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New York mpany : & COMPANY, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS (form 10-Q)

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12/07/2016 | 10:44pm CET
OF OPERATIONS



Overview

New York & Company, Inc. (together with its subsidiaries, the "Company") is a
specialty retailer of women's fashion apparel and accessories, and the modern
wear­to­work destination for women, providing fashion that is feminine,
polished, on­trend and versatile. New York & Company, Inc. helps its customers
feel confident, put­together, attractive and stylish by providing affordable
fashion. The Company's proprietary branded New York & Company® merchandise is
sold through its national network of retail stores and online at
www.nyandcompany.com. The target customers for the Company's merchandise are
fashion­conscious, value­sensitive women between the ages of 25 and 45. As of
October 29, 2016, the Company operated 483 stores in 41 states.

The Company's overall strategy is to drive growth in each channel of its
business, including New York & Company stores, New York & Company Outlet stores
("Outlets"), and its eCommerce store. During the third quarter of fiscal year
2016, the Company remained focused on the following strategic initiatives:
(i) evolve as a broader lifestyle brand through the growth of the Company's
sub­brand strategy, including 7th Avenue Design Studio, Soho Jeans featuring
Jennifer Hudson, and the Eva Mendes Collection; (ii) create a deeper emotional
connection with its customer, acquire new private label credit card customers
and grow its active customer database to drive traffic in all channels of the
business; (iii) improve sales productivity and margins across each channel of
the business; (iv) continue to evolve as an omni­channel retailer; and
(v) implement its Go­To­Market process improvements to increase speed to market,
delivering merchandise from concept to in­store faster.

On July 14, 2016, the Company entered into a Second Amended and Restated Private
Label Credit Card Program Agreement, effectively dated May 1, 2016, with
Comenity Bank, a bank subsidiary of Alliance Data Systems Corporation ("ADS"),
which replaces the existing agreement with ADS and has a term through April 30,
2026 (the "ADS Agreement"). Pursuant to the terms of the ADS Agreement, ADS
continues to have the exclusive right to provide private label credit cards to
customers of the Company. In connection with the execution of the ADS Agreement,
the Company will receive $40.0 million in signing bonuses. The signing bonuses
are payable in two installments, of which $17.5 million was received on July 28,
2016, and $22.5 million will be received on January 10, 2017. In addition, over
the 10­year term of the ADS Agreement, the Company will receive an increased
level of royalty payments based on a percentage of private label credit card
sales.

Net sales for the three months ended October 29, 2016 were $213.9 million, as
compared to $219.8 million for the three months ended October 31, 2015.
Comparable store sales decreased 0.7% for the three months ended October 29,
2016, as compared to an increase of 4.9% for the three months ended October 31,
2015. A store is included in the comparable store sales calculation after it has
completed 13 full fiscal months of operations from the store's opening date or
once it has been reopened after remodeling if the gross square footage did not
change by more than 20%. Sales from the Company's eCommerce store and private
label credit card royalties and related revenue are included in comparable store
sales.

Net loss for the three months ended October 29, 2016 was $2.5 million, or a loss
of $0.04 per diluted share, as compared to a net loss of $5.3 million, or a loss
of $0.08 per diluted share, for the three months ended October 31, 2015. On a
non-GAAP basis, adjusted net loss for the three months ended October 29, 2016
was $3.0 million, or a loss of $0.05 per diluted share, which excludes a $0.5
million non-operating legal accrual reversal. This compares to non­GAAP adjusted
net loss for the three months ended October 31, 2015 of $3.0 million, or a loss
of $0.05 per diluted share, which excludes $2.3 million of non­operating
charges. Please refer to the "Results of Operations" and "Reconciliation of GAAP
to non­GAAP Financial Measures" sections below for a further discussion of the
Company's operating results.

