Exhibit 99.1
Final: For Release | Company Contact: |
| Ronald Ristau |
| Chief Operating Officer |
| Chief Financial Officer |
| (212) 884-2000 |
|
|
| Investor/Media Contact: |
| Integrated Corporate Relations |
| (203) 682-8200 |
| Investor: Allison Malkin |
| Media: Liz Brady |
NEW YORK & COMPANY, INC. ANNOUNCES SECOND QUARTER AND SIX MONTH 2006 RESULTS
· Second Quarter Net Income of $6.5 Million, or $0.11 Per Diluted Share
· Maintains Earnings Outlook
New York, NY — August 17, 2006 — New York & Company, Inc. [NYSE:NWY], a specialty apparel chain with 537 stores, today announced net income for the second quarter ended July 29, 2006 of $6.5 million, or $0.11 per diluted share.
Net sales for the second quarter of fiscal year 2006 increased 4.0% to $264.9 million, as compared to $254.6 million in the second quarter of fiscal year 2005. Comparable store sales for the second quarter decreased 4.0%, compared to a 0.4% increase in the prior year quarter. Net income in the second quarter of fiscal year 2006 was $6.5 million, or $0.11 per diluted share, compared to $12.3 million, or $0.21 per diluted share, in the second quarter of fiscal year 2005. Earnings per share are based on fully diluted shares outstanding of 59.9 million for the second quarter of fiscal year 2006, compared to 57.2 million for the second quarter of fiscal year 2005.
Net sales for the six month period ended July 29, 2006 increased 1.4% to $532.0 million, as compared to $524.6 million in the prior year six month period. Comparable store sales for the six month period ended July 29, 2006 decreased 6.7%, compared to a 2.3% increase in the prior year period. Net income for the six month period ended July 29, 2006 was $12.6 million, or $0.21 per diluted share, compared to $33.7 million, or $0.59 per diluted share, in the prior year period. Earnings per share are based on fully diluted shares outstanding of 59.8 million for the six month period ended July 29, 2006, compared to 56.9 million for the six month period ended July 30, 2005.
Richard P. Crystal, New York & Company’s Chairman and CEO, stated: “While our sales results missed our expectations in the second quarter, our ability to control expenses and tightly manage our inventory enabled us to reach the high end of our guidance. During the quarter, we refocused our organization on the merchandising and operational disciplines that have made us successful in the past, and we put in place a series of initiatives aimed at improving our
performance for the balance of the year and into 2007. We will continue our diligent control of inventory and expenses while our design and merchandising teams focus on improving our product offering.”
The Company’s balance sheet included $36.9 million in cash and working capital of $53.3 million on July 29, 2006. Inventory as of July 29, 2006 was $102.5 million, as compared to $101.0 million last year.
Capital spending for the first six months of fiscal 2006 was $38.1 million, compared to $42.8 million for the first six months of fiscal year 2005.
Guidance
The Company is also updating its full year guidance and introducing guidance for the third quarter as follows:
Third Quarter
The Company currently forecasts net sales for the third quarter of fiscal year 2006 in the range of $270.0 million to $280.0 million, an increase of 6.1% to 10.1%, compared to actual net sales of $254.4 million for the third quarter of fiscal year 2005. This estimate reflects comparable store sales ranging from flat to 3.0%. Net income is estimated to be in the range of $6.0 million to $8.3 million, compared to net income of $4.2 million in the third quarter of fiscal year 2005. Diluted earnings per share for the third quarter of fiscal year 2006 are estimated to be in the range of $0.10 to $0.14, compared to diluted earnings per share of $0.07 for the third quarter of fiscal year 2005. The Company expects diluted shares outstanding to approximate 60.3 million shares for the third quarter of fiscal year 2006, compared to 57.7 million shares for the third quarter of fiscal year 2005.
During the third quarter of fiscal year 2006, the Company plans to open 38 new stores and remodel 15 locations. The Company expects to close three stores during the third quarter of fiscal year 2006 and anticipates having 572 stores in operation at the end of the quarter, as compared to 523 stores in operation at the end of the third quarter of fiscal year 2005. Total selling square footage at the end of the third quarter of fiscal year 2006 is expected to approximate 3.399 million square feet, compared to 3.306 million square feet at the end of the third quarter of fiscal year 2005. Exhibit (5) at the end of this release details the actual and projected store openings, closings, remodels and the related selling square footage by quarter for fiscal year 2006.
