USA -- New York & Company, Inc., a specialty apparel chain with 588 retail stores, today announced results for the first quarter ended May 2, 2009. For the first quarter of fiscal year 2009, net sales were $232.9 million, as compared to $270.1 million for the first quarter of fiscal year 2008. Comparable store sales for the first quarter of fiscal year 2009 decreased 15.0%, compared to a 6.6% decrease in the prior year first quarter. Net loss from continuing operations for the first quarter of fiscal year 2009 was $4.9 million, or $0.08 per diluted share, as compared to prior year net income from continuing operations of $6.7 million, or $0.11 per diluted share.

Richard P. Crystal, New York & Company’s Chairman and CEO, stated: “While our first quarter results were in line with our expectations and included solid progress toward achieving our merchandising, expense and inventory management goals, our top line sales performance was disappointing. Our performance for the quarter did, however, reflect dramatic improvements in margin versus the fourth quarter. As we look ahead, the environment remains challenging and while we believe our assortments are fashion right, we continue to see customers reluctant to purchase at regular price. We remain on track to achieve our expense reduction plans, and we will continue to implement the strategies that have proven successful this quarter while capitalizing on opportunities to improve the trend in certain areas of our business such as our casual segment. Although we have conservatively planned for the Spring season, based upon the consumer’s ongoing preference toward buying on discount versus regular price, we have tempered our expectations for the second quarter. We remain confident in our strategies and continue to reinforce our fashion value message and we expect our initiatives will position us for sustained long term growth and increased value for our shareholders when our customer is once again comfortable spending on herself.”

During the quarter, the Company achieved the following significant accomplishments:
- Net sales at the Company’s E-commerce store increased by more than 12% during the quarter, on top of a significant increase in the prior year.
- The accessories business continued to improve during the quarter and delivered positive comparable store sales.
- Inventory remains under tight control with apparel units per average store down approximately 8% compared to the prior year quarter end. On a cost basis, total inventory increased slightly due to a shift in the timing of our Summer floorset, which now sets prior to Memorial Day and as a result, in-transit inventory at quarter end has increased significantly to support the earlier floorset.
- Selling, general and administrative expenses declined by 8.3% on an average store basis, reflecting the positive impact of the Company’s restructuring program launched in January 2009.
- The Company ended the quarter with $31 million of cash-on-hand and no outstanding borrowings under its revolving credit facility.

Outlook
The Company believes that the economic environment will remain challenging and continues to plan conservatively for fiscal year 2009. As a result, the Company will limit its future outlook to one quarter and as such will provide earnings guidance for the second quarter of fiscal year 2009, along with guidance on certain key financial metrics.
- Based on the softness in sales experienced during the Mother’s Day selling period, the Company has tempered its expectations for the second quarter, and now expects the comparable store sales trend for the second quarter to be similar to the trend experienced in the first quarter.
- Gross margins are expected to be similar to the first quarter of fiscal year 2009, but are expected to decline compared to the second quarter last year as consumers continue to be price sensitive and hold back spending while looking for value.
- Selling, general and administrative expenses per average store will continue to decrease as compared to last year, reflecting the success of the Company’s restructuring program which remains on track.
- The Company currently expects a loss per diluted share in the second quarter of fiscal year 2009 similar to the loss incurred during the first quarter. This compares to actual second quarter of fiscal year 2008 earnings per diluted share of $0.14.
- Inventory will continue to be managed tightly with goods available for sale per average store down in the high single-digits on a percentage basis versus the prior year. In-store inventory is expected to be down 10% to 15% per average store at the end of the second quarter.
- Cash-on-hand at the end of the second quarter is expected to be approximately $50 million and is expected to increase during the second half of the year.
- The Company has no outstanding borrowings under its revolving credit facility and does not anticipate the need to use the facility during the second quarter.
- During fiscal year 2009, the Company plans to open approximately three new stores, remodel four existing locations, and close 10 to 15 stores, ending the year with 577 to 582 stores. Capital expenditures are expected to be $15 million for the full fiscal year versus $45 million in fiscal year 2008. Depreciation expense is estimated at $42 million.
 
New York & Company Inc