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New York & Company: Q2 net sales drop but earnings rise

By Prachi Singh

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Report

New York & Company’s net sales were 224.1 million, decreasing 3.7 percent compared to 232.8 million dollars in the prior year, reflecting growth in ecommerce, offset by the impact of a lower store count of 460 this year versus 486 last year and 1.1 percent decrease in comparable store sales. GAAP net income was 4.8 million dollars or earnings of 0.08 dollar per diluted share compared to the prior year’s 0.9 million dollars or earnings of 0.01 dollar per diluted share.

“We are pleased to report better-than-expected second quarter results reflecting a significant increase in both operating income and diluted earnings per share as compared to the fiscal 2016 second quarter. The quarter marked our highest gross margin and operating income since second quarter 2005 and 2008, respectively. We also made progress on our profit improvement objectives,” said Gregory Scott, New York & Company’s CEO in a press statement.

Important financial highlights of Q2

The company said, gross profit as a percentage of net sales increased 180 basis points to 30.6 percent versus 28.8 percent for the fiscal year 2016 second quarter, reflecting the highest gross margin rate achieved in the second quarter since 2005. The increase during the quarter reflects a 30 basis point increase in merchandise margin and a 150 basis point improvement in the leverage of buying and occupancy expenses.

GAAP operating income improved to 5.2 million dollars compared to 1.3 million dollars, in the prior year’s second quarter. Excluding a 1.7 million dollars net non-operating benefit, non-GAAP adjusted operating income was 3.5 million dollars. Excluding the net benefit of 1.7 million dollars of non-operating adjustments, the current year’s second quarter non-GAAP adjusted net income was 3.1 million dollars, or earnings of 0.05 dollars per diluted share.

The company opened one New York & Company store and two new Outlet stores, refreshed three New York & Company stores, and closed six, ending the first quarter with 460 stores, including 125 Outlet stores.

New York & Company expects flat sales growth in Q3

Regarding the third quarter of fiscal year 2017, the company expects net sales and comparable store sales to be approximately flat. Gross margin is expected to be up approximately 150 basis points to 200 basis points from the prior year’s third quarter rate reflecting continued benefits from Project Excellence through increased royalties, reductions in product costs, agent expenses and occupancy costs, partially offset by increased shipping costs associated with the significant growth in the omni-channel business.

For the third quarter of fiscal year 2017, operating results are expected to be approximately breakeven to a loss of 1 million dollars, as compared to an operating loss of 2.1 million dollars in the prior year’s third quarter.

Picture:Facebook/New York & Company

New York & Company