NY & Co remains on-track to achieve plan for fall season

20 Nov '09

5 min read

• Inventory continues to be managed conservatively with inventory per average store down by 24.6%, as compared to the end of last year's third quarter.
• Selling, general and administrative expenses declined by 8.8% on an average store basis, as compared to third quarter last year.
• The Company's E-Commerce business experienced positive comparable store sales versus the prior year, reflecting the success of this sales channel in a challenging consumer spending environment.
• The Company ended the quarter with $39.3 million of cash-on-hand and no outstanding borrowings under its revolving credit facility.

Outlook

New York & Company continues to believe that the business environment will remain challenging, and expects promotional activity to accelerate throughout the key holiday selling period. Nevertheless, the Company believes that it has planned appropriately and expects to end fiscal year 2009 with significant cash and no borrowings under its revolving credit facility. The Company remains focused on its long-term performance. Therefore, the Company will continue to provide meaningful trend information on business fundamentals, key metrics, and strategic initiatives. Regarding expectations for the balance of fiscal year 2009, the Company provided the following:

• The comparable store sales trend for the fourth quarter is expected to sequentially improve versus the third quarter due to the positive customer response to the Company's merchandise and strong inventory management.
• Merchandise margins are expected to significantly improve, as compared with the prior year's fourth quarter, resulting primarily from sourcing efficiencies and significant decreases in the level of promotional activities.
• Buying and occupancy costs are expected to decrease during the fourth quarter, as compared to the same period last year, due to the success of the Company's restructuring and cost reduction program; however, the Company expects to de-leverage these costs based on anticipated sales levels.
• Gross margins are expected to significantly improve during the fourth quarter, as compared to the same period last year, reflecting sourcing efficiencies, less promotional activity and the impact of the restructuring and cost reduction program.
• Selling, general and administrative expenses (SG&A) are expected to decrease by a low to mid single-digit percentage during the fourth quarter, as compared to the same period last year, reflecting the benefits of the Company's restructuring and cost reduction program partially offset by continued investment into growth areas of the organization.
• The Company continues to expect to exceed the $30 million pre-tax savings target for fiscal year 2009 established when it initiated its restructuring and cost reduction program in January 2009. As previously announced, these savings will be realized in the Company's financial results through a combination of selling, general and administration expenses and buying and occupancy costs.
• Inventory will continue to be managed tightly with inventory per average store at the end of the fourth quarter expected to be approximately flat as compared to last year's fourth quarter.
• Cash-on-hand at the end of year is expected to be higher than the cash balance at the end of last year, reflecting no cash drain during an extremely difficult year.

New York & Company

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