Fiscal Year 2006
For full fiscal year 2006, the Company currently estimates net sales in the range of $1,198.0 million to $1,218.0 million. This compares to the Company’s previous guidance range of $1,203.0 million to $1,222.0 million, and actual fiscal year 2005 net sales of $1,130.5 million. This estimate reflects comparable store sales ranging from negative 1.0% to negative 3.0%. Consistent with its previous guidance, the Company currently estimates full fiscal year 2006 net income in the range of $42.2 million to $49.4 million, or $0.70 to $0.82 per diluted share, as compared to actual fiscal year 2005 net income of $58.5 million, or $1.02 per diluted share. The Company expects full year diluted shares outstanding to be approximately 60.2 million for fiscal year 2006, as compared to 57.3 million diluted shares for fiscal year 2005.
For full fiscal year 2006, the Company plans to open approximately 63 new stores and remodel 34 locations. The Company expects to close 14 stores and anticipates having 568 stores in operation
at the end of fiscal year 2006, as compared to 519 stores in operation at the end of fiscal year 2005. Total selling square footage at the end of fiscal year 2006 is expected to approximate 3.373 million square feet, compared to 3.254 million square feet at the end of fiscal year 2005. Exhibit (5) at the end of this release details the actual and projected store openings, closings, remodels and the related selling square footage by quarter for fiscal year 2006.
For full fiscal year 2006, capital spending is estimated to be in the range of $84.0 million to $86.0 million, as compared to $81.1 million in fiscal year 2005. These amounts do not reflect landlord allowances of $18.6 million and $16.0 million, respectively, which are reflected as deferred rent liabilities.
Conference Call Information
A conference call to discuss second quarter of fiscal year 2006 results is scheduled for today Thursday, August 17th, 2006 at 8:00 am Eastern Time. Investors and analysts interested in participating in the call are invited to dial (800) 289-0572 approximately ten minutes prior to the start of the call. The conference call will also be web-cast live at www.nyandcompany.com. A replay of this call will be available until August 24, 2006 and can be accessed by dialing (888) 203-1112 and entering pin number 4479675.
Forward-Looking Statements: This press release contains certain forward-looking statements. Some of these statements can be identified by terms and phrases such as “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “could,” “may,” “plan,” “project,” “predict” and similar expressions and include references to assumptions that we believe are reasonable and relate to our future prospects, developments and business strategies. Such statements are subject to various risks and uncertainties that could cause actual results to differ materially. These include, but are not limited to: (i) our ability to open and operate stores successfully; (ii) seasonal fluctuations in our business; (iii) our ability to anticipate and respond to fashion trends and launch new product lines successfully; (iv) general economic conditions, consumer confidence and spending patterns; (v) our dependence on mall traffic for our sales; (vi) the susceptibility of our business to extreme and/or unseasonable weather conditions; (vii) our ability to retain and recruit key personnel; (viii) our reliance on third parties to manage some aspects of our business; (ix) changes in the cost of raw materials, distribution services or labor; (x) our reliance on foreign sources of production; (xi) the potential impact of natural disasters and health concerns relating to outbreaks of widespread diseases, particularly on manufacturing operations of our vendors; (xii) the ability of our manufacturers to manufacture and deliver products in a timely manner while meeting our quality standards; (xiii) our ability to successfully integrate acquired businesses into our existing business; (xiv) our reliance on manufacturers to maintain ethical business practices; (xv) our ability to protect our trademarks and other intellectual property rights; (xvi) our ability to maintain and our reliance on our information systems infrastructure; (xvii) our dependence on the success of our brand; (xviii) competition in our market, including promotional and pricing competition; (xix) our reliance on the effective use of customer information; (xx) the effects of government regulation; (xxi) the control of our company by our sponsors; and (xxii) other risks and uncertainties as described in our documents filed with the SEC, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. We undertake no obligation to revise the forward-looking statements included in this press release to reflect any future events or circumstances.
About New York & Company, Inc.
New York & Company, Inc., founded in 1918, is a leading specialty retailer of fashion-oriented, moderately-priced women’s apparel. The Company’s proprietary branded New York & Company ™ merchandise is sold exclusively through its national network of retail stores. The Company currently operates 537 retail stores in 45 states. Additionally, certain product, press release and SEC filing information concerning the Company are available at the Company’s website: www.nyandcompany.com.