Capital spending for the nine months ended October 29, 2016 was $13.3 million,
as compared to $20.8 million for the nine months ended October 31, 2015,
primarily reflecting the remodeling/refreshing of existing locations and
continued investment in the Company's information technology infrastructure.
During the nine months ended October 29, 2016, the Company converted 50 New
York & Company stores to Outlet stores, opened 2 New York & Company stores,
remodeled/refreshed 20 existing stores, and closed 9 stores, ending the third
quarter with 483 stores, including 130 Outlet stores, and 2.5 million selling
square feet in operation. Included in the New York & Company store count at

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October 29, 2016, are 18 "Side­by­Side" and 24 "Shop­in­Shop" New York & Company stores, which feature an adjoining or shop­in­shop Eva Mendes store, and 2 free­standing Eva Mendes boutiques.


As previously disclosed, during the third quarter of fiscal year 2014, the
Company engaged a leading global business advisory firm to assist the Company in
analyzing its business processes and organizational structure in an effort to
improve sales productivity and operating efficiencies, as well as reduce the
Company's overall cost structure. The Company refers to this business
re­engineering program as "Project Excellence." The first phase of Project
Excellence consisted of an organizational realignment initiated at the end of
fiscal year 2014 and completed in fiscal year 2015. The second phase of Project
Excellence was completed during the second quarter of fiscal year 2015, which
consisted of: (i) a comprehensive review of the Company's Go­To­Market strategy
aimed at improving operating efficiencies and reducing costs associated with the
related processes, (ii) the reduction of indirect procurement costs, and
(iii) additional workforce reductions in connection with the organizational
realignment. The Company expects to recognize combined annual expense reductions
of approximately $30 million, of which approximately $15 million was first
recognized in fiscal year 2015, upon the execution of the business improvement
plans identified through both phases of Project Excellence; however, a portion
of these savings are being reinvested into the Company's strategic initiatives
and longer term growth strategies as discussed in "Item 1. Business" of the
Company's Annual Report on Form 10­K filed with the SEC on April 14, 2016.
Approximately $15 million of annual savings first recognized in fiscal year 2015
is a reduction of selling, general and administrative expenses, mitigating
inflationary increases in certain fixed costs and an increase in variable
expenses to support the growth in eCommerce and Outlet stores. The remaining
$15 million of estimated annual savings from Project Excellence will be realized
through reduced product costs of approximately $10 million and a reduction in
buying expenses beginning in fiscal year 2016 and recognized throughout the
year. During the three and nine months ended October 29, 2016, the Company
realized a reduction of $2.1 million and $6.2 million in product costs,
respectively, as a result of Project Excellence.

The Company's Go­To­Market process improvements identified through Project
Excellence include, among other things, an improved product development calendar
and the realignment and increased collaboration with the Company's key
independent buying agents to reduce lead times and product cost. These changes,
along with the implementation of a formalized "Fast Track" product development
process, enables the Company to more effectively leverage runway and trend
intelligence and, combined with improvements to the Company's logistics network,
provide more rapid delivery of product from concept to in­store.

The Company views the retail apparel market as having two principal selling
seasons: spring (first and second fiscal quarters) and fall (third and fourth
fiscal quarters). The Company's business experiences seasonal fluctuations in
net sales and operating income, with a significant portion of its operating
income typically realized during its fourth quarter. Any decrease in sales or
margins during either of the principal selling seasons in any given year could
have a disproportionate effect on the Company's financial condition and results
of operations. Seasonal fluctuations also affect inventory levels. The Company
must carry a significant amount of inventory, especially before the holiday
season selling period in the fourth fiscal quarter and prior to the Easter and
Mother's Day holidays toward the latter part of the first fiscal quarter and
beginning of the second fiscal quarter.

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Results of Operations

The following tables summarize the Company's results of operations as a percentage of net sales and selected store operating data for the three and nine months ended October 29, 2016 and October 31, 2015:


                                                         Three months        Three months          Nine months         Nine months
                                                            ended               ended                 ended               ended
(As a % of net sales)                                  October 29, 2016    

