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New York & Company, Inc. Updates Fourth Quarter Guidance

Stocks in this article: NWY

New York & Company, Inc. [NYSE:NWY], a specialty apparel chain with 519 retail stores, today updated its fourth quarter fiscal year 2012 guidance. These preliminary results are unaudited. The Company expects to report full results for the fourth quarter and fiscal year 2012 during the third week of March 2013.

On a Generally Accepted Accounting Principles (GAAP) basis, fourth quarter fiscal year 2012 projected operating income is expected to be in the range of $9 million to $10 million. On an as adjusted basis, excluding an anticipated favorable benefit of approximately $4 million to net sales and operating income reflecting revenue from unused merchandise credits, operating income is expected to be in the range of $5 million to $6 million. During the fourth quarter of fiscal year 2012, the Company determined it had adequate information on historical redemption patterns for merchandise credits and utilized this to revise its estimates of redemption rates and the period over which breakage income is recognized.

The Company is providing guidance for the fourth quarter of fiscal year 2012 on an as adjusted basis, which excludes the previously mentioned favorable adjustment related to merchandise credits. The Company currently expects:

  • Comparable store sales to increase 2.3% versus the year-ago period.
  • Adjusted net sales to be approximately $287 million compared to $271.8 million in the 13-week period last year. This increase is driven by increased comparable store sales and the inclusion of the 53 rd week, partially offset by operating fewer stores versus the prior year.
  • Adjusted gross margin to increase approximately 500 basis points versus the fourth quarter last year. This increase reflects significant improvements in merchandise margin resulting primarily from improved product costs and, to a lesser extent, improved leverage of buying and occupancy expenses.
  • Adjusted selling, general and administrative expenses to decrease by approximately 100 basis points as a percentage of net sales compared to the prior year fourth quarter.
  • Adjusted operating income to range between $5 million and $6 million. This represents the high end of the Company’s previous guidance of $2 million to $6 million and a significant improvement from last year’s operating loss of $10.8 million.
  • The effective tax rate to continue to be approximately 0%.
  • Total inventory levels at the end of the fourth quarter of fiscal year 2012 to be down approximately 2% as compared to last year-end. The retail value of in-store inventory per average store is expected to be up low double-digits on a percentage basis from last year to support the Company’s early Spring floorset.
  • To end the fiscal year with no borrowings under its credit facility.

The Company’s updated guidance for the fourth quarter of fiscal year 2012 reflects the 14-week period ended February 2, 2013, compared to the 13-week period ended January 28, 2012. As a result, net sales for the fourth quarter of fiscal year 2012 include an additional week, while comparable store sales exclude the 14 th week.

Gregory Scott, New York & Company’s CEO, stated: “Our preliminary fourth quarter results point to a solid quarter for our Company driven by a positive response to our holiday assortments and marketing strategies. We are pleased to have advanced each of our strategic initiatives in the fourth quarter and throughout 2012 and we look forward to building upon our progress in 2013.”

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