the opening of outlet stores and ecommerce
while building our omni-channel capabilities. This in combination
with delivering the right fashion and value for our customers and
maintaining stringent control of inventory is expected to bring
about improved sales productivity and profitability for our Company
in our ongoing efforts to increase value for our shareholders.”
Full Fiscal Year 2014 Results:
During fiscal year 2014, the Company incurred $9.2 million of
non-operating charges, which included $4.1 million of duplicative
rent expense and other moving expenses related to the relocation of
the Company’s corporate headquarters, $3.0 million of severance
expenses and $1.7 million of consulting fees incurred in connection
with the business re-engineering program initiated during the third
quarter, and $0.4 million of legal and other expenses. The fiscal
year 2014 “non-GAAP” figures referred to in this press release
exclude this impact. Please refer to the “Reconciliation of GAAP to
Non-GAAP Financial Measures” in Exhibit 5 of this press release.
There were no non-operating charges recorded during fiscal year
2013.
Net sales for fiscal year 2014 were $923.3 million, as compared
to $939.2 million for fiscal year 2013. Comparable store sales
decreased 1.0%, as compared to an increase of 1.1% in the prior
fiscal year. GAAP operating loss for fiscal year 2014 was $15.6
million. On a non-GAAP basis, adjusted operating loss was $6.4
million, as compared to GAAP operating income of $3.1 million for
fiscal year 2013. GAAP net loss for fiscal year 2014 was $16.9
million, or a loss of $0.27 per diluted share. On a non-GAAP basis,
adjusted net loss was $7.7 million, or a loss of $0.12 per diluted
share. This compares to the prior fiscal year’s GAAP net income of
$2.4 million, or earnings per diluted share of $0.04.
Outlook:
Regarding expectations for the first quarter of fiscal year
2015, the Company is providing the following guidance:
- Net sales and comparable store sales
are expected to increase in the low single-digit percentage versus
last year.
- Gross margin is expected to increase by
approximately 50-150 basis points from the prior year’s first
quarter rate reflecting improved product costs, partially offset by
increased freight and shipping costs associated with the
implementation of the Company’s contingency plans resulting from
the West Coast port delays and increased shipping costs associated
with our expanding eCommerce business.
- Selling, general and administrative
expenses are expected to be up approximately $8.0 million from last
year reflecting non-operating charges of approximately $2.6
million, which are primarily comprised of consulting related
expenses due to the continuation of the business process
re-engineering project. Excluding the impact of the non-operating
charges, selling, general and administrative expenses are expected
to increase approximately $5.4 million reflecting investments in
television advertising, anticipated increases in performance-based
compensation accruals as compared to last year, increased rent
expense for our corporate office and higher depreciation resulting
from the increase in information technology investments.
- On a non-GAAP basis, excluding the
non-operating charges of $2.6 million, adjusted operating income is
expected to be approximately breakeven, as compared to the prior
year’s breakeven operating income.
Additional Outlook:
- The Company expects on-hand inventory
at the end of the first quarter of fiscal year 2015 to be up by a
low-single-digit percentage versus the end of the first quarter of
last year. In-transit inventories are expected to be up
significantly due to the longer lead times associated with the
Company’s contingency plans surrounding the ongoing port delays.
Total inventory is expected to increase in the double-digit range,
primarily resulting from the higher levels of in-transit
inventory.
- Capital expenditures for the first
quarter of fiscal year 2015 are projected to be between $11 million
and $14 million, as compared to $4.6 million of capital
expenditures in the first quarter of last year. The increase
includes the carryforward of $6.2 million in capital spending
originally planned in 2014, which when combined with planned 2015
expenditures, results in the following:
- Real Estate capital expenditures of $5
million to $6 million for two new stores, three new Outlets, and
two remodels;
- Investments of $4 million to $5 million
in information technology and eCommerce; and
- Capital expenditures of approximately
$2 million to $3 million related to the Company’s relocation and
build-out of its new corporate headquarters.
- For fiscal year 2015, capital
expenditures are expected to range between $28 million and $30
million including the carryforward of $6.2 million from 2014, as
compared to $26.8 million in fiscal year 2014. This increase
reflects continued investments in information technology and
eCommerce; real estate spending to support the opening of new
Outlet stores and New York & Company stores, along with
remodels, and capital expenditures related to the Company’s
relocation and build-out of its new corporate headquarters.
- Depreciation expense for the first
quarter of fiscal year 2015 is estimated at $7 million.
- For fiscal year 2015, depreciation
expense is expected to be approximately $27 million.