October 31, 2015 October 29, 2016 October 31, 2015 Net sales

                                                         100.0 %             100.0 %               100.0 %             100.0 %
Cost of goods sold, buying and occupancy costs                     70.1 %              71.0 %                71.2 %              71.3 %
Gross profit                                                       29.9 %              29.0 %                28.8 %              28.7 %
Selling, general and administrative expenses                       30.9 %              31.2 %                29.7 %              30.0 %
Operating loss                                                    (1.0) %             (2.2) %               (0.9) %             (1.3) %
Interest expense, net                                               0.1 %               0.1 %                 0.1 %               0.1 %
Loss before income taxes                                          (1.1) %             (2.3) %               (1.0) %             (1.4) %
Provision for income taxes                                          0.1 %               0.1 %                 0.1 %               0.1 %
Net loss                                                          (1.2) %             (2.4) %               (1.1) %             (1.5) %





                                           Three months          Three months            Nine months           Nine months
                                              ended                 ended                   ended                 ended
                                         October 29, 2016      October 31, 

2015 October 29, 2016 October 31, 2015 Selected operating data:

                                   (Dollars in thousands, except square foot data)
Comparable store sales (decrease)
increase                                             (0.7) %                 4.9 %                 (0.9) %                 3.5 %
Net sales per average selling square
foot(1)(4)                              $               86    $               85      $              266    $              262
Net sales per average store(2)(4)       $              442    $              434      $            1,361    $            1,347
Average selling square footage per
store(3)                                             5,113                 5,117                   5,113                 5,117


--------------------------------------------------------------------------------

(1) Net sales per average selling square foot is defined as net sales divided by

the average of beginning and monthly end of period selling square feet.

(2) Net sales per average store is defined as net sales divided by the average of

beginning and monthly end of period number of stores.

(3) Average selling square footage per store is defined as end of period selling

square feet divided by end of period number of stores.

(4) Effective first quarter of fiscal year 2016, the Company transitioned to a

monthly average calculation from a two­point average calculation. Prior

      period metrics have been restated resulting in an immaterial impact.



                                                 Three months            Three months            Nine months             Nine months
                                                    ended                   ended                   ended                   ended
                                               October 29, 2016       

October 31, 2015 October 29, 2016 October 31, 2015 Store count and selling

                      Store      Selling      Store  

Selling Store Selling Store Selling square feet:

                                 Count    Square Feet    Count  

Square Feet Count Square Feet Count Square Feet Stores open, beginning of period

               486      2,488,307      504      2,586,714      490      2,511,429      504      2,596,988
New stores                                       1          5,019        5         20,238        2         10,536       12         50,638
Closed stores                                  (4)       (23,783)      (1) 

(6,000) (9) (52,574) (8) (32,671) Net impact of remodeled stores on selling square feet

                                      -              -        -        (1,579)        -            152        -       (15,582)
Stores open, end of period                     483      2,469,543      508      2,599,373      483      2,469,543      508      2,599,373



Three Months Ended October 29, 2016 Compared to Three Months Ended October 31, 2015


Net Sales.  Net sales for the three months ended October 29, 2016 were
$213.9 million, as compared to $219.8 million for the three months ended October
31, 2015. Comparable store sales decreased 0.7% for the three months ended
October 29, 2016, as compared to an increase of 4.9% for the three months ended
October 31, 2015. Included in comparable store sales for the three months ended
October 29, 2016 are royalties and other revenue totaling $3.1 million

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recognized as a result of the ADS Agreement. In the comparable store base,
average dollar sales per transaction increased by 0.2%, while the number of
transactions per average store decreased 1.0%, as compared to the same period
last year. For further information related to the ADS Agreement, please refer to
Note 3, "Proprietary Credit Card" in the Notes to Condensed Consolidated
Financial Statements appearing elsewhere in this Quarterly Report on Form 10­Q.

Gross Profit.  Gross profit for the three months ended October 29, 2016 was
$64.0 million, or 29.9% of net sales, as compared to $63.7 million, or 29.0% of
net sales, for the three months ended October 31, 2015. The increase in gross
profit as a percentage of net sales for the three months ended October 29, 2016,
as compared to the three months ended October 31, 2015, reflects a 110 basis
point increase in merchandise margin, partially offset by a 20 basis point
decline in the leverage of buying and occupancy costs. The increase in
merchandise margin during the three months ended October 29, 2016, as compared
to the three months ended October 31, 2015, is primarily due to a $3.1 million
benefit from the revenue recognized as a result of the ADS Agreement and a $2.1
million reduction in product costs from Project Excellence, partially offset by
a $1.3 million increase in shipping costs associated with the growth in the
Company's eCommerce business.

