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Share Name | Share Symbol | Market | Type |
---|---|---|---|
RTW Retailwinds Inc | NYSE:RTW | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.2534 | 0 | 01:00:00 |
~ Reports Total Sales of $201.9 Million ~ ~ eCommerce Business Grew to 30% of Sales from 26% in the Prior Year Quarter ~ ~ Reports $83.3 Million in Cash / $1.28 Per Diluted Share with No Debt Outstanding ~
RTW Retailwinds, Inc. [NYSE:RTW], an omni-channel specialty apparel retail platform for powerful celebrity and consumer brands, today announced results for the second quarter of fiscal year 2019 ended August 3, 2019.
Gregory Scott, Chief Executive Officer of RTW Retailwinds, said: “We continue to execute against our strategic initiatives, most notably building the foundation of our multi-brand digital platform to address customer opportunities. Fashion to Figure, our on-trend plus-size brand, delivered positive comp results reflecting the ongoing implementation of our strategic vision. Happy x Nature, our ready-to-wear brand in partnership with Kate Hudson, continues to build momentum driven by the strength of Kate’s active and engaged social following. We also experienced positive comp results in our celebrity brands, driven by a significant comp increase in the Gabrielle Union sub-brand. In addition, we made key additions to the RTW executive team representing industry leaders who bring the expertise necessary to drive our near and long-term growth objectives.
“That said, we were disappointed with second quarter results in our core New York & Company brand. While our traffic and eCommerce business improved sequentially from the prior quarter, and we delivered positive increases in new customer acquisition, we continued to experience decreases in brick-and-mortar traffic as well as decreases in basket size and ongoing weakness from our SoHo Jeans sub-brand. We responded swiftly to these challenges by reducing receipts in the second quarter. As we move forward we are also addressing these challenges with a sense of urgency, beginning with our Customer First initiative launching this Fall. At the same time, we experienced increases in variable eCommerce expenses particularly in shipping, and this increase combined with reduced vendor rebates and increased recruiting fees, negatively affected our operating results in the quarter. We also incurred $2.3 million of losses from our new businesses in the quarter, compared to breakeven in the prior year.
“Looking ahead to the third quarter, as we continue to experience challenging trends in our core New York & Company brand, we will continue to focus on the growth of the New York & Company eCommerce business which has shown stronger traffic and sales trend, as reflected in our guidance for the third quarter. We have repositioned our product investments for Fall recognizing the ongoing weakness in our SoHo Jeans sub-brand, and will lean into the celebrity brands, our dominant wear-to-work pants category, and the lounge/athleisure category. Finally, our Customer First initiative, led by Traci Inglis, President, Chief Marketing and Customer Officer, is expected to transform the customer journey across our portfolio of brands and position us for long term growth. We remain committed to our strategic priorities and are making the necessary adjustments reflecting the current environment.”
Over the last year, the Company launched three new businesses, Fashion to Figure, Happy x Nature and Uncommon Sense. Based on our current performance, and the necessary decision to focus our resources on improving the New York & Company business, the Company has decided to concentrate on the Fashion to Figure and the Happy x Nature businesses as the most compelling new opportunities for growth. These businesses have shown early potential and the Company has decided to focus on growing these brands, and as such, has decided to exit the Uncommon Sense business. In connection with this decision, the Company expects to pursue several divestiture options and depending upon those efforts, could record a one-time charge of up to $4.5 million in the third quarter to write down inventory, impair certain assets, and record severance.
For the second quarter of fiscal year 2019, the Company reported the following:
Other Financial and Operational Highlights for the Second Quarter of Fiscal Year 2019:
Outlook:
For the third quarter of fiscal year 2019:
Additional Outlook:
Comparable Store Sales:
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 stores, and private label credit card royalties and related revenue are included in comparable store sales. In addition, in a year with 53 weeks, sales in the last week of the year are not included in determining comparable store sales.
Conference Call Information
A conference call to discuss second quarter results is scheduled for today, Thursday, August 22, 2019 at 4:30 p.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 407-0784 and reference conference ID number 13693408 approximately ten minutes prior to the start of the call. The conference call will also be webcast live at www.nyandcompany.com. A replay of this call will be available at 7:30 p.m. Eastern Time on August 22, 2019 until 11:59 p.m. Eastern Time on August 29, 2019 and can be accessed by dialing (844) 512-2921 and entering conference ID number 13693408.
As a supplement to this press release, slides with information regarding the second quarter results and outlook for third quarter 2019 will also be available at: www.nyandcompany.com at approximately 4:20 p.m. Eastern Time on Thursday, August 22, 2019.