- During the first quarter of fiscal year
2015, the Company expects to open approximately two new stores,
three new Outlet Stores, remodel two existing locations, close five
stores, and convert nine New York & Company locations to new
Outlet stores.
- For fiscal year 2015, the Company
expects to open approximately 3 new New York & Company stores,
open between 11 and 15 new Outlet stores, convert 9 New York &
Company locations to new Outlet stores, remodel between 8 and 12
existing stores and close between 18 and 22 stores, ending the
fiscal year with between 496 and 504 stores, including between 82
and 86 Outlet stores.
Conference Call Information
A conference call to discuss fourth quarter of fiscal year
2014 results is scheduled for today, Thursday, March 19, 2015
at 4:30 p.m. Eastern Time. Investors and analysts interested in
participating in the call are invited to dial (888) 503-8175 and
reference conference ID number 2269011 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 March 19, 2015, until
11:59 p.m. Eastern Time on March 26, 2015 and can be accessed by
dialing (877) 870-5176 and entering conference ID number
2269011.
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 – all at
compelling values. The Company's proprietary branded New York &
Company® merchandise is sold exclusively through its national
network of retail stores and online at www.nyandcompany.com. The
Company operates 504 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
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) 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 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
January 31,2015
%ofnetsales
Three monthsended
February 1,2014
%ofnetsales Net sales $ 267,359 100.0 %
$ 271,004 100.0 % Cost of goods sold, buying and occupancy
costs 198,983 74.4 % 193,958 71.6 %
Gross profit 68,376 25.6 % 77,046 28.4 % Selling,
general and administrative expenses 74,739 28.0 %
69,824 25.7 % Operating (loss) income (6,363 )
(2.4 )% 7,222 2.7 % Interest expense, net of interest income
292 0.1 % 94 — % (Loss) income
before income taxes (6,655 ) (2.5 )% 7,128 2.7 % Provision
for income taxes 65 — % 185 0.1 %
Net (loss) income $ (6,720 ) (2.5 )% $ 6,943 2.6 %
Basic (loss) income per share $ (0.11 ) $ 0.11
Diluted (loss) income per share $ (0.11 ) $ 0.11
Weighted average shares outstanding: Basic shares of common
stock 62,933 62,512 Diluted shares of
common stock 62,933 63,251
Selected operating data: (Dollars in thousands, except
square foot data) Comparable store sales
(decrease) increase (0.9 )% 1.2 % Net sales per average selling
square foot (a) $ 102 $ 102 Net sales per average store (b) $ 526 $
531 Average selling square footage per store (c) 5,153 5,201 Ending
store count 504 507 (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)
Twelve monthsended
January 31,2015
%ofnetsales Twelve
monthsended
February 1, 2014
%ofnetsales Net sales $ 923,332 100.0 %
$ 939,163 100.0 % Cost of goods sold, buying and occupancy
costs 673,557 72.9 % 674,793 71.9 %
Gross profit 249,775 27.1 % 264,370 28.1 % Selling,
general and administrative expenses 265,371 28.8 %
261,293 27.8 % Operating (loss) income (15,596
) (1.7 )% 3,077 0.3 % Interest expense, net of interest
income 573 0.1 % 369 — % (Loss)
income before income taxes (16,169 ) (1.8 )% 2,708 0.3 %
Provision for income taxes 716 — % 314
— % Net (loss) income $ (16,885 ) (1.8 )% $ 2,394 0.3
% Basic (loss) income per share $ (0.27 ) $ 0.04
Diluted (loss) income per share $ (0.27 ) $ 0.04
Weighted average shares outstanding: Basic shares of
common stock 62,825 62,313 Diluted
shares of common stock 62,825 63,240
Selected operating data: (Dollars in thousands,
except square foot data) Comparable store sales
(decrease) increase (1.0 )% 1.1 % Net sales per average selling
square foot (a) $ 353 $ 350 Net sales per average store (b) $ 1,825
$ 1,831 Average selling square footage per store (c) 5,153 5,201
(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 31, 2015
February 1, 2014 (Unaudited) (Audited)
Assets Current assets: Cash and cash equivalents $ 69,293 $
69,723 Restricted cash 1,509 — Accounts receivable 7,406 7,026
Income taxes receivable 99 99 Inventories, net 93,791 83,479
Prepaid expenses 20,581 21,141 Other current assets 1,121
1,280 Total current assets 193,800 182,748 Property
and equipment, net 84,374 83,553 Intangible assets 14,879 14,879
Deferred income taxes 6,660 6,501 Other assets 2,167
1,072 Total assets $ 301,880 $ 288,753
Liabilities and
stockholders’ equity Current liabilities: Current
portion—long-term debt $ 1,000 $ — Accounts payable 86,481 75,874
Accrued expenses 52,418 46,880 Income taxes payable 710 1,075
Deferred income taxes 6,660 6,501 Total current
liabilities 147,269 130,330 Long-term debt, net of current
portion 13,750 — Deferred rent 35,169 39,925 Other liabilities
6,333 5,283 Total liabilities 202,521 175,538
Total stockholders’ equity 99,359 113,215 Total
liabilities and stockholders’ equity $ 301,880 $ 288,753
Exhibit (4)
New York & Company, Inc.