Selling, General and Administrative Expenses.  Selling, general and
administrative expenses were $66.1 million, or 30.9% of net sales, for the three
months ended October 29, 2016, as compared to $68.6 million, or 31.2% of net
sales, for the three months ended October 31, 2015. The decrease in selling,
general, and administrative expenses during the three months ended October 29,
2016, as compared to the three months ended October 31, 2015, reflects
a reduction in performance-based compensation expense and the elimination of the
non-operating charges incurred in the prior year's third quarter, partially
offset by increased variable expenses associated with the growth in eCommerce
sales and an increase in marketing expense due to the elimination of marketing
credits earned under the old ADS private label credit card agreement, which have
been replaced by royalty payments under the new ADS Agreement and classified by
the Company as revenue in accordance with generally accepted accounting
principles. In addition, selling, general and administrative expenses for the
three months ended October 29, 2016 included a $0.5 million non-operating
benefit from the reduction of a legal accrual. Selling, general and
administrative expenses for the three months ended October 31, 2015 included
$2.3 million of non-operating charges, primarily consisting of $2.2 million of
legal expenses related to the settlement of a wage and hour class action lawsuit
in the state of California and $0.1 million in consulting fees incurred in
connection with Project Excellence.

Operating Loss.  For the reasons discussed above, operating loss for the three
months ended October 29, 2016 was $2.1 million, as compared to an operating loss
of $4.9 million for the three months ended October 31, 2015.

Interest Expense, Net. Net interest expense was $0.3 million for both the three months ended October 29, 2016 and October 31, 2015, primarily related to interest on a $15.0 million, 5­year term loan (the "Term Loan"), described further in the "Long­Term Debt and Credit Facilities" section below.


Provision for Income Taxes.  As previously disclosed, the Company continues to
provide for adjustments to the deferred tax valuation allowance initially
recorded during the three months ended July 31, 2010. The provision for income
taxes for both the three months ended October 29, 2016 and October 31, 2015 was
$0.1 million.

Net Loss.  For the reasons discussed above, net loss for the three months ended
October 29, 2016 was $2.5 million, or a loss of $0.04 per diluted share, as
compared to a net loss of $5.3 million, or a loss of $0.08 per diluted share,
for the three months ended October 31, 2015.

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Nine Months Ended October 29, 2016 Compared to Nine Months Ended October 31, 2015


Net Sales.  Net sales for the nine months ended October 29, 2016 were
$662.8 million, as compared to $678.8 million for the nine months ended October
31, 2015. Comparable store sales for the nine months ended October 29, 2016
decreased 0.9%, as compared to an increase of 3.5% for the nine months ended
October 31, 2015. Included in comparable store sales for the nine months ended
October 29, 2016 are royalties and other revenue totaling $5.6 million
recognized as a result of the ADS Agreement. In the comparable store base,
average dollar sales per transaction decreased by 1.1%, while the number of
transactions per average store was flat, as compared to the same period last
year. For further information related to the ADS Agreement, please refer to
Note 3, "Proprietary Credit Card" in the Notes to Condensed Consolidated
Financial Statements appearing elsewhere in this Quarterly Report on Form 10­Q.

Gross Profit.  Gross profit for the nine months ended October 29, 2016 was
$190.9 million, or 28.8% of net sales, as compared to $195.1 million, or 28.7%
of net sales, for the nine months ended October 31, 2015. The slight increase in
gross profit as a percentage of net sales during the nine months ended October
29, 2016, as compared to the nine months ended October 31, 2015, was due to a 30
basis point improvement in buying and occupancy costs primarily reflecting a
decrease in occupancy expenses, partially offset by a 20 basis point decrease in
merchandise margin. The decrease in merchandise margin during the nine months
ended October 29, 2016, as compared to the nine months ended October 31, 2015,
is primarily due to an increase in markdowns and shipping costs associated with
the growth in the Company's eCommerce business, partially offset by a
$6.2 million reduction in product costs resulting from Project Excellence and a
$5.6 million benefit from the revenue recognized as a result of the ADS
Agreement.

