~ 4th Consecutive Quarter of Positive
Comparable Store Sales Growth ~
~ Comparable Store Sales Increased 1.9% in
Fourth Quarter and 3.1% in Full Year ~
~ Introduces Q1 Guidance of Diluted EPS of
$0.02 to $0.04 Per Share
~ Expects Positive Comps and Operating
Income Improving to Best Level Since 2008 ~
New York & Company, Inc. [NYSE:NWY], a specialty
apparel chain with 490 retail stores, today announced results for
the fourth quarter and fiscal year ended January 30, 2016.
Gregory Scott, New York & Company’s CEO stated: “We finished
the year strongly capping off another successful year of growth and
continued progress toward our long term goals. The fourth quarter
was highlighted by increased sales, positive comparable sales,
expansion in gross margin and a reduction in expenses. Combined,
this drove a $7.0 million improvement in GAAP operating income and
a $1.1 million increase in non-GAAP adjusted net income versus the
fourth quarter of 2014.”
“Our performance continues to demonstrate that our strategies
are focused on making New York & Company a leading apparel
destination by creating differentiated assortments with exclusive
celebrity collections and sub-brands including the Eva Mendes
Collection and Jennifer Hudson for Soho Jeans collection, by
connecting more closely with our customers with high impact
marketing and loyalty programs, by evolving our omni-channel
capabilities so we are able to serve our customers wherever and
whenever they choose to shop and by continuing to achieve our
efficiency goals as we execute our Project Excellence cost
reduction program. These strategies drove four consecutive quarters
of increased comparable store sales and a significant improvement
in our profitability for the 2015 fiscal year and provide us with a
great platform to continue our favorable momentum in fiscal
2016.”
Fourth Quarter Fiscal Year 2015 Results (13-weeks ended
January 30, 2016 compared to the 13-weeks ended January 31,
2015):
- Net sales were $271.3 million, as
compared to $267.4 million in the prior year.
- Comparable store sales
increased 1.9% and total net sales increased by 1.5%.
- Gross profit as a percentage of net
sales increased 10 basis points to 25.7% versus the fiscal year
2014 fourth quarter gross profit percentage of 25.6%. This
improvement reflects a 130 basis point increase in product margins
due to reduced product costs, a 110 basis point improvement in the
leverage of buying and occupancy expense due to reductions in store
occupancy costs and buying payroll offset by a 230 basis point
increase in other cost of goods sold, principally shipping costs
associated with the significant growth in the Company’s eCommerce
sales.
- Selling, general and administrative
expenses were $69.2 million, as compared to $74.7 million in the
prior year period. Excluding non-operating charges of $0.6 million
and $6.4 million for the three months ended January 30, 2016 and
January 31, 2015, respectively, selling, general and administrative
expenses were $68.5 million, or 25.3% of net sales, as compared to
$68.4 million, or 25.6% of net sales in the prior year. The 30
basis point improvement in selling, general, and administrative
expenses, excluding the non-operating charges, reflects reductions
in performance-based compensation expenses and the reversal of
amounts previously accrued, combined with decreases in marketing
and payroll, partially offset by significant increases in variable
expenses associated with the growth in eCommerce sales.
- GAAP operating results improved by $7.0
million to income of $0.6 million, as compared to the prior year’s
fourth quarter GAAP operating loss of $6.4 million. On a non-GAAP
basis, excluding $0.6 million of non-operating charges, adjusted
operating income was $1.3 million, an improvement of $1.3 million
from the prior year’s non-GAAP breakeven operating results, which
excluded $6.4 million of non-operating charges.
- GAAP net income for the fourth quarter
of fiscal year 2015 was $0.1 million, or breakeven per diluted
share. This compares to the prior year’s GAAP net loss of $6.7
million, or a loss of $0.11 per diluted share. On a non-GAAP basis,
the Company’s fourth quarter 2015 adjusted net income was $0.7
million, or $0.01 per diluted share. This compares to the prior
year’s fourth quarter non-GAAP adjusted net loss of $0.4 million,
or a loss of $0.01 per diluted share.Please refer to the
“Reconciliation of GAAP to Non-GAAP Financial Measures” in Exhibits
5 and 6 of this press release, which delineate the non-operating
charges for the three and twelve months ended January 30, 2016 and
January 31, 2015, respectively. GAAP is defined as Generally
Accepted Accounting Principles.
