Excluding the non-operating charges, the Company's adjusted net loss from continuing operations was $34.2 million, or $0.58 per diluted share, as compared to a net loss from continuing operations in the prior year of $9.7 million, or $0.16 per diluted share. Please refer to the "Reconciliation of GAAP to Non-GAAP Net Loss From Continuing Operations and Loss Per Diluted Share" in Exhibit 5 of this press release.
The Company's second quarter results were negatively impacted by higher levels of markdowns to clear inventory which was initially planned to a higher sales trend. The Company believes its inventory is now well positioned for the fall season and is pleased with the early positive responses received from customers to the new assortments.
During the quarter:
• The Company's E-commerce store delivered comparable store sales growth of 9.7%. • The Company continued the implementation of its new outlet store strategy, opening 11 new outlet stores during the quarter and ending with 16 outlet stores in operation that are meeting the Company's early expectations. • The Company ended the quarter with $20 million of cash-on-hand and no outstanding borrowings under its revolving credit facility. • While the Company's inventory is up 4.9% at quarter-end, the increase is attributable to new merchandise for the fall season, as the Company's carryover merchandise from the spring season has decreased significantly over the prior year.
Outlook
Regarding its expectations for the fall season (combined third and fourth quarters), the Company provided the following:
• Comparable store sales for the fall season of fiscal year 2010 are expected to be down slightly versus the year-ago period. • Gross profit as a percentage of net sales for the fall season of fiscal year 2010 is expected to be flat to up slightly versus the prior year's levels, with improvements in the fourth quarter expected to offset flat to slightly lower gross margin levels in the third quarter. • Selling, general and administrative expenses for the fall season of fiscal year 2010 are expected to be approximately flat versus the prior year. • The effective tax rate for the fall season of fiscal year 2010 is expected to be 0% as future tax provisions or benefits will be offset by adjustments to the deferred tax valuation allowance. • The Company expects inventory per average store for the fall season of fiscal year 2010 to be approximately flat versus the same period of the prior year. • While the Company expects to utilize its credit facility for certain seasonal working capital needs, it expects to end the year with no borrowings under its credit facility. • Capital expenditures are expected to range between $6 million and $8 million for the fall season of fiscal year 2010, as compared to $7.3 million in the same period of the prior year. The Company plans to open five to seven new stores, remodel four to six existing locations, and close 25 to 33 stores, ending the year with approximately 555 to 561 stores.
New York & Company, Inc. is a leading specialty retailer of women's fashion apparel and accessories offering "NY Style" at Great Deals. The Company's proprietary branded New York & Company merchandise is sold exclusively through its national network of New York & Company retail stores.
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