Selling, General and Administrative Expenses.  Selling, general and
administrative expenses decreased to $197.1 million, or 29.7% of net sales, for
the nine months ended October 29, 2016, as compared to $203.8 million, or 30.0%
of net sales, for the nine months ended October 31, 2015. The decrease in
selling, general, and administrative expenses during the nine months ended
October 29, 2016, as compared to the nine months ended October 31, 2015,
reflects a decrease in marketing expense and performance­based compensation
expense and the elimination of the non-operating charges incurred in the prior
year period, partially offset by increased variable expenses associated with the
growth in eCommerce sales and the elimination of marketing credits earned under
the old ADS private label credit card agreement, which have been replaced by
royalty payments under the new ADS Agreement and classified by the Company as
revenue in accordance with generally accepted accounting principles. In
addition, selling, general and administrative expenses for the nine months ended
October 29, 2016 included a $0.5 million non-operating benefit from the
reduction of a legal accrual. The nine months ended October 31, 2015 included
$7.2 million of non­operating charges consisting of $3.1 million in consulting
fees incurred in connection with Project Excellence, $1.6 million of certain
severance expenses and $2.6 million of certain legal expenses, partially offset
by a $0.1 million net reduction in moving expenses related to the Company's
corporate headquarters.

Operating Loss.  For the reasons discussed above, operating loss for the nine
months ended October 29, 2016 was $6.2 million, as compared to an operating loss
of $8.7 million for the nine months ended October 31, 2015.

Interest Expense, Net.  Net interest expense was $0.9 million for both the nine
months ended October 29, 2016 and October 31, 2015, primarily related to
interest on the Term Loan, described further in the "Long­Term Debt and Credit
Facilities" section below.

Provision for Income Taxes.  As previously disclosed, the Company continues to
provide for adjustments to the deferred tax valuation allowance initially
recorded during the three months ended July 31, 2010. The provision for income
taxes for the nine months ended October 29, 2016 was $0.2 million, as compared
to $0.5 million for the nine months ended October 31, 2015.

Net Loss.  For the reasons discussed above, net loss for the nine months ended
October 29, 2016 was $7.3 million, or a loss of $0.12 per diluted share, as
compared to a net loss of $10.2 million, or a loss of $0.16 per diluted share,
for the nine months ended October 31, 2015.

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Reconciliation of GAAP to Non­GAAP Financial Measures


A reconciliation of the Company's GAAP to non­GAAP selling, general, and
administrative expenses, operating loss, net loss and loss per diluted share for
the three and nine months ended October 29, 2016 and October 31, 2015 is
indicated below. This information reflects, on a non­GAAP basis, the Company's
adjusted operating results after excluding certain non­operating charges, as
described below. This non­GAAP financial information is provided to enhance the
user's overall understanding of the Company's current financial performance.
Specifically, the Company believes the non­GAAP 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 non­GAAP financial information should be considered in addition to,
not as a substitute for or as being superior to, measures of financial
performance prepared in accordance with GAAP.




                                                                 Three 

months ended October 29, 2016

                                                        Selling,
                                                      general and
                                                     administrative     Operating                     Loss per

(Amounts in thousands, except per share amounts) expenses loss Net loss diluted share GAAP as reported

                                    $         66,087    $  (2,103)    $ (2,532)    $        (0.04)
Adjustments affecting comparability:
Legal accrual reduction                                        (473)         (473)        (473)
Total adjustments(1)                                           (473)         (473)        (473)             (0.01)
Non-GAAP as adjusted                                $         66,560    $  (2,576)    $ (3,005)    $        (0.05)





                                                                 Three

months ended October 31, 2015

                                                        Selling,
                                                      general and
                                                     administrative     Operating                     Loss per

(Amounts in thousands, except per share amounts) expenses loss Net loss diluted share GAAP as reported

                                    $         68,612    $  (4,917)    $ (5,336)    $        (0.08)
Adjustments affecting comparability:
Consulting expense-Project Excellence                             77            77           77
Net reduction of certain severance expenses                      (7)           (7)          (7)
Moving expenses for new headquarters                              12            12           12
Legal expense                                                  2,211         2,211        2,211
Total adjustments(1)                                           2,293         2,293        2,293               0.03
Non-GAAP as adjusted                                $         66,319    $  (2,624)    $ (3,043)    $        (0.05)