- Total quarter-end inventory decreased
6.4%, as compared to the end of last year’s fourth quarter, due to
lower levels of inventory in-transit as the Company changed
shipping terms with certain vendors to take title later in the
supply chain, as well as transitioned its supply chain back to West
Coast ports. Inventory on-hand increased 6.2% as the Company
positioned inventory for the Spring selling period.
- Capital spending for the fourth quarter
of fiscal year 2015 was $5.8 million, as compared to $5.8 million
in last year’s fourth quarter, primarily reflecting spend on the
Company’s information technology infrastructure, due in large part
to the expansion of its omni-channel strategy.
- The Company closed 18 New York &
Company stores during the fourth quarter, ending the fiscal year
with 490 stores, including 82 Outlet stores, and 2.5 million
selling square feet in operation.
- The Company ended the quarter with
$61.4 million of cash-on-hand and no outstanding borrowings under
its revolving credit facility.
Full Fiscal Year 2015 Results (52-weeks ended January 30,
2016 compared to the 52-weeks ended January 31, 2015):
Net sales were $950.1 million for fiscal year 2015, as compared
to $923.3 million for fiscal year 2014. Comparable store sales
increased 3.1%, as compared to a decrease of 1.0% in the prior
fiscal year. GAAP operating loss was $8.1 million. On a non-GAAP
basis, adjusted operating loss was $0.3 million. This compares to a
GAAP operating loss of $15.6 million and a non-GAAP, adjusted
operating loss of $6.4 million for fiscal year 2014. Net loss was
$10.1 million, or a loss of $0.16 per diluted share. On a non-GAAP
basis, adjusted net loss was $2.3 million, or a loss of $0.04 per
diluted share. This compares to the prior fiscal year net loss of
$16.9 million, or a loss of $0.27 per diluted share. On a non-GAAP
basis, prior fiscal year adjusted net loss was $7.7 million, or a
loss of $0.12 per diluted share.
Outlook:
Regarding expectations for the first quarter of fiscal year
2016, the Company is providing the following guidance:
- Net sales and comparable store sales
are expected to increase by a low single-digit percentage.
- Gross margin is expected to increase in
the range of 100 - 200 basis points from the prior year’s first
quarter rate reflecting reductions in product costs and agent
expenses resulting from the Company’s business reorganization
program (Project Excellence) combined with reductions in buying
payroll and improved leverage of occupancy costs, partially offset
by increased shipping costs associated with the growing
omni-channel business.
- Selling, general and administrative
expenses are expected to decrease by approximately $2 million, as
compared to the prior year’s first quarter, reflecting a shift in
marketing expenses into the second quarter. On a non-GAAP basis,
excluding non-operating charges of $2.9 million from the prior
year, the Company expects to improve the leverage of selling,
general and administrative expenses by up to 50 basis points
reflecting anticipated increases in performance-based compensation
accruals and variable costs associated with the growing eCommerce
business partially offset by the shift of approximately $2 million
of marketing into the second quarter.
- Operating results on a GAAP basis for
the first quarter of fiscal year 2016 are expected to improve by
approximately $6 million to $7 million, as compared to a loss of
$4.2 million in the prior year. On a non-GAAP basis, operating
results are expected to improve to income of between $2 million and
$3 million, resulting in the best operating performance in the
first quarter in 8 years and anticipated diluted earnings per share
in the range of $0.02 to $0.04.
Additional Outlook:
- Total inventory at the end of the first
quarter is expected to increase in the low single-digit percentage
range, reflecting higher levels of in-store inventory as we
position inventory for the Mother’s Day and early summer selling
period.
