Inventory up at New York & Co

20 Aug '10

6 min read

New York & Company, Inc., a specialty apparel chain with 581 retail stores, announced results for the second quarter ended July 31, 2010.

For the second quarter of fiscal year 2010, net sales were $243.3 million, as compared to $247.8 million for the second quarter of fiscal year 2009. Comparable store sales for the second quarter of fiscal year 2010 decreased 1.8% compared to a 16.4% decrease in the prior year second quarter.

Including certain non-operating charges noted below, the Company's U.S. Generally Accepted Accounting Principles ("GAAP") net loss from continuing operations for the second quarter of fiscal year 2010 was $88.5 million, or $1.49 per diluted share of which $1.00 per diluted share represents the non-cash charges as noted below.

Excluding the non-operating charges, the Company's adjusted net loss from continuing operations was $29.3 million, or $0.49 per diluted share, as compared to a net loss from continuing operations in the prior year of $4.8 million, or $0.08 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 non-operating charges incurred during the second quarter of fiscal year 2010 include several non-cash items as follows:

• As previously announced, the Company plans to exit an underperforming test accessories concept consisting of five stores and, as a result, incurred restructuring charges of $2.1 million pre-tax ($1.2 million after tax), or $0.02 per diluted share, consisting primarily of non-cash items related to asset impairments and the write-off of inventory.
• The Company performed an impairment analysis related primarily to its long-lived assets used in its stores in accordance with GAAP. As a result, the Company recorded a non-cash charge of $15.7 million pre-tax ($9.4 million after tax), or $0.16 per diluted share, representing the impairment of store assets and the disposal of certain information technology assets.
• The Company recorded a non-cash charge of $48.5 million, or $0.82 per diluted share, which is included within the provision for income taxes. This charge relates to the Company's determination that a full valuation allowance against its deferred tax assets was necessary in order to reflect the Company's assessment of its ability to realize the benefits of those deferred tax assets. The Company made this determination in accordance with GAAP after weighing the available evidence, which included in particular a three-year historical cumulative loss related to earnings before taxes.

For the six months ended July 31, 2010, net sales were $480.3 million, as compared to $480.7 million for the six months ended August 1, 2009. Comparable store sales increased 0.5% for the six months ended July 31, 2010, as compared to a 15.7% decrease in the prior year period.

Including the aforementioned non-operating charges, the Company's GAAP net loss from continuing operations for the six months ended July 31, 2010 was $93.3 million, or $1.57 per diluted share, as compared to prior year net loss from continuing operations of $9.7 million, or $0.16 per diluted share.

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