                                                                  Nine

months ended October 29, 2016

                                                        Selling,
                                                      general and
                                                     administrative     Operating                     Loss per

(Amounts in thousands, except per share amounts) expenses loss Net loss diluted share GAAP as reported

                                    $        197,082    $  (6,161)    $ (7,303)    $        (0.12)
Adjustments affecting comparability:
Legal accrual reduction                                        (473)         (473)        (473)
Total adjustments(1)                                           (473)         (473)        (473)                  -
Non-GAAP as adjusted                                $        197,555    $  (6,634)    $ (7,776)    $        (0.12)












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Nine months ended October 31, 2015

                                                                  Selling,
                                                                general and
                                                               administrative     Operating                      Loss per
(Amounts in thousands, except per share amounts)                  expenses           loss        Net loss      diluted share
GAAP as reported                                              $        

203,802 $ (8,727) $ (10,153) $ (0.16) Adjustments affecting comparability: Consulting expense-Project Excellence

                                    3,105         3,105         3,105
Certain severance expenses                                               1,577         1,577         1,577
Net reduction of moving expenses for new headquarters                    (104)         (104)         (104)
Legal expense                                                            2,597         2,597         2,597
Total adjustments(1)                                                     7,175         7,175         7,175               0.11
Non-GAAP as adjusted                                          $        196,627    $  (1,552)    $  (2,978)    $        (0.05)

________________________________________


(1)The tax effect of the $0.5 million expense reduction during the three and
nine months ended October 29, 2016 and the $2.3 million and $7.2 million of
expenses during the three and nine months ended October 31, 2015, respectively,
is offset by a full valuation allowance against deferred tax assets.

Liquidity and Capital Resources


The Company's primary uses of cash are to fund working capital, operating
expenses, debt service and capital expenditures related primarily to the
construction of new stores, remodeling/refreshing of existing stores and
development of the Company's information technology infrastructure and
omni­channel strategy. Historically, the Company has financed these requirements
from internally generated cash flow. The Company intends to fund its ongoing
capital and working capital requirements, as well as debt service obligations,
primarily through cash flows from operations, supplemented by borrowings under
its credit facility, if needed. As of the date of this Quarterly Report on
Form 10­Q, the Company is in compliance with all debt covenants.

The Company may also use cash to repurchase shares of its common stock. On July
14, 2016, the Company announced that its board of directors had authorized the
use of up to $5 million to repurchase the Company's common stock over a 12­month
period. Repurchases will be made from time to time in the manner the Company
believes appropriate, through open market or private transactions including
through pre­established trading plans. The Company is not obligated to acquire
any particular amount of common stock. Repurchases are dependent on a number of
factors including market conditions for the Company's common stock.

The following tables contain information regarding the Company's liquidity and
capital resources:


                                    October 29,      January 30,      October 31,
                                       2016             2016             2015
                                               (Amounts in thousands)
      Cash and cash equivalents    $      54,012    $      61,432    $      44,980
      Working capital              $      69,810    $      42,035    $      39,437





                                                               Nine months            Nine months
                                                                  ended                  ended
                                                            October 29, 2016       October 31, 2015
                                                                     (Amounts in thousands)
Net cash provided by (used in) operating
activities                                                 $             8,523    $           (2,052)
Net cash used in investing activities                      $          (13,332)    $          (20,689)
Net cash used in financing activities                      $           (2,611)    $           (1,572)
Net decrease in cash and cash equivalents                  $           (7,420)    $          (24,313)




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Operating Activities

Net cash provided by operating activities was $8.5 million for the nine months
ended October 29, 2016, as compared to net cash used in operating activities of
$2.1 million for the nine months ended October 31, 2015. The increase in net
cash provided by operating activities during the nine months ended October 29,
2016, as compared to the nine months ended October 31, 2015, is primarily the
result of a $17.5 million payment received in July 2016 in connection with the
ADS Agreement, partially offset by fluctuations in other operating assets and
liabilities. For further information related to the ADS Agreement, please refer
to Note 3, "Proprietary Credit Card" in the Notes to Condensed Consolidated
Financial Statements appearing elsewhere in this Quarterly Report on Form 10­Q.
Included in the net loss for the nine months ended October 29, 2016 and October
31, 2015, is a $0.5 million non-operating benefit and $7.2 million of
non­operating charges, respectively, as described in the "Results of Operations"
section above.

