New York & Company announced results for the second quarter ended August 1, 2015. Net sales were $235.7 million, as compared to $226.1 million in the prior year.
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GAAP operating income was $0.4 million, as compared to the prior year’s second quarter GAAP operating income of $0.2 million.
On a non-GAAP basis, excluding $2 million of non-operating charges, adjusted operating income was $2.5 million, exceeding the high end of the company’s previously issued guidance range of $1 million to $2 million.
Comparable store sales increased 3.8%, following an increase of 2.3% for the same period last year and total net sales increased by 4.3%.
Gross profit as a percentage of net sales increased 110 basis points versus the fiscal 2014 second quarter principally due to improved leverage of buying and occupancy costs.
Selling, general and administrative expenses were $66.7 million, as compared to $61.7 million in the prior year period. Included in fiscal 2015 second quarter are $2 million of non-operating charges as the company continues on its path of becoming a leaner company.
These non-operating charges are due to a reduction in headcount in its corporate headquarters resulting in a severance charge of $0.8 million, consulting fees of $0.6 million to complete the previously disclosed business re-engineering project, and $0.6 million of certain legal and corporate moving expenses.
Excluding non-operating charges of $2 million, non-GAAP selling, general and administrative expenses were $64.7 million, as compared to $61.7 million in the prior year.
This increase reflects incremental investments in marketing to drive sales, increases in variable distribution costs associated with the growing eCommerce business, and increases in rent and depreciation related to the new corporate headquarters, partially offset by savings from the organizational realignment initiated in the third quarter of fiscal 2014. There were no non-operating charges recorded during the first or second quarters of fiscal year 2014.
GAAP net loss for the second quarter of fiscal year 2015 was $0.1 million, or $0.00 per diluted share. This compares to the prior year’s GAAP net loss of $0.1 million, or $0.00 per diluted share. On a non-GAAP basis, the company’s second quarter 2015 adjusted net income was $1.9 million, or $0.03 per diluted share.
Total quarter-end inventory increased 1.2%, as compared to the end of last year’s second quarter, which was below the company’s previously issued guidance on May 21, 2015. In-store inventory increased 7.6%, in line with the company’s prior expectations.
Capital spending for the second quarter of fiscal year 2015 was $7.3 million, as compared to $6.2 million in last year’s second quarter, primarily reflecting continued investments in the company’s information technology infrastructure, including its omni-channel retail strategy, the opening of new Outlet stores and the remodeling of existing locations.
The decrease in capital spending during the second quarter of fiscal year 2015, as compared to the company’s previously issued guidance, is primarily due to lower than expected costs related to the build-out of the new corporate headquarters and a shift in the timing of certain information technology projects to later this year.
The company opened 2 Outlet stores, closed 2 stores, and remodeled 4 New York & company stores during the second quarter, ending the fiscal quarter with 504 stores, including 76 Outlet stores, and 2.6 million selling square feet in operation.
The company ended the quarter with $60.1 million of cash-on-hand and no outstanding borrowings under its revolving credit facility, as compared to $63.2 million of cash-on-hand at the end of last year’s second quarter. ■