New York & Company reduces loss in Q1 as bricks-and-mortar struggles
New York & Company on Thursday released its first quarter 2017 results that met its guidance driven by its celebrity collaborations and growth in e-commerce.
Reduced mall traffic impacted the quarter and was a catalyst for the soft start to the period. Net sales decreased 2.9% to $209.9 million, and comparable store sales fell 0.7%. E-commerce posted double-digit growth, but was offset by decreases in brick-and-mortar due to a lower store count and traffic declines.
New York & Company also reduced its net loss on a GAAP basis to $4.2 million, or a loss of $0.07 per diluted share, compared to a GAAP net loss of $5.7 million, or a loss of $0.09 per diluted share, in the prior year. Excluding $1.6 million of non-operating charges, non-GAAP adjusted net loss was $2.7 million, or a loss of $0.04 per diluted share.
SG&A expenses were $68.3 million compared to $65.3 million in the prior year and GAAP operating results decreased to a loss of $3.9 million, compared to a loss of $5.4 million in the previous first quarter.
Gross profit as a percentage of net sales increased 300 basis to 30.7%, the highest gross margin rate achieved since 2008. The increase reflected the Project Excellence re-engineering program, which resulted in a 200 basis point increase in product margins.
“While the apparel retail sector remains challenging with traffic declines and a highly promotional environment, we remain committed to accelerating even greater success in the proven high-growth segments of celebrity partnerships, sub-brands and e-commerce,” said New York & Company CEO Gregory Scott. “We expect that the continued execution of our strategies will drive increased sales productivity and profitability in this fiscal year and enhance value for our shareholders.”
In addition to the first quarter results, New York & Company announced its second quarter guidance and expects net sales and comparable sales to be flat to down in the low single-digit percentage range. The company also expects gross margin to be up 250 to 300 basis points, and SG&A expenses to increase $3 million to $4 million due to an expected increase in e-commerce sales.
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