Exhibit (1)
New York & Company, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
|
| Three months |
| % |
| Three months |
| % |
| ||
|
| ended |
| of |
| ended |
| of |
| ||
|
| July 29, |
| net |
| July 30, |
| net |
| ||
(Amounts in thousands, except per share amounts) |
| 2006 |
| sales |
| 2005 |
| sales |
| ||
Net sales |
| $ | 264,858 |
| 100.0 | % | $ | 254,581 |
| 100.0 | % |
|
|
|
|
|
|
|
|
|
| ||
Costs of goods sold, buying and occupancy costs |
| 189,277 |
| 71.5 | % | 172,563 |
| 67.8 | % | ||
|
|
|
|
|
|
|
|
|
| ||
Gross profit |
| 75,581 |
| 28.5 | % | 82,018 |
| 32.2 | % | ||
|
|
|
|
|
|
|
|
|
| ||
Selling, general and administrative expenses |
| 64,200 |
| 24.2 | % | 60,278 |
| 23.7 | % | ||
|
|
|
|
|
|
|
|
|
| ||
Operating income |
| 11,381 |
| 4.3 | % | 21,740 |
| 8.5 | % | ||
|
|
|
|
|
|
|
|
|
| ||
Interest expense, net of interest income |
| 477 |
| 0.2 | % | 1,301 |
| 0.5 | % | ||
|
|
|
|
|
|
|
|
|
| ||
Income before income taxes |
| 10,904 |
| 4.1 | % | 20,439 |
| 8.0 | % | ||
|
|
|
|
|
|
|
|
|
| ||
Provision for income taxes |
| 4,405 |
| 1.6 | % | 8,189 |
| 3.2 | % | ||
|
|
|
|
|
|
|
|
|
| ||
Net income |
| $ | 6,499 |
| 2.5 | % | $ | 12,250 |
| 4.8 | % |
|
|
|
|
|
|
|
|
|
| ||
Basic earnings per share |
| $ | 0.12 |
|
|
| $ | 0.23 |
|
|
|
Diluted earnings per share |
| $ | 0.11 |
|
|
| $ | 0.21 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
| ||
Basic shares of common stock |
| 55,656 |
|
|
| 53,654 |
|
|
| ||
Diluted shares of common stock |
| 59,852 |
|
|
| 57,197 |
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||
Selected operating data : |
|
|
|
|
|
|
|
|
| ||
(Dollars in thousands, except square foot data) |
|
|
|
|
|
|
|
|
| ||
Comparable store sales (decrease) increase |
| (4.0 | )% |
|
| 0.4 | % |
|
| ||
Total net sales growth |
| 4.0 | % |
|
| 4.9 | % |
|
| ||
Net sales per average selling square foot (a) |
| $ | 81 |
|
|
| $ | 79 |
|
|
|
Net sales per average store (b) |
| $ | 496 |
|
|
| $ | 515 |
|
|
|
Total selling square footage |
| 3,280,075 |
|
|
| 3,237,471 |
|
|
| ||
Average selling square footage per store (c) |
| 6,108 |
|
|
| 6,398 |
|
|
|
(a) Net sales per average selling square foot is defined as net sales divided by the average of beginning and end of period selling square feet.
(b) Net sales per average store is defined as net sales divided by the average of beginning and end of period number of stores.
(c) Average selling square footage per store is defined as end of period selling square feet divided by end of period number of stores.
