Store closures negatively impact RTW Retailwinds' Q3 net sales

For its third quarter, RTW Retailwinds, Inc., formerly known as New York & Company, Inc. reported net sales of 210.8 million dollars compared to 214.2 million dollars in the prior year, reflecting a reduction of 31 stores, partially offset by growth in ecommerce sales and increased sales from Fashion to Figure. Comparable store sales increased 0.2 percent, representing the fifth consecutive quarter of positive comparable store sales, which the company said, was led by growth in its ecommerce business and strength in outlet and outlet clearance stores.

“We are pleased to see continued favourable momentum in our business with the third quarter highlighted by an increase in comparable store sales, expansion in gross margin and expense discipline, which drove operating income that met our guidance. In changing our name to RTW Retailwinds, we’re establishing a strong and distinct corporate identity, which reflects our evolution into one of the largest specialty women’s omni-channel and digitally enabled retailers with a powerful multi-brand lifestyle platform poised for growth,” said Gregory Scott, RTW Retailwinds CEO in a statement.

Review of RTW Retailwinds’ third quarter

The company said, gross profit as a percentage of net sales increased 80 basis points to 32.4 percent versus 31.6 percent, reflecting the highest gross margin rate achieved in the third quarter since 2006. GAAP net income for the third quarter was 1.7 million dollars or earnings of 3 cents per diluted share, as compared to 0.4 million dollars or earnings of 1 cent per diluted share in the prior year. On a non-GAAP basis, the third quarter net income was 2.5 million dollars or 4 cents per diluted share compared to 1 million dollars or 2 cents per diluted share last year.

During the third quarter, the company opened two New York & Company stores and two Fashion to Figure stores, closed one New York & Company store and one Outlet store, as well as remodelled/refreshed two existing locations ending the third quarter with 428 stores, including 119 Outlet stores (which includes 58 clearance stores).

For the Fall season, combined third and fourth quarter of fiscal year 2018, the company expects comparable store sales to be approximately flat. For the fourth quarter, net sales are expected to decrease in the mid to high single-digit range, reflecting the elimination of the 53rd week and reduced store count, partially offset by benefits due to the growth in ecommerce sales and inclusion of Fashion to Figure. Comparable store sales, which are shifted to compare like calendar weeks, are expected to be approximately flat. Gross margin on a GAAP basis is expected to be approximately flat. During the quarter, the company expects to open one Fashion to Figure store and close 14 to 16 stores.

Commenting on fourth quarter, Scott added: “Despite a soft start in November, we were pleased with Black Friday week which matched last year’s performance and culminated with a record-breaking Cyber Monday. While our revised Fall Season guidance reflects performance through Cyber Monday and our expectation for the balance of the quarter, key holiday shopping weeks are ahead of us, and we are encouraged by the comp improvement in our recent trend, which is reflected in our comp and operating income expectations.”

Picture:New York & Company website