New York & Company, Inc. Announces Fourth Quarter and Fiscal Year 2009 Results in Line with Previous Guidance

New York & Company, Inc. (NYSE:NWY), a specialty apparel chain with 576 retail stores, today announced results for the fourth quarter and the full fiscal year ended January 30, 2010 ("fiscal year 2009”). The results of operations discussed below are for the Company’s continuing operations only, the New York & Company brand.

Fourth Quarter and Fiscal Year Results

The Company significantly improved its profitability with net income from continuing operations of $0.04 per diluted share in the fourth quarter of fiscal year 2009, as compared to a net loss from continuing operations of $0.46 per diluted share in the prior year period. These results included certain unusual items that negatively impacted earnings for the period. Adjusted net income from continuing operations for the fourth quarter of fiscal year 2009 was $0.06 per diluted share, which excludes pre-tax restructuring charges of $1.9 million comprised of a $1.2 million non-cash asset impairment charge related to underperforming stores and a $0.7 million cash charge related to severance. This compares to prior year adjusted net loss from continuing operations of $0.20 per diluted share, which excludes $26.0 million of pre-tax restructuring and other charges. For the fourth quarter of fiscal year 2009, net sales were $298.0 million, as compared to $325.1 million for the fourth quarter of fiscal year 2008, and comparable store sales for the fourth quarter of fiscal year 2009 decreased 7.7% versus a decline of 10.9% last year.

Richard P. Crystal, New York & Company’s Chairman and CEO, stated: "Our fourth quarter results were driven by an 800 basis point improvement in gross profit margin and the ongoing benefit of our cost reduction plan. In a challenging environment and despite the impact of our conservative inventory position on sales, we accomplished many of our financial and strategic objectives in fiscal 2009. Financially, we generated over $30 million in cost savings and ended the year with a strengthened balance sheet, including $87 million in cash-on-hand, a 15% decline in average inventory per store, reduced debt and no borrowings under our credit facility. Strategically, we continued to make progress in many of our merchandising initiatives as we upgraded our fashion assortments and improved our casual offerings. As a result of our actions, we ended fiscal 2009 in a strengthened position with strategies in place to continue our progress in 2010.”

For fiscal year 2009, net sales were $1,006.7 million, as compared to net sales of $1,139.9 million for fiscal year 2008, and comparable store sales decreased 11.8% for fiscal year 2009 versus a decline of 8.6% last year. Net loss from continuing operations was $0.23 per diluted share for fiscal year 2009, as compared to a net loss from continuing operations of $0.34 per diluted share in fiscal year 2008. Adjusted net loss from continuing operations for fiscal year 2009 was $0.20 per diluted share, which excludes pre-tax restructuring charges recorded during the third and fourth quarters of $0.5 million and $1.9 million, respectively. These charges were comprised of a $1.2 million non-cash asset impairment charge related to underperforming stores and $1.2 million of cash charges related to severance. This compares to the prior year adjusted net loss from continuing operations of $0.05 per diluted share, which excludes $28.6 million of pre-tax restructuring and other charges.

Significant highlights with respect to fiscal year 2009 included the following:

• The Company’s restructuring and cost reduction program launched in January 2009 is still on track to generate a total of $175 million in pre-tax savings over a five year period, of which more than $30 million was realized in fiscal year 2009. As previously announced, these savings will be realized in the Company’s financial results through a combination of reduced selling, general and administrative expenses and buying and occupancy costs;
• Inventory per average store was planned and remained tightly managed with total inventory declining by 15.1% as compared to last year’s fiscal year end;
• The Company opened 11 new stores, remodeled three stores and closed 24 stores during the fiscal year, ending the year with 576 stores and 3.2 million selling square feet in operation;
• Selling, general and administrative expenses declined by 10.3% on an average store basis, reflecting tight expense controls and the positive impact of the Company’s restructuring and cost reduction program;
• The Company ended the year with $87 million of cash-on-hand, up significantly from $54 million at the end of last year;
• During the year, the Company reduced long-term debt and, as of year-end, had no outstanding borrowings under its revolving credit facility.

"Our top priority in fiscal 2010 is to drive top line growth and achieve profitability,” Mr. Crystal continued. "To accomplish this goal, we will increase our inventory commitment in categories where we see opportunity including pants, denim and wear-to-work. We will also employ a more targeted promotional cadence that conveys New York & Company’s strong fashion/value proposition and drives customers to our stores. Additionally, we have great growth opportunities in multiple distribution channels including outlets, E-Commerce and other off-mall locations to increase our ultimate sales potential. Our company is strongly positioned for a significant recovery with fashion-right merchandise, and an optimized cost structure that will allow us to return to peak operating margins over time.”