- Capital expenditures for the first
quarter of fiscal year 2016 are projected to be between $4 million
and $5 million, as compared to $6.7 million of capital expenditures
in the first quarter of last year.
- Depreciation expense for the first
quarter of fiscal year 2016 is estimated to be approximately $6
million.
- During the first quarter, the Company
expects to close 2 New York & Company stores, and convert 50
New York & Company stores to new Outlet stores, ending the
first quarter of fiscal year 2016 with approximately 488 stores,
including 132 Outlet stores.
- For fiscal year 2016, the Company
expects to open approximately 2 New York & Company stores, open
1 new Outlet store, remodel 5 New York & Company locations,
convert 50 New York & Company locations to new Outlet stores,
and close between 8 and 12 New York & Company stores, ending
the fiscal year with between 481 and 485 stores, including 133
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 are included in comparable store
sales.
Conference Call Information
A conference call to discuss fourth quarter of fiscal year
2015 results is scheduled for today, Thursday, March 17, 2016
at 4:30 p.m. Eastern Time. Investors and analysts interested in
participating in the call are invited to dial (888) 461-2024 and
reference conference ID number 8054771 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 17, 2016 until
11:59 p.m. Eastern Time on March 24, 2016 and can be accessed by
dialing (877) 870-5176 and entering conference ID number
8054771.
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. 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 exclusively through its national network of
retail stores and online at www.nyandcompany.com. The Company
operates 490 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 under “Outlook” and “Additional Outlook,”
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) the Company’s ability to fully recognize the
potential savings identified through Project Excellence; (vi)
seasonal fluctuations in the Company’s business; (vii) the
Company’s ability to anticipate and respond to fashion trends;
(viii) the Company’s dependence on mall traffic for its sales; (ix)
competition in the Company’s market, including promotional and
pricing competition; (x) the Company’s ability to retain, recruit
and train key personnel; (xi) the Company’s reliance on third
parties to manage some aspects of its business; (xii) the Company’s
reliance on foreign sources of production; (xiii) the Company’s
ability to protect its trademarks and other intellectual property
rights; (xiv) the Company’s ability to maintain, and its reliance
on, its information technology infrastructure; (xv) the effects of
government regulation; (xvi) the control of the Company by its
sponsors and any potential change of ownership of those sponsors;
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) New York & Company, Inc.
and Subsidiaries Condensed Consolidated Statements of
Operations (Unaudited) (Amounts in thousands,
except per share amounts)
Three monthsended
January 30,2016
%ofnetsales
Three monthsended
January 31,2015
%ofnetsales
Net sales $ 271,272 100.0 % $
267,359 100.0 % Cost of goods sold, buying and
occupancy costs 201,492 74.3 % 198,983 74.4 %
Gross profit 69,780 25.7 % 68,376 25.6 % Selling, general
and administrative expenses 69,158 25.5 % 74,739 28.0
% Operating income (loss) 622 0.2 %
(6,363
)
(2.4) % Interest expense, net of interest income 304
0.1 % 292 0.1 % Income (loss) before income taxes 318
0.1 % (6,655) (2.5) % Provision for income taxes 234
0.1 % 65 — % Net income (loss) $ 84 — %
$ (6,720) (2.5) % Basic income (loss)
per share $ 0.00 $ (0.11) Diluted income
(loss) per share $ 0.00 $ (0.11) Weighted
average shares outstanding: Basic shares of common stock 63,233
62,933 Diluted shares of common stock 63,607 62,933
Selected operating data: (Dollars in thousands, except
square foot data) Comparable store sales increase (decrease)
1.9 % (0.9) % Net sales per average selling square foot (a) $ 106 $
