New York & Co achieves positive comp store sales growth of 3.6%

19 Nov '10

5 min read

New York & Company, Inc., a specialty apparel chain with 579 retail stores, announced results for the third quarter ended October 30, 2010 were in-line with previous guidance issued by the Company.

For the third quarter of fiscal year 2010, net sales were $238.2 million, as compared to $227.9 million for the third quarter of fiscal year 2009. Comparable store sales for the third quarter of fiscal year 2010 increased 3.6% compared to an 8.4% decrease in the prior year third quarter. Net income from continuing operations for the third quarter of fiscal year 2010 was $1.9 million, or $0.03 per diluted share, which includes earnings of $0.06 per diluted share related to certain non-operating adjustments. This compares to a net loss of $0.11 per diluted share in the prior year, which includes a previously disclosed non-operating loss of $0.01 per diluted share related to restructuring charges.

The non-operating adjustments recorded in the third quarter of fiscal year 2010 include a $6.1 million tax benefit resulting primarily from a change in accounting methods for tax purposes, partially offset by $1.2 million of tax expense to record a valuation allowance against deferred tax assets generated during the third quarter, $1.0 million of separation expenses related to recent management changes and $0.1 million of restructuring charges.

On a non-GAAP basis, excluding the non-operating adjustments, the Company's adjusted net loss from continuing operations for the third quarter of fiscal year 2010 was $1.9 million, or $0.03 per diluted share. This compares to a non-GAAP adjusted net loss from continuing operations for the third quarter last year of $6.0 million, or $0.10 per diluted share, which excludes a non-operating charge discussed above. Please refer to the "Reconciliation of GAAP to Non-GAAP Financial Measures" in Exhibit 5 of this press release.

Richard P. Crystal, New York & Company's Chairman and CEO, stated: "We are encouraged by our third quarter results which were driven by an improved fall product assortment that resonated well with our core customer. During the quarter, we were more targeted and efficient with our customer relationship management efforts which allowed us to be more selective in our promotions and drive higher margins. As we enter the fourth quarter, we are pleased with the initial response to our holiday merchandise as well as our inventory position."

During the quarter:

• The Company achieved positive comparable store sales growth of 3.6%.
• Gross profit as a percentage of net sales improved by 260 basis points versus the prior year, primarily driven by leverage in buying and occupancy costs resulting from positive comparable store sales.
• Selling, general and administrative expenses as a percentage of net sales declined by 30 basis points versus the prior year. This includes $1.0 million of separation expenses described above.
• The Company continued the implementation of its new outlet store strategy opening seven additional stores, four of which were converted from existing New York & Company stores, and ending with 23 outlet stores in operation.

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