New York & Company Q3 comparable sales up 2.2 percent

Third quarter net sales were 214.2 million dollars, increasing 0.1 percent compared to 213.9 million dollars in the prior year, reflecting growth in comparable sales driven by ecommerce, offset by the impact of a lower store count (459 this year versus 483 last year). Comparable store sales increased 2.2 percent, reflecting double-digit percentage growth in ecommerce partially offset by decreases in comparable store sales in brick-and-mortar stores.

Commenting on the third quarter trading, Gregory Scott, New York & Company’s CEO said in a media release: “As we enter the fourth quarter we were pleased to experience a strong November with improved comparable store sales versus the third quarter, driven by strength on Black Friday. We were pleased to see positive comparable store sales across all three channels and record breaking results in our ecommerce business on Black Friday. These results position us well for the quarter and are reflected in our guidance for positive comparable store sales and a significant improvement in operating results which would make us profitable for the fourth quarter and full fiscal year.”

Review of New York & Company's Q3 results

The company said, gross profit as a percentage of net sales increased 170 basis points to 31.6 percent versus 29.9 percent for the fiscal year 2016 third quarter, reflecting the highest gross margin rate achieved in the third quarter since 2006. The increase during the quarter, the company said, reflects a 210 basis point improvement in the leverage of buying and occupancy costs, partially offset by a 40 basis point decrease in merchandise margin.

GAAP operating income improved to income of 0.6 million dollars compared to a loss of 2.1 million dollars, in the prior year’s third quarter. On a non-GAAP basis, excluding 0.6 million dollars of non-operating charges, adjusted operating income was 1.3 million dollars, compared to the prior year’s non-GAAP operating loss of 2.6 million dollars, which excluded a 0.5 million dollars non-operating benefit.

GAAP net income was 0.4 million dollars or earnings of 0.01 dollar per diluted share. This compares to the prior year’s GAAP net loss of 2.5 million dollars or a loss of 0.04 dollar per diluted share. On a non-GAAP basis, the company’s adjusted net income was 1 million dollars or earnings of 0.02 dollar per diluted share. This compares to prior year’s third quarter, non-GAAP adjusted net loss of 3 million dollars or a loss of 0.05 dollar per diluted share.

The company opened two New York & Company stores, refreshed four and closed three New York & Company stores, ending the third quarter with 459 stores, including 125 outlet stores.

New York & Company provides Q4 guidance

For the fourth quarter, net sales are expected to be up by a low single-digit percentage reflecting positive comparable store sales and the inclusion of the 53rd week in the fiscal calendar, partially offset by a decrease in store count. Comparable store sales are expected to be up in the low single-digit percentage range.

Gross margin is expected to be up approximately 200 basis points to 250 basis points from the prior year’s fourth quarter rate reflecting improvements in product margin combined with continued benefits from Project Excellence through increased royalties, reductions in product costs, agent expenses and occupancy costs, partially offset by increased shipping costs associated with the significant growth in the omni-channel business.

GAAP operating income is expected to be between 2 million and 4 million dollars compared to a GAAP operating loss of 9.2 million dollars in the prior year’s fourth quarter.

The company plans to end the full fiscal year 2017 with 431 stores, including 118 outlet stores, having opened eight New York & Company stores and three Outlet stores, remodeled/refreshed 14 existing stores and closed 38 New York & Company stores and eight Outlet stores during the fiscal year.

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