Exhibit (2)
New York & Company, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
|
| Six months |
| % |
| Six months |
| % |
| ||
|
| ended |
| of |
| ended |
| of |
| ||
|
| July 29, |
| net |
| July 30, |
| net |
| ||
(Amounts in thousands, except per share amounts) |
| 2006 |
| sales |
| 2005 |
| sales |
| ||
Net sales |
| $ | 531,995 |
| 100.0 | % | $ | 524,556 |
| 100.0 | % |
|
|
|
|
|
|
|
|
|
| ||
Costs of goods sold, buying and occupancy costs |
| 377,311 |
| 70.9 | % | 344,228 |
| 65.6 | % | ||
|
|
|
|
|
|
|
|
|
| ||
Gross profit |
| 154,684 |
| 29.1 | % | 180,328 |
| 34.4 | % | ||
|
|
|
|
|
|
|
|
|
| ||
Selling, general and administrative expenses |
| 132,684 |
| 25.0 | % | 121,204 |
| 23.1 | % | ||
|
|
|
|
|
|
|
|
|
| ||
Operating income |
| 22,000 |
| 4.1 | % | 59,124 |
| 11.3 | % | ||
|
|
|
|
|
|
|
|
|
| ||
Interest expense, net of interest income |
| 967 |
| 0.2 | % | 2,710 |
| 0.5 | % | ||
|
|
|
|
|
|
|
|
|
| ||
Income before income taxes |
| 21,033 |
| 3.9 | % | 56,414 |
| 10.8 | % | ||
|
|
|
|
|
|
|
|
|
| ||
Provision for income taxes |
| 8,477 |
| 1.5 | % | 22,684 |
| 4.4 | % | ||
|
|
|
|
|
|
|
|
|
| ||
Net income |
| $ | 12,556 |
| 2.4 | % | $ | 33,730 |
| 6.4 | % |
|
|
|
|
|
|
|
|
|
| ||
Basic earnings per share |
| $ | 0.23 |
|
|
| $ | 0.63 |
|
|
|
Diluted earnings per share |
| $ | 0.21 |
|
|
| $ | 0.59 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
| ||
Basic shares of common stock |
| 55,441 |
|
|
| 53,497 |
|
|
| ||
Diluted shares of common stock |
| 59,798 |
|
|
| 56,935 |
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||
Selected operating data : |
|
|
|
|
|
|
|
|
| ||
(Dollars in thousands, except square foot data) |
|
|
|
|
|
|
|
|
| ||
Comparable store sales (decrease) increase |
| (6.7 | )% |
|
| 2.3 | % |
|
| ||
Total net sales growth |
| 1.4 | % |
|
| 6.0 | % |
|
| ||
Net sales per average selling square foot (a) |
| $ | 163 |
|
|
| $ | 163 |
|
|
|
Net sales per average store (b) |
| $ | 1,008 |
|
|
| $ | 1,068 |
|
|
|
Total selling square footage |
| 3,280,075 |
|
|
| 3,237,471 |
|
|
| ||
Average selling square footage per store (c) |
| 6,108 |
|
|
| 6,398 |
|
|
|
(a) Net sales per average selling square foot is defined as net sales divided by the average of beginning and end of period selling square feet.
(b) Net sales per average store is defined as net sales divided by the average of beginning and end of period number of stores.
(c) Average selling square footage per store is defined as end of period selling square feet divided by end of period number of stores.
Exhibit (3)
New York & Company, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
|
| July 29, |
| January 28, |
| July 30, |
| |||
(Amounts in thousands) |
| 2006 |
| 2006 |
| 2005 |
| |||
|
| (Unaudited) |
| (Audited) |
| (Unaudited) |
| |||
Assets |
|
|
|
|
|
|
| |||
Current assets: |
|
|
|
|
|
|
| |||
Cash and cash equivalents |
| $ | 36,888 |
| $ | 57,436 |
| $ | 57,239 |
|
Inventories, net |
| 102,526 |
| 109,656 |
| 100,977 |
| |||
Other current assets |
| 42,205 |
| 35,866 |
| 40,501 |
| |||
Total current assets |
| 181,619 |
| 202,958 |
| 198,717 |
| |||
|
|
|
|
|
|
|
| |||
Property and equipment, net |
| 181,949 |
| 159,388 |
| 135,351 |
| |||
Goodwill and intangible assets |
| 43,141 |
| 41,702 |
| 40,857 |
| |||
Other assets |
| 1,949 |
| 2,227 |
| 3,282 |
| |||
Total assets |
| $ | 408,658 |
| $ | 406,275 |
| $ | 378,207 |
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
| |||
Current liabilities: |
|
|
|
|
|
|
| |||
Current portion — long-term debt |