Investing Activities

Net cash used in investing activities was $13.3 million for the nine months
ended October 29, 2016, as compared to $20.7 million for the nine months ended
October 31, 2015. The decrease in capital spending during the nine months ended
October 29, 2016, as compared to the nine months ended October 31, 2015,
primarily reflects a shift in certain planned expenditures for real estate and
information technology projects to the fourth quarter of fiscal year 2016. Net
cash used in investing activities during the nine months ended October 29, 2016
represents capital expenditures of $8.7 million for store­related projects and
$4.7 million related to the Company's information technology infrastructure.
During the nine months ended October 29, 2016, the Company converted 50 New
York & Company stores to Outlet stores, opened 2 New York & Company stores,
remodeled/refreshed 20 existing stores, and closed 9 stores, ending the third
quarter with 483 stores, including 130 Outlet stores, and 2.5 million selling
square feet in operation. Included in the New York & Company store count at
October 29, 2016, are 18 "Side­by­Side" and 24 "Shop­in­Shop" New York & Company
stores, which feature an adjoining or shop­in­shop Eva Mendes store, and 2
free­standing Eva Mendes boutiques.

Net cash used in investing activities during the nine months ended October 31,
2015 represents capital expenditures of $14.4 million, primarily related to the
opening of four New York & Company stores and eight new Outlet stores, the
conversion of twelve New York & Company stores to Outlet stores, and the
remodeling/refreshing of ten existing stores, and $6.4 million on the Company's
non-store capital projects, primarily relating to its information technology
infrastructure and omni­channel strategy, partially offset by $0.1 million of
insurance proceeds.

For fiscal year 2016, capital expenditures are expected to range between
$20.0 million and $22.0 million. In total, fiscal year 2016 capital expenditures
reflect continued investments in the Company's information technology
infrastructure, including its eCommerce store and mobile applications, and real
estate spending to support opening a select number of new stores and
remodeling/refreshing existing locations. During the remainder of fiscal year
2016, the Company expects to open 1 new New York & Company store, and close
between 18 and 20 stores, ending the fiscal year with between 464 and 466
stores, including approximately 124 Outlet stores.

As of October 29, 2016, approximately 25% of the Company's store leases could be terminated by the Company within one year or less.

Financing Activities


Net cash used in financing activities for the nine months ended October 29, 2016
was $2.6 million, which consists of $0.9 million for the purchase of treasury
stock, $0.8 million in quarterly amortization payments of the Term Loan,
$0.8 million of principal payments on capital lease obligations, and
$0.3 million of employee payroll taxes for which shares were withheld, partially
offset by $0.1 million of proceeds from the exercise of stock options. Net cash
used in financing activities for the nine months ended October 31, 2015 was $1.6
million, which consists primarily of $0.8 million in quarterly amortization
payments of the Term Loan, $0.4 million of principal payments on capital lease
obligations, $0.3 million of employee payroll taxes for which shares were
withheld, and the payment of $0.2 million of financing costs.

                                       19

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Table of Contents

Long­Term Debt and Credit Facilities


On October 24, 2014, Lerner New York, Inc., Lernco, Inc. and Lerner New York
Outlet, LLC (f.k.a. Lerner New York Outlet, Inc.), wholly­owned indirect
subsidiaries of New York & Company, Inc., entered into a Fourth Amended and
Restated Loan and Security Agreement (the "Loan Agreement") with Wells Fargo
Bank, National Association, as Agent and Term Loan Agent and the lender party
thereto. The obligations under the Loan Agreement are guaranteed by New York &
Company, Inc. and its other subsidiaries.