Outlook

The Company continues to plan for a challenging consumer spending environment in fiscal year 2010 and has planned promotional events accordingly. Regarding expectations for Spring 2010, the Company provided the following:

• Comparable store sales for the first half of fiscal year 2010 are expected to return to positive territory with comparable stores sales expected in the low positive single-digit range.
• Gross margins for the first half of fiscal year 2010 are expected to improve versus the prior year’s levels.
• Selling, general and administrative expenses for the first half of fiscal year 2010 are expected to increase; however, they will remain flat as a percentage of net sales versus the prior year reflecting the continued positive impact of the Company’s restructuring and cost reduction program, offset by additional spending to support the Company’s growing E-Commerce and Outlet businesses as well as other growth initiatives.
• Results from continuing operations for the first half of fiscal year 2010 are expected to modestly improve versus the prior year. While the Company does not expect improvement from the first quarter loss in fiscal year 2009, it does anticipate a narrowing of its loss in the second quarter versus last year. Also, as previously disclosed, the first half results include the negative impact of initial store infrastructure costs and pre-opening expenses related to the Company’s newly launched outlet stores.
• To maximize sales opportunities going forward, the Company plans to end the Spring season with double-digit increases in inventory. This increase shifts the Company’s inventory more in-line with historical levels in contrast to the cumulative 27% decline in inventory levels over the preceding two-year period.
• Capital expenditures are expected to be approximately $17 million for the first half of fiscal year 2010, as compared to $6 million in the prior year. The Company plans to open approximately 25 new stores, remodel approximately eight existing locations, and close approximately 10 stores, ending the first half of fiscal year 2010 with 591 stores. Depreciation expense for the six-month period is estimated at $21 million.
• The Company has no outstanding borrowings under its credit facility and does not anticipate the need to use the facility during the first half of fiscal year 2010.

Share Repurchases

As previously announced, the Company’s Board of Directors authorized the repurchase of up to 3,750,000 shares over a 12-month period ending on November 23, 2009. On November 18, 2009, the Company’s Board of Directors authorized the extension of the existing repurchase plan for an additional 12-month period ending on November 23, 2010. As of January 30, 2010, the Company has repurchased a total of 1,000,000 shares under this program with a total purchase price of $3.4 million. Repurchases, if any, will be made from time to time in a manner the Company believes is appropriate through open market or private transactions including through pre-established trading plans.

Conference Call Information

A conference call to discuss the fourth quarter of fiscal year 2009 results is scheduled for today, Thursday, March 18, 2010, at 9:00 am Eastern Daylight Time. Investors and analysts interested in participating in the call are invited to dial 800-922-9655, referencing conference ID number 60325578, approximately ten minutes prior to the start of the call. The conference call will also be web-cast live at www.nyandcompany.com. A replay of this call will be available until midnight on March 25, 2010 and can be accessed by dialing 800-642-1687 and enter conference ID number 60325578 and pin: 1079.

Forward Looking Statements: This press release contains certain forward looking statements. Some of these statements can be identified by terms and phrases such as "anticipate,” "believe,” "intend,” "estimate,” "expect,” "continue,” "could,” "may,” "plan,” "project,” "predict”, and similar expressions and include references to assumptions that we believe are reasonable and relate to our future prospects, developments and business strategies. Such statements are subject to various risks and uncertainties that could cause actual results to differ materially. These include, but are not limited to: (i) the impact of general economic conditions and their effect on consumer confidence and spending patterns, which have deteriorated significantly and may continue to do so for the foreseeable future; (ii) our ability to successfully integrate our restructuring and cost reduction program; (iii) the deteriorating economic conditions could negatively impact the Company's merchandise vendors and their ability to deliver products; (iv) our ability to open and operate stores successfully; (v) seasonal fluctuations in our business; (vi) our ability to anticipate and respond to fashion trends; (vii) our dependence on mall traffic for our sales; (viii) competition in our market, including promotional and pricing competition; (ix) our ability to retain, recruit and train key personnel; (x) our reliance on third parties to manage some aspects of our business; (xi) our reliance on foreign sources of production; (xii) our ability to protect our trademarks and other intellectual property rights; (xiii) our ability to maintain, and our reliance on, our information technology infrastructure; (xiv) the effects of government regulation; (xv) the control of the company by our sponsors and any potential change of ownership of those sponsors; and (xvi) other risks and uncertainties as described in our documents filed with the SEC, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. We undertake no obligation to revise the forward looking statements included in this press release to reflect any future events or circumstances.

About New York & Company, Inc.

New York & Company, Inc., founded in 1918, is a leading specialty retailer of fashion oriented, moderately priced women’s apparel. The Company’s proprietary branded New York & Company ™ merchandise is sold exclusively through its national network of retail stores and E-Commerce store at www.nyandcompany.com. The Company currently operates 576 stores in 43 states. Additionally, certain product, press release and SEC filing information concerning the Company is available at the Company’s website: www.nyandcompany.com.

Exhibits (1) (2) (3) and (4)

The Company has provided non-GAAP adjusted earnings per share information for the three and twelve months ended January 30, 2010 and January 31, 2009 in this release, in addition to providing financial results in accordance with GAAP. This information reflects, on a non-GAAP adjusted basis, the Company’s operating income, net income (loss) and earnings (loss) per diluted share after excluding the effects of charges incurred in connection with the Company’s restructuring and cost reduction program in addition to certain unusual charges incurred during the course of fiscal years 2009 and 2008. This non-GAAP financial information is provided to enhance the user’s overall understanding of the Company’s current financial performance. Specifically, the Company believes the non-GAAP adjusted results provide useful information to both management and investors by excluding expenses that the Company believes are not indicative of the Company’s continuing operating results. The non-GAAP financial information should be considered in addition to, not as a substitute for or as being superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. A reconciliation of this non-GAAP information to the Company’s actual results for the three and twelve months ended January 30, 2010 and January 31, 2009 are as follows: