New York & Company, Inc. Announces Third Quarter 2009 Results

New York & Company, Inc. [NYSE:NWY], a specialty apparel chain with 592 retail stores, today announced results for the third quarter ended October 31, 2009. For the third quarter of fiscal year 2009, net sales were $227.9 million, as compared to $249.0 million for the third quarter of fiscal year 2008. Comparable store sales for the third quarter of fiscal year 2009 decreased 8.4%, compared to a 14.0% decrease in the prior year third quarter. Net loss from continuing operations for the third quarter of fiscal year 2009 was $6.3 million, or $0.11 per diluted share, and included a non-operating charge of approximately $0.01 per diluted share related to the restructuring of the Company’s real estate group. This compares to a net loss from continuing operations in the prior year of $8.0 million, or $0.13 per diluted share, which included a previously disclosed, non-operating charge of approximately $0.03 per diluted share related to management changes.

For the nine months ended October 31, 2009, net sales were $708.6 million, as compared to $814.8 million for the nine months ended November 1, 2008. Comparable store sales decreased 13.5% for the nine months ended October 31, 2009, as compared to a 7.6% decrease in the prior year period. Net loss from continuing operations for the nine months ended October 31, 2009 was $16.0 million, or $0.27 per diluted share, as compared to prior year net income from continuing operations of $7.3 million, or $0.12 per diluted share.

Richard P. Crystal, New York & Company’s Chairman and Chief Executive Officer, stated: "Third quarter results were in-line with our expectations and reflected a sequential improvement in our comparable store sales trend from the second quarter of this year. Merchandise margins in the third quarter improved from the year-ago period, and importantly were in-line with historical levels. Additionally, we continued to stringently manage our inventory and expenses with inventory per average store down 25% compared to last year. In October, we experienced the start of what we hope is a turnaround as we posted our strongest monthly sales comparisons in over twelve months, and this momentum has continued into the first two weeks of November. As a result, we remain on-track to achieve our plan for the fall season, as we expect to achieve profitability in the fourth quarter and believe our cumulative results for the fall season will approach breakeven levels.”

During the quarter, the Company continued to maintain tight control over inventory and remained focused on the execution of its restructuring and cost reduction program. As a result of these efforts, the Company was able to achieve the following:

• Merchandise margins improved by 110 basis points on top of the prior year results, which were in-line with historical levels. This improvement reflected a positive customer response to the Company’s fall merchandise assortment, continued sourcing efficiencies, and controlled promotional activity.
• Inventory continues to be managed conservatively with inventory per average store down by 24.6%, as compared to the end of last year’s third quarter.
• Selling, general and administrative expenses declined by 8.8% on an average store basis, as compared to third quarter last year.
• The Company’s E-Commerce business experienced positive comparable store sales versus the prior year, reflecting the success of this sales channel in a challenging consumer spending environment.
• The Company ended the quarter with $39.3 million of cash-on-hand and no outstanding borrowings under its revolving credit facility.

Outlook

New York & Company continues to believe that the business environment will remain challenging, and expects promotional activity to accelerate throughout the key holiday selling period. Nevertheless, the Company believes that it has planned appropriately and expects to end fiscal year 2009 with significant cash and no borrowings under its revolving credit facility. The Company remains focused on its long-term performance. Therefore, the Company will continue to provide meaningful trend information on business fundamentals, key metrics, and strategic initiatives. Regarding expectations for the balance of fiscal year 2009, the Company provided the following:

• The comparable store sales trend for the fourth quarter is expected to sequentially improve versus the third quarter due to the positive customer response to the Company’s merchandise and strong inventory management.
• Merchandise margins are expected to significantly improve, as compared with the prior year’s fourth quarter, resulting primarily from sourcing efficiencies and significant decreases in the level of promotional activities.
• Buying and occupancy costs are expected to decrease during the fourth quarter, as compared to the same period last year, due to the success of the Company’s restructuring and cost reduction program; however, the Company expects to de-leverage these costs based on anticipated sales levels.
• Gross margins are expected to significantly improve during the fourth quarter, as compared to the same period last year, reflecting sourcing efficiencies, less promotional activity and the impact of the restructuring and cost reduction program.
• Selling, general and administrative expenses (SG&A) are expected to decrease by a low to mid single-digit percentage during the fourth quarter, as compared to the same period last year, reflecting the benefits of the Company’s restructuring and cost reduction program partially offset by continued investment into growth areas of the organization.
• The Company continues to expect to exceed the $30 million pre-tax savings target for fiscal year 2009 established when it initiated its restructuring and cost reduction program in January 2009. As previously announced, these savings will be realized in the Company’s financial results through a combination of selling, general and administration expenses and buying and occupancy costs.
• Inventory will continue to be managed tightly with inventory per average store at the end of the fourth quarter expected to be approximately flat as compared to last year’s fourth quarter.
• Cash-on-hand at the end of year is expected to be higher than the cash balance at the end of last year, reflecting no cash drain during an extremely difficult year.

Share Repurchases

As previously announced, the Company’s Board of Directors has authorized the repurchase of up to 3,750,000 shares over a 12-month period ending on November 23, 2009. During the third quarter ended October 31, 2009, the Company did not repurchase any shares under this program. As of October 31, 2009, the Company has repurchased a total of 1,000,000 shares under this program with a total purchase price of $3.4 million. Separately, 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. 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 third quarter of fiscal year 2009 results is scheduled for today, Thursday, November 19, 2009 at 8:00 am Eastern Time. Investors and analysts interested in participating in the call are invited to dial 800-922-9655, referencing conference ID number 40802515, 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 November 26, 2009 and can be accessed by dialing 800-642-1687 and entering conference ID number 40802515.

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 592 stores in 44 states. Additionally, certain product, press release and SEC filing information concerning the Company are available at the Company’s website: www.nyandcompany.com.