| $ | 6,000 |
| $ | 6,000 |
| $ | — |
|
Accounts payable |
| 68,944 |
| 90,980 |
| 66,572 |
| |||
Accrued expenses |
| 49,770 |
| 55,261 |
| 52,285 |
| |||
Other current liabilities |
| 3,593 |
| 3,016 |
| 1,636 |
| |||
Total current liabilities |
| 128,307 |
| 155,257 |
| 120,493 |
| |||
|
|
|
|
|
|
|
| |||
Long-term debt, net of current |
| 28,500 |
| 31,500 |
| 75,000 |
| |||
Deferred rent and other liabilities |
| 52,810 |
| 40,468 |
| 33,387 |
| |||
Total liabilities |
| 209,617 |
| 227,225 |
| 228,880 |
| |||
|
|
|
|
|
|
|
| |||
Total stockholders’ equity |
| 199,041 |
| 179,050 |
| 149,327 |
| |||
Total liabilities and stockholders’ equity |
| $ | 408,658 |
| $ | 406,275 |
| $ | 378,207 |
|
Exhibit (4)
New York & Company, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands) |
| Six months |
| Six months |
| ||
|
|
|
|
|
| ||
Operating activities |
|
|
|
|
| ||
Net income |
| $ | 12,556 |
| $ | 33,730 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
| 15,651 |
| 11,041 |
| ||
Amortization of deferred financing costs |
| 138 |
| 578 |
| ||
Share-based compensation |
| 790 |
| 486 |
| ||
Deferred income taxes |
| (1,330 | ) | (3,833 | ) | ||
Changes in operating assets and liabilities: |
|
|
|
|
| ||
Accounts receivable |
| (8,400 | ) | (6,497 | ) | ||
Inventories, net |
| 7,130 |
| (3,811 | ) | ||
Prepaid expenses |
| 186 |
| (602 | ) | ||
Accounts payable |
| (22,036 | ) | (9,487 | ) | ||
Accrued expenses |
| (5,140 | ) | 423 |
| ||
Income taxes payable |
| 587 |
| — |
| ||
Other assets and liabilities |
| 11,789 |
| 11,616 |
| ||
Net cash provided by operating activities |
| 11,921 |
| 33,644 |
| ||
|
|
|
|
|
| ||
Investing activities |
|
|
|
|
| ||
Acquisition of Jasmine Company, Inc., net of cash acquired |
| — |
| (21,246 | ) | ||
Capital expenditures |
| (38,057 | ) | (42,772 | ) | ||
Net cash used in investing activities |
| (38,057 | ) | (64,018 | ) | ||
|
|
|
|
|
| ||
Financing activities |
|
|
|
|
| ||
Proceeds from public offering |
| 2,294 |
| — |
| ||
Payment of public offering costs |
| (439 | ) | — |
| ||
Repayment of debt |
| (3,000 | ) | (1,327 | ) | ||
Tax benefit from exercise of stock options |
| 5,893 |
| 3,558 |
| ||
Proceeds from exercise of stock options |
| 840 |
| 221 |
| ||
Net cash provided by financing activities |
| 5,588 |
| 2,452 |
| ||
|
|
|
|
|
| ||
Net decrease in cash and cash equivalents |
| (20,548 | ) | (27,922 | ) | ||
|
|
|
|
|
| ||
Cash and cash equivalents at beginning of period |
| 57,436 |
| 85,161 |
| ||
Cash and cash equivalents at end of period |
| $ | 36,888 |
| $ | 57,239 |
|
Exhibit (5)
New York & Company, Inc. and Subsidiaries
Store Count and Selling Square Footage
Fiscal |
| Total stores open |
| Number of stores |
| Number of stores |
| Number of stores |
| Total stores |
|
1st Quarter (Actual) |
| 519 |
| 14 |
| 5 |
| (3 | ) | 530 |
|
2nd Quarter (Actual) |
| 530 |
| 10 |
| 14 |
| (3 | ) | 537 |
|
3rd Quarter (Projected) |
| 537 |
| 38 |
| 15 |
| (3 | ) | 572 |
|
4th Quarter (Projected) |
| 572 |
| 1 |
| — |
| (5 | ) | 568 |
|
Fiscal |
| Total selling square |
| Selling square feet |
| Reduction of |
| Reduction of |
| Total selling square |
|
1st Quarter (Actual) |
| 3,254,465 |
| 64,312 |
| (18,297 | ) | (18,147 | ) | 3,282,333 |
|
2nd Quarter (Actual) |
| 3,282,333 |
| 43,317 |
| (28,166 | ) | (17,409 | ) | 3,280,075 |
|
3rd Quarter (Projected) |
| 3,280,075 |
| 168,877 |
| (27,135 | ) | (23,085 | ) | 3,398,732 |
|
4th Quarter (Projected) |
| 3,398,732 |
| 4,745 |
| — |
| (30,063 | ) | 3,373,414 |
|