It is no secret that brick and mortar retail locations are feeling the impact of an increase in online shopping. New York & Company, Inc., (NWY), best known as a womens wear-to-work retailer that operates 488 stores in 43 states, is one of the many retailers struggling to stay afloat.
New York and Company’s profits looked strong last year as they reported gross profits of $265 million for 2015, a 15 million dollar increase to their $250 million reported in 2014. Although the profits look great on paper, the reality was different. The once retail giant in the work to wear industry has been closing the doors of full priced stores and shifting merchandise to outlet stores.
The company’s (NWY) stock performance is alsp rather concerning. There have been a number of failed rebranding attempts and as a result, the stock continues to drop closing down 0.05 today at $2.25.
In the Q1 report, the retailer reported a loss for the fourth consecutive quarter, reporting a $5.7 million dollar loss. This loss gave holders of the already underperforming stock a loss of 0.09 cents.
In the Q2 the company only beat it’s EPS by 0.01 but is still down 1.2 percent Y/Y. On the Q2 recent earnings call CEO, Greg Scott sighted hopes that celebrity partnerships will lead to an increase in revenue of the company entering the third quarter.
“Our celebrity sub-brands continue to drive customers to New York & Company. In fact, our Eva Mendes collection delivered its best Q2 sales performance since we began our collaboration winning on both sales and margins in the quarter,” said Scott. “We also ended the quarter on a positive note with a favorable customer response to the launch of our new Jennifer Hudson Soho jeans line.”
The company also cites increased in-store events and the launch of an app to help encourage more traction to their stores in hopes of boosting Q3 and Q4. However, there will be fewer stores for shoppers to get to.
“We are now expected to close 23 to 28 stores in the second half of this year,” said Scott. “We are expecting to open one store in the second half of this year ending the year with approximately 125 outlets and a total of approximately 460 stores.”
This slash and burn method appears still be leaving NWY far from their 2015 revenues of $265 million as they presently sit at $233 million in revenues, three million less than last year. With just two quarters to go, company execs believe they can turn it around and have recently appointed new leadership.
It will be interesting to see how the presidential race and a potential Clinton victory and the holidays will affect the wear-to-work retail sector and how NWY is affected.
With the continued decline of the stock price daily a strong third quarter is imperative for the life of the stock and the company. A successful third quarter could revive the dying NWY brand but a dismal Q3 showing could send the company back to the drawing board.