New York & Company sales hindered by slower spring traffic
New York & Company, Inc. announced on Thursday its financial results for the first quarter ended April 30, 2016.
Net sales for the quarter decreased to $216.0 million from $223.4 million in the prior year, and comparable store sales decreased 2.3%. Gross profit as a percentage of net sales decreased 110 basis points to 27.7% from 28.8% due to increased markdowns, partially offset by lower product costs from the business re-engineering program.
Selling, general and administrative expenses were $65.3 million compared to $68.5 million in the prior year. GAAP operating results declined to a loss of $5.4 million from an operating loss of $4.2 million in the first quarter of 2015, and GAAP net loss was $5.7 million compared to $4.2 million in the previous year.
Gregory Scott, New York & Company’s CEO stated: “We began the quarter with positive sales trends; however, as we entered the last week of March, we experienced a slowdown in traffic to our brick-and-mortar stores, that continued into April, and led to sales and profitability below our expectations. This change in traffic was inconsistent with our quarter-to-date trend, and impacted our performance heading into the Easter Holiday. While we continued to experience strength in traffic and sales in our e-commerce business, along with positive sales trends in our celebrity backed sub-brands, Eva Mendes and Soho Jeans featuring Jennifer Hudson, these positives were not enough to overcome the negative traffic in stores, and weakness for seasonal categories, including crops, shorts, t-shirts and dresses.”
For the second quarter, the company is adjusting its game plan in order to leverage what is working and improve traffic trends by investing in marketing to support the launch of Jennifer Hudson Jeans in late July, investing in digital marketing to support the continued double-digit growth in traffic and sales of the company’s e-commerce business, and investing in differentiated product for its celebrity collaborations and sub-brands.
The company expects its second quarter net sales and comparable store sales to be flat to slightly negative, gross margin to be flat to up 50 basis points and SG&A expenses to be approximately flat.
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