RTW Retailwinds reports Q2 net loss of 7.5 million dollars

Second quarter net sales at RTW Retailwinds, Inc. were 201.9 million dollars, reflecting a 4.8 percent decrease in comparable store sales, and a net reduction in store count by 13 stores from the prior year second quarter, partially offset by an increase in sales from new businesses. Net loss for the quarter was 7.5 million dollars or a loss of 12 cents per diluted share compared to net income of 3.1 million dollars or earnings of 5 cents per diluted share, in the second quarter of fiscal year 2018.

Commenting on the company’s performance, Gregory Scott, Chief Executive Officer of RTW Retailwinds, said in a statement: “We were disappointed with second quarter results in our core New York & Company brand. We continued to experience decreases in brick-and-mortar traffic as well as decreases in basket size and ongoing weakness from our SoHo Jeans sub-brand. We also experienced increases in variable ecommerce expenses particularly in shipping, and this increase combined with reduced vendor rebates and increased recruiting fees, negatively affected our operating results in the quarter. We also incurred 2.3 million dollars of losses from our new businesses in the quarter, compared to breakeven in the prior year.”

RTW Retailwinds expects low single-digit decline in Q3 sales

Gross profit as a percentage of net sales decreased 260 basis points to 29.5 percent versus last year’s second quarter gross profit percentage of 32.1 percent. Operating loss was 7.6 million dollars, inclusive of 2.3 million dollars of losses from the company’s new businesses. This compares to operating income of 3.1 million dollars for the second quarter of fiscal year 2018.

For the third quarter, the company said, net sales are expected to be down in the low single-digit to mid single-digit percentage range, reflecting the combination of reduced store count and comparable store sales which are expected to be down in the low to mid single-digit percentage range. Gross margin is expected to be down slightly, primarily reflecting increased shipping costs and decreased vendor rebates, partially offset by an increase in product margins.

Operating results for the third quarter are expected to reflect a modest loss, excluding one-time charges to exit the Uncommon Sense business.

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