About RTW Retailwinds
RTW Retailwinds, Inc. (together with its subsidiaries, the "Company") is a specialty women's omni-channel and digitally enabled retailer with a powerful multi-brand lifestyle platform providing curated fashion solutions that are versatile, on-trend, and stylish at a great value. The specialty retailer, first incorporated in 1918, has grown to now operate 413 retail and outlet locations in 35 states while also growing a substantial eCommerce business. The Company's portfolio includes branded merchandise from New York & Company, Fashion to Figure, and Happy x Nature, and collaborations with Eva Mendes, Gabrielle Union and Kate Hudson. The Company's branded merchandise is sold exclusively at its retail locations and online at www.nyandcompany.com, www.fashiontofigure.com, www.happyxnature.com, and through its rental subscription businesses at www.nyandcompanycloset.com and www.fashiontofigurecloset.com. Additionally, certain product, press releases and SEC filing information concerning the Company are available at the Company's website: www.nyandcompany.com.
Forward-looking Statements This press release contains certain forward-looking statements, including statements made within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Some of these statements can be identified by terms and phrases such as “expect,” “anticipate,” “believe,” “intend,” “estimate,” “continue,” “could,” “may,” “plan,” “project,” “predict,” and similar expressions and references to assumptions that the Company believes are reasonable and relate to its future prospects, developments and business strategies. Such statements, including information under “Outlook” and “Additional Outlook” above, are subject to various risks and uncertainties that could cause actual results to differ materially. These include, but are not limited to: (i) the Company’s dependence on mall traffic for its sales and the continued reduction in the volume of mall traffic; (ii) the Company’s ability to anticipate and respond to fashion trends; (iii) the impact of general economic conditions and their effect on consumer confidence and spending patterns; (iv) changes in the cost of raw materials, distribution services or labor; (v) the potential for economic conditions to negatively impact the Company's merchandise vendors and their ability to deliver products; (vi) the Company’s ability to open and operate stores successfully; (vii) seasonal fluctuations in the Company’s business; (viii) competition in the Company’s market, including promotional and pricing competition; (ix) the Company’s ability to retain, recruit and train key personnel; (x) the Company’s reliance on third parties to manage some aspects of its business; (xi) the Company’s reliance on foreign sources of production; (xii) the Company’s ability to protect its trademarks and other intellectual property rights; (xiii) the Company’s ability to maintain, and its reliance on, its information technology infrastructure; (xiv) the effects of government regulation; (xv) the control of the Company by its largest shareholder and any potential change of ownership of the Company including the shares held by its largest shareholder; (xvi) the impact of tariff increases or new tariffs; and (xvii) other risks and uncertainties as described in the Company’s documents filed with the SEC, including its most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. The Company undertakes no obligation to revise the forward-looking statements included in this press release to reflect any future events or circumstances.
Exhibit (1)RTW Retailwinds, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except per share amounts)
13 weeks ended August 3, 2019
% of net sales
13 weeks ended August 4, 2018
% of net sales
Net sales
$
201,894
100.0
%
$
216,370
100.0
%
Cost of goods sold, buying and occupancy costs
142,259
70.5
%
146,996
67.9
%
Gross profit
59,635
29.5
%
69,374
32.1
%
Selling, general and administrative expenses
67,208
33.3
%
66,317
30.7
%
Operating (loss) income
(7,573)
(3.8)
%
3,057
1.4
%
Net interest income
(261)
(0.1)
%
(217)
(0.1)
%
(Loss) income before income taxes
(7,312)
(3.7)
%
3,274
1.5
%
Provision for income taxes
178
—
%
207
0.1
%
Net (loss) income
$
(7,490)
(3.7)
%
$
3,067
1.4
%
Basic (loss) earnings per share
$
(0.12)
$
0.05
Diluted (loss) earnings per share
$
(0.12)
$
0.05
Weighted average shares outstanding:
Basic shares of common stock
64,337
63,749
Diluted shares of common stock
64,337
66,244
Selected operating data:
(Dollars in thousands, except square foot data)
Comparable store sales (decrease) increase
(4.8)
%
0.6
%
Net sales per average selling square foot (a)
$
99
$
101
Net sales per average store (b)
$
491
$
503
Average selling square footage per store (c)
4,959
4,974
Ending store count
413
426
(a)
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.
(b)
Net sales per average store is defined as net sales divided by the average of beginning and monthly end of period number of stores.
(c)
Average selling square footage per store is defined as end of period selling square feet divided by end of period number of stores.