The Loan Agreement consists of: (i) a revolving credit facility that provides
the Company with up to $100 million of credit, consisting of a $75 million
revolving credit facility (which includes a sub­facility for issuance of letters
of credit up to $45 million) with a fully committed accordion option that allows
the Company to increase the revolving credit facility up to $100 million or
decrease it to a minimum of $60 million, subject to certain restrictions, and
(ii) a $15 million, 5­year term loan, bearing interest at the Adjusted
Eurodollar Rate plus 4.50%. The Company used a portion of the proceeds from the
Term Loan to pay for costs associated with the relocation and build­out of its
new corporate headquarters at 330 West 34th Street, New York, New York and for
general corporate purposes.

Under the terms of the Loan Agreement, the interest rates applicable to
Revolving Loans are, at the Company's option, either at a floating rate equal to
the Adjusted Eurodollar Rate plus a margin of between 1.50% and 1.75% per year
for Eurodollar Rate Loans or a floating rate equal to the Prime Rate plus a
margin of between 0.50% and 0.75% per year for Prime Rate Loans, depending upon
the Company's Average Compliance Excess Availability. The Company pays to the
lender under the revolving credit facility a monthly fee on outstanding
commercial letters of credit at a rate of between 0.75% and 0.875% per year and
on standby letters of credit at a rate of between 1.50% and 1.75% per year,
depending upon the Company's Average Compliance Excess Availability, plus a
monthly fee on a proportion of the unused commitments under the revolving credit
facility at a rate of 0.25% per year.

The maximum borrowing availability under the Company's revolving credit facility
is determined by a monthly borrowing base calculation based on applying
specified advance rates against eligible inventory and certain other eligible
assets. As of October 29, 2016, the Company had availability under its revolving
credit facility of $54.3 million, net of letters of credit outstanding of
$15.7 million, as compared to availability of $36.6 million, net of letters of
credit outstanding of $15.6 million, as of January 30, 2016, and availability of
$51.2 million, net of letters of credit outstanding of $20.3 million, as of
October 31, 2015. The $15.7 million in letters of credit outstanding at October
29, 2016 represents $1.4 million of trade letters of credit and $14.2 million of
standby letters of credit primarily related to the Company's new corporate
headquarters and certain insurance contracts.

Under the terms of the Loan Agreement, the Company is subject to a Minimum
Excess Availability covenant of $7.5 million. The Loan Agreement contains other
covenants and conditions, including restrictions on the Company's ability to pay
dividends on its common stock, prepay the Term Loan, incur additional
indebtedness and to prepay, redeem, defease or purchase other indebtedness.
Subject to such restrictions, the Company may incur more indebtedness for
working capital, capital expenditures, stock repurchases, acquisitions and for
other purposes.

The lender has been granted a pledge of the common stock of Lerner New York
Holding, Inc. and certain of its subsidiaries, and a first priority security
interest in substantially all other tangible and intangible assets of New York &
Company, Inc. and its subsidiaries, as collateral for the Company's obligations
under the Loan Agreement. In addition, New York & Company, Inc. and certain of
its subsidiaries have fully and unconditionally guaranteed the obligations under
the Loan Agreement, and such guarantees are joint and several.

Critical Accounting Policies


Management has determined the Company's most critical accounting policies are
those related to inventories, long­lived assets, intangible assets and income
taxes. Management continues to monitor these accounting policies to ensure
proper application of current rules and regulations. There have been no
significant changes to these policies as discussed in the Company's Annual
Report on Form 10­K filed with the SEC on April 14, 2016.

                                       20

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Table of Contents

Adoption of New Accounting Standards

Please refer to Note 2, "New Accounting Pronouncements" in the Notes to Condensed Consolidated Financial Statements appearing elsewhere in this Quarterly Report on Form 10­Q.

© Edgar Online, source Glimpses

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Financials ($)
Sales 2017 927 M
EBIT 2017 -2,96 M
Net income 2017 2,30 M
Debt 2017 -
Yield 2017 -
P/E ratio 2017 55,00
P/E ratio 2018 29,33
Capi. / Sales 2017 0,15x
Capi. / Sales 2018 0,15x
Capitalization 143 M
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