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

New York & Company, Inc. (NYSE:NWY), a specialty apparel chain with 591 retail stores, today announced results for the second quarter ended August 1, 2009. For the second quarter of fiscal year 2009, net sales were $247.8 million, as compared to $295.7 million for the second quarter of fiscal year 2008. Comparable store sales for the second quarter of fiscal year 2009 decreased 16.4%, compared to a 2.2% decrease in the prior year second quarter. Net loss from continuing operations for the second quarter of fiscal year 2009 was $4.8 million, or $0.08 per diluted share, as compared to prior year net income from continuing operations of $8.6 million, or $0.14 per diluted share.

For the six months ended August 1, 2009, net sales were $480.7 million, as compared to $565.7 million for the six months ended August 2, 2008. Comparable store sales decreased 15.7% for the six months ended August 1, 2009, as compared to a 4.3% decrease in the prior year period. Net loss from continuing operations for the six months ended August 1, 2009 was $9.7 million, or $0.16 per diluted share, as compared to prior year net income from continuing operations of $15.3 million, or $0.25 per diluted share.

Richard P. Crystal, New York & Company’s Chairman and CEO, stated: "Our second quarter bottom line results met our expectations, as we tightly managed expenses and inventory. Customers continue to be selective in their discretionary spending and remain focused on those purchases that deliver an outstanding value proposition. During the quarter we maintained a strong balance sheet and had no borrowings under our revolver, ending the quarter with $53 million in cash and inventory per average store down by 10.9%, as compared to the prior year.

"While the environment continues to be challenging, we believe we are well positioned to improve our sales and margin trends during the fall and holiday seasons, as year-over-year comparisons ease and as we introduce exciting new merchandise initiatives. As we begin the third quarter, we are encouraged by consumers’ favorable response to our new fall assortments, especially in our casual tops and denim categories, along with our continued positive momentum in accessories.”

During the quarter, the Company maintained 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 accomplish the following:

• Inventory per average store declined 10.9%, as compared to the end of last year’s second quarter.
• Selling, general and administrative expenses declined by 13.3% on an average store basis, as compared to second quarter last year.
• The Company ended the quarter with $53.1 million of cash-on-hand and no outstanding borrowings under its revolving credit facility.

Outlook

Despite the continued uncertainty in U.S. economic conditions and limited visibility into consumer spending patterns, New York & Company remains focused on its long-term corporate performance. Therefore, while the Company will no longer provide specific sales and earnings guidance, the Company will provide meaningful trend information on business fundamentals, key metrics, and strategic initiatives. Regarding expectations for the second half of this year, the Company provided the following:

• The comparable store sales trend for the third and fourth quarters is expected to improve versus the trend experienced during the first half of fiscal year 2009 reflecting the easing of year-over-year comparisons, strong merchandising initiatives and appropriate levels of inventory.
• Merchandise margins are expected to modestly improve during the third quarter, as compared to the prior year, with more significant improvements occurring during the fourth quarter, resulting from sourcing efficiencies and an anticipated decrease in promotional activity.
• Buying and occupancy costs are expected to decrease during the second half of this year, 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 increase during the third and fourth quarters, as compared to the same periods last year, reflecting 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 second half of this year, 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. SG&A as a percent of sales are expected to slightly de-leverage based on anticipated sales levels.
• During fiscal year 2009, the Company expects to exceed the $30 million pre-tax savings target 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 administrative expenses and buying and occupancy costs. Due to the seasonal nature of certain expenses, the Company was able to achieve a greater percentage of these savings during the first half of fiscal year 2009 than it expects to realize during the second half of the year.
• Inventory will continue to be managed tightly with inventory per average store expected to be down significantly at the end of the third quarter compared to last year’s third quarter end.
• Cash-on-hand at the end of the year is expected to be comparable to the cash balances 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 in November 2009. During the second quarter ended August 1, 2009, the Company purchased 857,600 shares. As of August 1, 2009, 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 second quarter of fiscal year 2009 results is scheduled for today, Wednesday, August 26, 2009 at 8:30 am Eastern Daylight Time. Investors and analysts interested in participating in the call are invited to dial 800-922-9655, referencing conference ID number 23535116, 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 September 2, 2009 and can be accessed by dialing 800-642-1687 and entering conference ID number 23535116 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 591 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.