By a News Reporter-Staff News Editor at Marketing Weekly News -- New York & Company, Inc. (NYSE:NWY), a specialty apparel chain with 486 retail stores, announced results for the second quarter ended July 30, 2016.
Gregory Scott, New York & Company's CEO stated: "Our second quarter results were highlighted by positive comp sales in line with our guidance and earnings at the high end of guidance. Our second quarter sales performance accelerated from the trend we experienced in Q1 and early May, which we attribute to more seasonal weather, enhanced flexibility within our go to market process, our targeted marketing efforts, and the ongoing benefits from our omni-channel and credit card loyalty initiatives. During the quarter, we experienced strong trends across our seasonal categories of dresses, shorts and tops while continuing to drive strong sales growth from our Eva Mendes and Jennifer Hudson celebrity collaborations."
"In July, we were excited to enter into a new ten-year agreement with Alliance Data Services Corporation to continue managing our private label credit card. We expect this new agreement to allow us to further drive brand loyalty and private label credit card sales. We continue to expect our successful strategy to position New York & Company for increased sales productivity and profitability during the balance of the year." Second Quarter Fiscal Year 2016 Results (13-weeks ended July 30, 2016 compared to the 13-weeks ended August 1, 2015): Net sales were $232.8 million, as compared to $235.7 million in the prior year.
Comparable store sales increased 0.3% driven by strength in the Company's eCommerce business and increased royalty and related revenue from its new private label credit card agreement.
Gross profit as a percentage of net sales increased 30 basis points to 28.8% versus the fiscal year 2015 second quarter gross profit percentage of 28.5%. This increase reflects benefits from the new private label credit card agreement, ongoing benefits of Project Excellence through reduced product costs, and a 90 basis point improvement in the leverage of buying and occupancy costs, partially offset by decreases in product margins due to higher promotional markdowns and increased shipping costs from the Company's growing eCommerce business.
Selling, general and administrative expenses were $65.7 million, as compared to $66.7 million in the prior year period. Excluding non-operating charges of $2.0 million from the prior year period, selling, general and administrative expenses were $64.7 million in the prior year. The decrease in selling, general, and administrative expenses on a GAAP basis reflects decreases in marketing, reductions in performance-based compensation expense, and the elimination of the non-operating charges incurred in the prior year, partially offset by significant increases in variable expenses associated with the growth in eCommerce sales.
GAAP operating income increased to $1.3 million, as compared to the prior year's second quarter GAAP operating income of $0.4 million. Excluding $2.0 million of non-operating charges, the non-GAAP adjusted operating income in the prior year's second quarter was $2.5 million. There were no non-operating charges during the three months ended July 30, 2016.
GAAP net income for the second quarter of fiscal year 2016 was $0.9 million, or earnings per diluted share of $0.01. This compares to the prior year's GAAP net loss of $0.1 million, or essentially breakeven per diluted share. Excluding $2.0 million of non-operating charges, the prior year's second quarter non-GAAP adjusted net income was $1.9 million, or earnings per diluted share of $0.03.Please refer to the "Reconciliation of GAAP to Non-GAAP Financial Measures" in Exhibit 5 of this press release, which delineates the non-operating charges for the three and six months ended August 1, 2015. There were no non-GAAP adjustments affecting comparability during the three and six months ended July 30, 2016. GAAP is defined as Generally Accepted Accounting Principles.
Total quarter-end inventory decreased 2.7%, as compared to the end of last year's second quarter, due to significantly lower levels of inventory in-transit as the Company changed shipping terms with certain vendors to take title later in the supply chain, partially offset by higher levels of on-hand inventory.
Capital spending for the second quarter of fiscal year 2016 was $7.4 million, as compared to $7.3 million in last year's second quarter, primarily reflecting continued spend on real estate and the Company's information technology infrastructure.
The Company opened 1 New York & Company store, remodeled 2 stores, and closed 2 New York & Company stores and 1 Outlet store during the second quarter, ending the second quarter with 486 stores, including 131 Outlet stores and 2.5 million selling square feet in operation.
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