Exhibit (2)RTW Retailwinds, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except per share amounts)
26 weeks ended August 3, 2019
% of net sales
26 weeks ended August 4, 2018
% of net sales
Net sales
$
402,857
100.0
%
$
435,199
100.0
%
Cost of goods sold, buying and occupancy costs
280,580
69.6
%
295,864
68.0
%
Gross profit
122,277
30.4
%
139,335
32.0
%
Selling, general and administrative expenses
132,300
32.9
%
132,803
30.5
%
Operating (loss) income
(10,023)
(2.5)
%
6,532
1.5
%
Net interest income
(576)
(0.1)
%
(195)
—
%
Loss on extinguishment of debt
—
—
%
239
—
%
(Loss) income before income taxes
(9,447)
(2.4)
%
6,488
1.5
%
Provision for income taxes
292
—
%
335
0.1
%
Net (loss) income
$
(9,739)
(2.4)
%
$
6,153
1.4
%
Basic (loss) earnings per share
$
(0.15)
$
0.10
Diluted (loss) earnings per share
$
(0.15)
$
0.09
Weighted average shares outstanding:
Basic shares of common stock
64,265
63,638
Diluted shares of common stock
64,265
65,824
Selected operating data:
(Dollars in thousands, except square foot data)
Comparable store sales (decrease) increase
(5.0)
%
1.7
%
Net sales per average selling square foot (a)
$
197
$
202
Net sales per average store (b)
$
980
$
1,007
Average selling square footage per store (c)
4,959
4,974
(a)
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.
(b)
Net sales per average store is defined as net sales divided by the average of beginning and monthly end of period number of stores.
(c)
Average selling square footage per store is defined as end of period selling square feet divided by end of period number of stores.
Exhibit (3)
RTW Retailwinds, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Amounts in thousands)
August 3, 2019
February 2, 2019*
August 4, 2018
(Unaudited)
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$ 83,320
$
95,542
$
94,758
Accounts receivable
9,526
9,879
11,831
Inventories, net
89,349
82,803
82,124
Prepaid expenses
12,361
16,921
17,233
Other current assets
1,897
1,818
2,018
Total current assets
196,453
206,963
207,964
Property and equipment, net
56,669
63,791
68,331
Operating lease assets
218,230
—
—
Intangible assets
16,719
16,813
16,969
Other assets
817
1,311
1,618
Total assets
$ 488,888
$
288,878
$
294,882
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$ 78,617
$
77,050
$
73,310
Accrued expenses
66,840
68,585
73,641
Current operating lease liabilities
40,383
—
—
Income taxes payable
—
375
—
Total current liabilities
185,840
146,010
146,951
Deferred rent
—
25,090
26,066
Non-current operating lease liabilities
207,168
—
—
Other liabilities
28,097
31,165
33,649
Total liabilities
421,105
202,265
206,666
Total stockholders’ equity
67,783
86,613
88,216
Total liabilities and stockholders’ equity
$ 488,888
$
288,878
$
294,882
*
Derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2019.
Exhibit (4)
RTW Retailwinds, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
26 weeks ended August 3, 2019
26 weeks ended August 4, 2018
Operating activities
Net (loss) income
$
(9,739)
$
6,153
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization
9,520
10,715
Non-cash lease expense
22,313
—
Loss from impairment charges
407
486
Amortization of intangible assets
94
156
Amortization of deferred financing costs
15
41
Write-off of unamortized deferred financing costs
—
239
Share-based compensation expense
1,352
1,186
Changes in operating assets and liabilities:
Accounts receivable
685
513
Inventories, net
(6,546)
2,374
Prepaid expenses
(603)
(786)
Accounts payable
1,567
3,221
Accrued expenses
(2,020)
(2,835)
Income taxes payable
(375)
(28)
Deferred rent
—
(1,151)
Operating lease liabilities
(23,478)
—
Other assets and liabilities
(2,070)
(2,025)
Net cash (used in) provided by operating activities
(8,878)
18,259
Investing activities
Capital expenditures
(2,708)
(1,626)
Insurance recoveries
267
184
Net cash used in investing activities
(2,441)
(1,442)
Financing activities
Repayment of long-term debt
—
(11,750)
Principal payments on capital lease obligations
(844)
(1,046)
Shares withheld for payment of employee payroll taxes
(59)
(171)
Net cash used in financing activities
(903)
(12,967)
Net (decrease) increase in cash and cash equivalents
(12,222)
3,850
Cash and cash equivalents at beginning of period
95,542
90,908
Cash and cash equivalents at end of period
$
83,320
$
94,758
View source version on businesswire.com: https://www.businesswire.com/news/home/20190822005664/en/
Investor Relations: ICR, Inc. (203) 682-8200 Allison Malkin
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