RTW Retailwinds Inc., formerly known as New York & Co., had a tough fourth quarter marred by a slowdown in January and decreased acceptance of the SoHo Jeans subbrand.
For the fourth quarter ended Feb. 2, 2019, RTW Retailwinds posted a net loss of $3.6 million, or 6 cents per diluted share, compared with net income of $4.7 million, or 7 cents per share.
Net sales declined to $247.3 million, compared with $278.7 million in the year-ago period, reflecting a reduction in comparable store sales, 36 closed stores, and the impact of an extra week recorded in 2017, partially offset by the inclusion of sales from Fashion to Figure, the large size brand purchased by the company in November 2017. The 53rd week in fiscal year 2017 contributed $12.5 million of sales.
Comparable store sales decreased 1.5 percent last quarter.
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“While our fourth-quarter results were in line with our updated guidance and the year included significant progress toward our goals, we were disappointed to see the momentum in our business soften in January,” chief executive officer Greg Scott said Thursday.
“The challenges we experienced in the fourth quarter reflected declines in traffic and new customer acquisition as well as decreased product acceptance in our SoHo Jeans subbrand,” Scott said. “We are rebalancing our marketing media mix toward new customer acquisition, have made leadership changes in our digital organization, and are adjusting our go-forward assortments in SoHo Jeans to improve the overall trend. Despite this, 2018 was a highly productive year. In fact, financially the year saw increased comparable sales, expansion in gross margin, expense discipline, and inventory management resulting in a $2.5 million increase in adjusted operating income as compared to fiscal 2017.”
Scott emphasized several accomplishments last year including the resetting of Fashion to Figure stores positioning it for growth: the corporate name change to RTW Retailwinds to reflect the growing portfolio of brands, and positive comps in celebrity collaborations, including the Eva Mendes and Gabrielle Union collections.
Scott cited as strategic advantages the exclusive celebrity collaborations; a healthy balance sheet marked by $96 million in cash at the end of the year and no debt, and having 70 percent of the store base on two-years-or-less lease terms.
On April 3, the Happy by Nature by Kate Hudson collection will launch in 150 New York & Co. stores, on the New York & Co. web site, and with a stand-alone web site. For the launch, the collection will have 40 stockkeeping units, and sustainability efforts, including organic cottons and denim made of recycled plastic bottles, will be evident. The collection will be slightly higher-priced than the New York & Co. brand, and Hudson will be doing a lot of p.r. on April 3 and 4, according to Scott.
In the third week of April, the Uncommon Sense lingerie brand will be launched with its own site while the New York & Co. web site and stores will sell a limited number of stockkeeping units than seen on the Uncommon Sense web site.
For 2018 overall, net income was $4.2 million, or 6 cents per diluted share, versus $5.7 million, or $0.09 per share. Adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, for fiscal-year 2018 was $33.2 million, as compared to $30.4 million in fiscal year 2017.Net sales were $893.2 million, compared to $926.9 million in 2017. Comparable store sales increased 0.4 percent.