New York & Co. (NWY) Reports Q1 Loss of $0.04; Guides

New York & Co. (NYSE: NWY) reported Q1 EPS of ($0.04). Revenue for the quarter came in at $209.9 million versus the consensus estimate of $211.5 million.

Comparable store sales decreased 0.7%, reflecting double-digit percentage growth in eCommerce offset by decreases in comparable store sales in brick-and-mortar stores due to traffic declines.

Gregory Scott, New York & Company’s CEO stated: “Our first quarter top and bottom-line results were in line with our guidance, and were highlighted by the continued success of our celebrity collaborations, a double-digit percentage increase in eCommerce sales and strong gross margin expansion to its highest level in the first quarter since 2008. As we expand on our high-growth celebrity collaborations, we are excited about our multi-year partnership with Gabrielle Union, who will be the face of our 7th Avenue Design Studio and will launch her own collection in the third quarter of this year. While we saw a soft start to the quarter due to reduced mall traffic, we saw comparable store sales significantly improve for the combined March and April period. Moreover, for the quarter we recorded our highest ever average unit retail, demonstrating the increasing strength of the New York and Company brand.”

“While the apparel retail sector remains challenging with traffic declines and a highly promotional environment, we remain committed to accelerating even greater success in the proven high-growth segments of celebrity partnerships, sub-brands and eCommerce. We expect that the continued execution of our strategies will drive increased sales productivity and profitability in this fiscal year and enhance value for our shareholders.”

Outlook:

Regarding expectations for the second quarter of fiscal year 2017, the Company is providing the following guidance:

• Net sales and comparable store sales are expected to be flat to down in the low single-digit percentage range.
• Gross margin is expected to be up 250 to 300 basis points from the prior year’s second quarter rate reflecting 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.
• Selling, general and administrative expenses are expected to increase $3 million to $4 million as compared to the prior year’s second quarter, reflecting the elimination of marketing credits earned under the old private label credit card agreement which have been replaced by royalty payments under the new agreement and reported as revenue, increased eCommerce fulfillment costs due to the expected increase in sales, and investment in marketing, including the recent private label credit card relaunch, increases in digital marketing and increases in celebrity collaborations, all of which are in an effort to drive top line sales.
• For the second quarter of fiscal year 2017 we are expecting approximately $1 million to $3 million in operating income, as compared to operating income of $1.3 million in the prior year, resulting in anticipated diluted earnings per share in the range of $0.01 to $0.04.

For earnings history and earnings-related data on New York & Co. (NWY) click here.

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