New York & Company, Inc. (NYSE:NWY), a specialty apparel chain with 540 retail stores, today updated its fourth quarter fiscal 2011 guidance based on the Company’s quarter-to-date performance and its expectations for the balance of the quarter.
Regarding its revised outlook for the fourth quarter of fiscal 2011, the Company provided the following information:
- Comparable store sales are expected to decline in the mid to high single-digit range.
- Gross margins are projected to decrease approximately 650 to 750 basis points versus last year reflecting significantly higher levels of promotional activity to drive traffic, increase sales, and liquidate non go-forward holiday inventory to ensure that inventories are well positioned entering the Spring season.
- Selling, general and administrative expenses remain well controlled and are expected to be down as compared to the prior year even after including approximately $2 million of non-cash impairment costs; however, as a percentage of net sales these expenses are expected to increase approximately 150 basis points compared to last year on lower comparable store sales.
- The Company expects net loss for the fourth quarter of fiscal 2011 to range between $11 million and $13 million.
- Total year-end inventories are projected to decrease significantly from the Company’s previous expectations and are now expected to be up slightly versus last year reflecting a significant reduction in clearance inventory offset by increases in goods in-transit to support early Spring selling. On-hand inventory is expected to be down in the double digit range as a result of significantly less clearance goods versus last year.
- The Company expects to end fiscal 2011 with no borrowings and cash-on-hand in excess of $45 million.
Gregory Scott, New York & Company’s CEO, stated: “Clearly we are disappointed with our performance quarter-to-date. Our strategy to rationalize our promotional cadence which resulted in a higher average dollar sale throughout fiscal 2011, did not prove to be successful during the holiday season. Due to the highly promotional environment, we found it necessary to increase our promotional efforts in December to drive sales and to ensure a healthy inventory position at quarter end – this came at the expense of margins. Going forward, we are making a strategic shift in our promotional cadence during key selling periods throughout the year to better convey our value proposition. This enhanced strategy will be supported by key merchandising and marketing initiatives that are aligned to better accommodate the competitive nature of our business and to improve our profitability. While we would have liked to see stronger results in fiscal 2011, we believe these enhancements to our strategies will enable us to deliver an improved performance in 2012. Our eCommerce business and outlet businesses continue to grow and we look forward to expanding our outlet channel with 15 to 20 new locations opening in fiscal 2012.”