102 Net sales per average store (b) $ 544 $ 526 Average selling
square footage per store (c) 5,125 5,153 Ending store count 490 504
(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)
Twelvemonthsended
January 30,2016
%ofnetsales
Twelvemonthsended
January 31,2015
%ofnetsales
Net sales $ 950,108 100.0 % $
923,332 100.0 % Cost of goods sold, buying and
occupancy costs 685,253 72.1 % 673,557
72.9 % Gross profit 264,855 27.9 % 249,775
27.1 % Selling, general and administrative expenses 272,960
28.8 % 265,371 28.8 %
Operating loss (8,105 ) (0.9 ) % (15,596 ) (1.7 ) %
Interest expense, net of interest income 1,227 0.1
% 573 — % Loss before income
taxes (9,332 ) (1.0 ) % (16,169 ) (1.7 ) % Provision for
income taxes 737 0.1 % 716 0.1
% Net loss $ (10,069 ) (1.1 ) % $
(16,885 ) (1.8 ) % Basic loss per share
$ (0.16 ) $ (0.27 ) Diluted loss per share $
(0.16 ) $ (0.27 ) Weighted average shares
outstanding: Basic shares of common stock 63,154 62,825
Diluted shares of common stock 63,154 62,825
Selected operating data: (Dollars in thousands,
except square foot data) Comparable store sales increase
(decrease) 3.1 % (1.0 ) % Net sales per average selling square foot
(a) $ 372 $ 353 Net sales per average store (b) $ 1,912 $ 1,825
Average selling square footage per store (c) 5,125 5,153
(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 30,
2016 January 31, 2015
(Unaudited) (Audited) Assets Current assets:
Cash and cash equivalents $ 61,432 $ 69,293 Restricted cash — 1,509
Accounts receivable 8,208 7,406 Income taxes receivable 47 99
Inventories, net 87,777 93,791 Prepaid expenses 19,442 20,581 Other
current assets 858 1,121 Total current assets 177,764 193,800
Property and equipment, net 88,831 84,374 Intangible assets
14,879 14,879 Deferred income taxes (a) — 6,660 Other assets 1,986
1,541 Total assets $ 283,460 $ 301,254
Liabilities and
stockholders’ equity Current liabilities: Current
portion—long-term debt $ 841 $ 866 Accounts payable 82,225 86,481
Accrued expenses 52,424 52,418 Income taxes payable 239 710
Deferred income taxes (a) — 6,660 Total current liabilities 135,729
147,135 Long-term debt, net of current portion 12,326 13,258
Deferred rent 34,351 35,169 Other liabilities 7,283 6,333 Total
liabilities 189,689 201,895 Total stockholders’ equity
93,771 99,359 Total liabilities and stockholders’ equity $ 283,460
$ 301,254 (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 as non-current within a classified statement
of financial position. On January 30, 2016, the Company adopted ASU
2015-17 prospectively. 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
(Amounts in thousands)
Twelve monthsendedJanuary
30, 2016
Twelve monthsendedJanuary
31, 2015
(Unaudited) (Audited) Operating
activities Net loss $ (10,069 ) $ (16,885 ) Adjustments to
reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 24,181 27,315 Loss from impairment
charges 327 911 Amortization of deferred financing costs 201 131
Share-based compensation expense 3,867 4,089 Changes in operating
assets and liabilities: Restricted cash 1,509 (1,509 ) Accounts
receivable (948 ) (380 ) Income taxes receivable 52 — Inventories,
net 6,014 (10,312 ) Prepaid expenses 1,139 560 Accounts payable
(4,256 ) 10,607 Accrued expenses (417 ) 5,538 Income taxes payable
(471 ) (365 ) Deferred rent (818 ) (4,756 ) Other assets and
liabilities 338 (2,944 ) Net cash provided by
operating activities 20,649 12,000
Investing activities Capital expenditures (26,648 )
(26,781 ) Insurance recoveries 146
254 Net cash used in investing activities
(26,502 ) (26,527 )
Financing
activities Proceeds from issuance of long-term debt — 15,000
Repayment of long-term debt (1,000 ) (250 ) Payment of financing
costs (161 ) (566 ) Proceeds from exercise of stock options 16 299
Shares withheld for payment of employee payroll taxes (297 ) (284 )
Principal payments on capital lease obligations (566 )
(102 ) Net cash (used in) provided by financing activities
(2,008 ) 14,097 Net decrease in cash
and cash equivalents (7,861 ) (430 ) Cash and cash equivalents at
beginning of period 69,293 69,723 Cash
