The bad news is, New York & Co.’s comp store sales and revenue are down as the company shifts strategies and moves more business online. The good news is, eCommerce sales are up and gross margin reached its highest level in the first quarter since 2008, according to CEO Gregory Scott.
The company saw a soft start to the quarter in line with thinning foot traffic at malls, but comp store sales made up for it in March and April, resulting in New York & Co.’s highest ever average unit retail.
“Our first quarter top and bottom-line results were in line with our guidance, and were highlighted by the continued success of our celebrity collaborations, a double-digit percentage increase in eCommerce sales and strong gross margin expansion,” said Scott.
New York & Co. reported Q1 2017 revenue of $209.9 million, coming in shy of its projected revenue of $211.5 million. Comp store sales dropped by 0.7 percent due to a migration of shoppers from brick-and-mortar retailers to virtual shopping avenues. Earnings per share were $0.04.
Scott acknowledged that shopper migration has long posed a challenge for the apparel retail sector, along with the highly promotional nature of the environment. However, the CEO was confident that staying the course to execute new strategies would continue to deliver growth.
New York & Co. will continue to leverage high-growth celebrity collaborations, including a multi-year partnership with Gabrielle Union, the face of their upcoming 7th Avenue Design Studio, who will be launching her own line in the third quarter of this year.
The company is not concerned about projections that comp store sales will hold steady or continue to drop in Q2 2017, since gross margin is expected to rise 250 to 300 basis points from last year’s Q2 numbers. Anticipated diluted earnings per share should fall between $0.01 and $0.04.