New York & Company reports Spring operating profit of $6.5 million thanks to rapidly expanding margins
NYC-based specialty apparel retailer New York & Company, Inc. announced its financial results for the second quarter and first half of 2018 on Thursday, reporting significant increases in operating profit for the Spring season, despite slipping sales in Q2.
For the first half of the fiscal year, New York & Company reported an operating income of $6.5 million, compared to $1.3 million in the prior year period, an increase which exceeded the retail chain’s latest expectations thanks to a 1.7% increase in comps and margin expansion at a rate not seen by the company since 2005.
Net sales for the second quarter ended August 4, 2018 were $216.4 million, a 3.4% decrease compared to the $224.1 million reported in Q2 2017. This fall was primarily due to a reduced store count and a calendar shift which moved a key pre-Mother’s Day shopping week into the first quarter.
Comparable store sales, however, increased 0.6% during the quarter thanks to e-commerce growth and strong sales at the company’s outlets.
The retailer’s gross margin also saw improvements, increasing 150 basis points to 32.1%, compared to 30.6% in the second quarter of 2017.
Operating profit for the quarter totaled $3.1 million, compared to $5.2 million in the prior year period. As pointed out by the company, however, it is worth noting that Q2 2017’s results included a non-operating benefit of $1.7 million, while this year’s second quarter was impacted by a charge of $0.4 million. Discounting the effects of these benefits and charges, operating profit remained flat at $3.5 million.
Net income for Q2 2018 came to $3.1 million, compared to $4.8 million in the same period in the previous year.
“We were very pleased with our strong operating results in the second quarter with positive comparable store sales, expansion in gross margin and operating profit which significantly exceeded our guidance,” stated New York & Company CEO Gregory Scott in a release.
In the third quarter, the company currently expects both net sales and comparable store sales to grow in the low single digits, while operating income is anticipated to be between $1 million and $2 million, compared to $0.6 million in the prior year period.
The retailer recently announced a multi-year partnership with Kate Hudson, a move which Scott described as “another catalyst for growth [which] further differentiates and defines our Company from peers,” going on to state, “I am excited about the opportunities that lie ahead and believe we remain well-positioned to continue our positive performance in the Fall season.”
Following six net closures in Q2, New York & Company currently operates 426 stores and has plans to open two new Fashion to Figure locations and three New York & Company stores in the third quarter of 2018. The company will also remodel three existing stores and close one New York & Company location, as well as one outlet.
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