and cash equivalents at end of period $ 61,432 $ 69,293
Non-cash capital lease transactions $ 2,317 $ 2,267
Exhibit (5)
New York & Company, Inc. and
SubsidiariesReconciliation 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
months ended January 30, 2016 and January 31, 2015 is indicated
below. This information reflects, on a non-GAAP basis, the
Company’s adjusted operating results after excluding certain
non-operating charges consisting primarily of consulting fees
associated with Project Excellence, certain severance expenses,
duplicative rent expense related to the relocation of the Company’s
corporate headquarters, and certain legal 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 30,
2016
(Amounts in thousands, except per share amounts)
Selling, general
andadministrative expenses
Operatingincome
Net income
Earnings perdiluted
share
GAAP as reported $ 69,158 $ 622 $ 84 $ 0.00
Adjustments
affecting comparability
Consulting expense 24 24 24 Severance expense 636 636 636 Net
reduction of BHQ moving expenses (20 ) (20 ) (20 ) Executive
relocation expense 146 146 146 Reversal of legal expense accrual
(145 ) (145 ) (145 ) Total adjustments
(1) 641 641 641
0.01 Non-GAAP as adjusted . $ 68,517 $
1,263 $ 725 $ 0.01
Three months ended January 31,
2015
(Amounts in thousands, except per share amounts)
Selling, general and
administrative expenses
Operating loss Net loss
Loss perdiluted share
GAAP as reported $ 74,739
$
(6,363
) $ (6,720 ) $ (0.11 )
Adjustments
affecting comparability
Consulting expense 693
693
693 Severance expense 2,258
2,258
2,258 Duplicative rent expense – new BHQ office space 3,156
3,156
3,156 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 ) (1) The tax effect
of $0.6 million and $6.4 million of expenses during the three
months ended January 30, 2016 and January 31, 2015, respectively,
is offset by a full valuation allowance against deferred tax
assets.
Exhibit (6)
New York & Company, Inc. and
SubsidiariesReconciliation 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 twelve months ended January 30, 2016
and January 31, 2015 is indicated below. This information reflects,
on a non-GAAP adjusted basis, the Company’s operating results after
excluding certain non-operating charges consisting primarily of
consulting fees associated with Project Excellence, certain
severance expenses, duplicative rent expense related to the
relocation of the Company’s corporate headquarters, and charges
related to a settlement of a wage and hour class action lawsuit in
the state of California. 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.
Twelve months ended January 30,
2016
(Amounts in thousands, except per share amounts)
Selling, general
andadministrative expenses
Operating loss
Net loss
Loss perdiluted share
GAAP as reported $ 272,960 $ (8,105 ) $ (10,069 ) $
(0.16 )
Adjustments
affecting comparability
Consulting expense 3,129 3,129 3,129 Severance expense 2,213 2,213
2,213 Net reduction of BHQ moving expenses (124 ) (124 ) (124 )
Executive relocation expense 146 146 146 Legal expense 2,452
2,452 2,452 Total
adjustments (1) 7,816 7,816
7,816 0.12 Non-GAAP as adjusted . $
265,144 $ (289 ) $ (2,253 ) $ (0.04 )
Twelve months ended January 31,
2015
(Amounts in thousands, except per share amounts)
Selling, general
andadministrative expenses
Operating loss
Net loss
Loss perdiluted share
GAAP as reported $ 265,371 $ (15,596 ) $
(16,885 ) $ (0.27 )
Adjustments
affecting comparability
Consulting expense 1,693 1,693 1,693 Severance expense 2,989 2,989
2,989 Duplicative rent expense – new BHQ office space 4,118 4,118
4,118 Executive recruiting expense 102 102 102 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 $7.8 million and $9.2 million of expenses during
the twelve months ended January 30, 2016 and January 31, 2015,
respectively, is offset by a full valuation allowance against
deferred tax assets.
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Investor/Media Contact:ICR, Inc.Investor: Allison
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