New York & Co. (NWY) Tops Q3 EPS by 8c

New York & Co. (NYSE: NWY) reported Q3 EPS of $0.01, $0.08 better than the analyst estimate of ($0.07).

Outlook:

As previously disclosed, the Company’s fiscal year is based upon a retail calendar and fiscal year 2017 is a 53-week year with an extra week of sales and expenses occurring late in the fourth quarter.

Regarding expectations for the fourth quarter of fiscal year 2017, the Company is providing the following guidance, which includes the extra week of sales and expenses:

• 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.
• Selling, general and administrative expenses inclusive of the 53rd week in 2017 are expected to decrease $1 million to $2 million as compared to the prior year’s fourth quarter (which did not include the extra 53rd week), driven by $6.2 million in non-operating legal expense which occurred in the prior year period with no comparable expense in the fourth quarter of 2017, partially offset by increased payroll and expenses for the 53rd week, increased eCommerce fulfillment costs due to the significant increase in sales resulting from the positive comparable store sales and the 53rd week, anticipated increases in variable compensation programs, which are based upon annual profits, and investment in marketing, including increases in digital marketing, private label credit card marketing, and celebrity collaborations, in an effort to increase sales.
• For the fourth quarter of fiscal year 2017, GAAP operating income is expected to be between $2 million and $4 million, as compared to a GAAP operating loss of $9.2 million in the prior year’s fourth quarter.

Additional Outlook:

• Total inventory at the end of the fourth quarter is expected to increase in the mid single-digit percentage range over the prior year fourth quarter largely reflecting increases in inventory in-transit due to timing differences resulting from the calendar shift relating to the 53rd week, and increases in eCommerce inventory to support higher sales. In-store inventory is expected to be down slightly due to lower store count.
• The Company continues to rationalize its real estate portfolio in an effort to reduce occupancy costs and maximize profitability per selling square foot. These efforts include maintaining a highly flexible real estate portfolio with approximately 67% of its leases expiring before fiscal year end 2019.
• Capital expenditures for the fourth quarter of fiscal year 2017 are projected to be between $4.0 million and $6.0 million, as compared to $5.0 million of capital expenditures in the fourth quarter of last year.
• Depreciation expense for the fourth quarter of fiscal year 2017 is estimated to be approximately $5.0 million.
• The Company plans to end the full fiscal year 2017 with 431 stores, including 118 Outlet stores, and approximately 2.2 million selling square feet, having opened 8 New York & Company stores and 3 Outlet stores, remodeled/refreshed 14 existing stores and closed 38 New York & Company stores and 8 Outlet stores during the fiscal year.

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

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