and Subsidiaries
Condensed Consolidated Statements of
Cash Flows
(Amounts in thousands)
Twelve months
ended
January 31, 2015
Twelve months
ended
February 1, 2014
(Unaudited) (Audited) Operating activities Net
(loss) income $ (16,885 ) $ 2,394 Adjustments to reconcile net
(loss) income to net cash provided by operating activities:
Depreciation and amortization 27,315 32,719 Loss from impairment
charges 911 524 Amortization of deferred financing costs 131 119
Share-based compensation expense 4,089 3,866 Changes in operating
assets and liabilities: Restricted cash (1,509 ) — Accounts
receivable (380 ) 1,190 Income taxes receivable — 389 Inventories,
net (10,312 ) (3,281 ) Prepaid expenses 560 326 Accounts payable
10,607 1,464 Accrued expenses 5,538 (2,167 ) Income taxes payable
(365 ) 86 Deferred rent (4,756 ) (8,909 ) Other assets and
liabilities (2,944 ) (832 ) Net cash provided by
operating activities 12,000 27,888
Investing activities Capital expenditures (26,781 )
(18,836 ) Insurance recoveries 254 —
Net cash used in investing activities (26,527 )
(18,836 )
Financing activities Proceeds from issuance
of long-term debt 15,000 — Repayment of long-term debt (250 ) —
Payment of financing costs (566 ) — Proceeds from exercise of stock
options 299 510 Shares withheld for payment of employee payroll
taxes (284 ) (772 ) Principal payments on capital lease obligation
(102 ) — Net cash provided by (used in)
financing activities 14,097 (262 ) Net
(decrease) increase in cash and cash equivalents (430 ) 8,790 Cash
and cash equivalents at beginning of period 69,723
60,933 Cash and cash equivalents at end of period $
69,293 $ 69,723
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 loss, net loss and
loss per diluted share for the three months and twelve months ended
January 31, 2015 are indicated below. This information reflects, on
a non-GAAP basis, the Company’s adjusted operating results after
excluding certain non-operating charges consisting of duplicative
rent expense and other moving expenses related to the relocation of
the Company’s corporate headquarters, certain consulting fees and
severance expenses incurred in connection with a business
re-engineering program initiated during the third quarter of fiscal
year 2014, a legal settlement, and certain executive recruiting
expenses. 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 January 31,
2015
(Amounts in thousands, except per share amounts)
Selling, general and
administrative
expenses
Operating loss Net loss
Loss per
diluted share
GAAP as reported $ 74,739 $ (6,363 ) $ (6,720 ) $ (0.11 )
Adjustments
affecting comparability
Duplicative rent expense – new BHQ office space 3,156 3,156 3,156
Severance expense 2,258 2,258 2,258 Consulting expense 693 693 693
Legal expense 250 250 250
Total adjustments (1) 6,357 6,357 6,357
0.10
Non-GAAP as adjusted
$ 68,382 $ (6 ) $ (363 ) $ (0.01 )
Twelve months ended January 31,
2015
(Amounts in thousands, except per share amounts)
Selling, general and
administrative
expenses
Operating loss Net loss
Loss per
diluted share
GAAP as reported $ 265,371 $ (15,596 ) $ (16,885 ) $ (0.27 )
Adjustments
affecting comparability
Duplicative rent expense – new BHQ office space 4,118 4,118 4,118
Severance expense 2,989 2,989 2,989 Executive recruiting expense
102 102 102 Consulting expense 1,693 1,693 1,693 Legal expense
250 250 250 Total
adjustments (1) 9,152 9,152 9,152
0.15
Non-GAAP as adjusted
$ 256,219 $ (6,444 ) $ (7,733 ) $ (0.12 ) (1) The tax
effect of $6.4 million and $9.2 million of expenses, during the
three months and twelve months ended January 31, 2015,
respectively, is offset by a full valuation allowance against
deferred tax assets.
Investor/Media Contact:ICR, Inc.203-682-8200Investor:
Allison Malkin
New York & Company (NYSE:NWY)
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