• Q2 net loss narrowed to $4.3m from $15.4m
  • Net sales slipped 0.4% to $227.7m
  • Comparable store sales flat with a year ago 

Specialty apparel retailer New York & Company Inc has seen a "significant improvement" in its second quarter performance after lower product costs helped offset flat sales and narrowed losses by two-thirds.

"Enhancements made to our summer merchandise assortments combined with compelling event-driven promotions led to flat comparable store sales for the quarter, despite less than optimal levels of inventory," explained CEO Gregory Scott.

"We also benefited from improved product costs, while generating savings in both our buying and occupancy costs and reductions in our planned level of SG&A expenses."

The retailer, which operates 537 stores, saw net loss narrow to $4.3m, or $0.07 per share, from a loss of $15.4m, or $0.25 per share the year before.

Net sales slipped 0.4% to $227.7m from $228.6m, and comparable store sales were flat with a year ago.

Show the press release

New York & Company, Inc. Announces Significantly Improved Second Quarter 2012 Operating Results

NEW YORK--(BUSINESS WIRE)--

New York & Company, Inc. [NYSE:NWY], a specialty apparel chain with 537 retail stores, today announced results for the second quarter ended July 28, 2012. For the second quarter of fiscal year 2012, net sales were $227.7 million, as compared to $228.6 million for the second quarter of fiscal year 2011. Comparable store sales for the second quarter of fiscal year 2012 were flat versus a comparable store sales decrease of 3.4% in the prior year second quarter.

Operating loss for the second quarter of fiscal year 2012 was $4.4 million, reflecting a significant improvement from the prior year’s second quarter operating loss of $15.1 million.

Net loss for the second quarter of fiscal year 2012 narrowed to $4.3 million, or $0.07 per diluted share. This compares to the prior year net loss of $15.4 million, or $0.25 per diluted share.

Gregory Scott, New York & Company’s CEO, stated: “Our second quarter operating results reflect a significant improvement from last year driven by continued progress on our strategic initiatives – our six keys to success. Enhancements made to our summer merchandise assortments combined with compelling event-driven promotions led to flat comparable store sales for the quarter, despite less than optimal levels of inventory. We also benefited from improved product costs, while generating savings in both our buying and occupancy costs and reductions in our planned level of SG&A expenses. We remain encouraged by our multi-channel growth initiatives – Outlet and eCommerce – which continue to increase as a percentage of our overall business while contributing to the bottom line.”

The Company continues to cite its six keys to success as its drivers toward improved fiscal year 2012 results. These include: maximizing sales and profitability particularly during peak traffic times of the year; increasing its marketing efforts to grow traffic in stores and on-line; maintaining dominance in wear-to-work, while redefining its casual assortment; improving average unit cost; optimizing its real estate portfolio; and expanding its growing eCommerce and Outlet businesses.

During the quarter, the Company accomplished the following:

  • Despite lower than optimal inventory levels throughout the quarter, comparable store sales improved from the year-ago period.
  • Gross profit as a percentage of net sales improved by 480 basis points versus the prior year, driven by improved product costs combined with reductions in buying and occupancy costs.
  • Selling, general and administrative expenses were up slightly compared to the prior year period as the Company invested in marketing, eCommerce and Outlet initiatives, which were partially offset by continued expense controls along with a benefit from insurance proceeds and a reduction in share-based compensation expense.
  • Inventory remained tightly managed with total quarter-end inventory declining by 4.8%, as compared to the end of last year’s second quarter. The retail value of on-hand inventory per average store increased 5.7%.
  • The Company ended the quarter with $39.4 million of cash-on-hand and no outstanding borrowings under its revolving credit facility.
  • The Company opened six new Outlet stores, remodeled three existing stores and closed 10 stores, ending the quarter with 537 stores, including 41 Outlet stores, and 2.8 million selling square feet in operation.

For the six months ended July 28, 2012, net sales were $455.4 million, as compared to $467.9 million for the six months ended July 30, 2011. Comparable store sales decreased 1.5% for the six months ended July 28, 2012, as compared to a decrease of 0.4% in the prior year period. Operating loss for the six months ended July 28, 2012 was $4.5 million, reflecting a significant improvement from the prior year’s operating loss of $18.7 million. Net loss for the six months ended July 28, 2012 narrowed to $4.5 million, or $0.07 per diluted share. This compares to the prior year net loss of $19.1 million, or $0.32 per diluted share.

Outlook

The Company is providing the following outlook for the third quarter reflecting its expectations for the balance of the quarter.

Comparable store sales for the third quarter of fiscal year 2012 are expected to be flat to up slightly versus the year-ago period, and the Company expects to have 538 stores in operation at the end of the third quarter as compared to 542 in the prior year.

Gross margin is expected to significantly increase by more than 200 basis points from the prior year’s rate primarily driven by improved product costs resulting in merchandise margin increases. This improvement is expected to be offset by investments in selling, general and administrative expenses, including: (i) an increase in accruals for variable-based compensation; (ii) incremental investments in marketing to drive traffic and increase brand awareness; and (iii) incremental store expense associated with the growth of the Company’s Outlet and eCommerce businesses, and to support the core New York & Company stores. Selling, general and administrative expenses as a percentage of net sales in the fourth quarter of fiscal year 2012 are expected to be comparable to the fourth quarter of fiscal year 2011.

As a result, operating loss in the third quarter of fiscal year 2012 is projected to be in the range of $4 million to $8 million. The year-to-date operating loss at the end of the third quarter is expected to be in the range of $8.5 million to $12.5 million, which is a significant improvement from the operating loss of $24.8 million last year and positions the Company closer to a return to profitability for the full year in the fourth quarter of fiscal year 2012.

As previously announced, the Company continues to provide for adjustments to the deferred tax valuation allowance initially recorded in the second quarter of fiscal year 2010 substantially offsetting any future tax provisions or benefits resulting in an approximately 0% effective tax rate for GAAP purposes.

The Company anticipates total inventory levels at the end of the third quarter of fiscal year 2012 to be down by a low single digit percentage versus the prior year reflecting continued reductions in product costs. The retail value of on-hand inventory per average store is expected to be approximately flat.

While the Company expects to utilize its credit facility for certain seasonal working capital needs, it expects to end the year with no borrowings under its credit facility and no long-term debt.

Capital expenditures are expected to be approximately $8.0 million for the third quarter of fiscal year 2012, as compared to $3.5 million in the prior year. Depreciation expense for the period is estimated at $9.0 million.

The Company expects to open two new Outlet stores, remodel six existing locations and close one store, ending the third quarter of fiscal year 2012 with 538 stores, including 43 Outlet stores.

The Company expects to report its third quarter fiscal year 2012 results during the last week of November, following the Thanksgiving holiday weekend.

About New York & Company, Inc.

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 537 retail 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.

Original source: http://finance.yahoo.com/news/york-company-inc-announces-significantly-200100157.html