New York & Co. plans cost cuts after tough Q3

An increase in selling, general & administrative (SG&A) expenses helped increase net loss at New York & Company Inc. to $9.7 million in the third quarter of fiscal 2014, up from $3.4 million a year earlier.

Net sales declined 3% to $210.6 million from $217.3 million, and same-store sales dropped 3.4%. New York & Co. cited soft performance in its wear-to-work category and the impact of product delays resulting from West Coast port labor issues as negatively impacting sales.

The retailer said it hired a “leading global business advisory firm” in the third quarter to assist in analyzing its business processes and organizational structure to identify cost savings and business improvement strategies. New York & Co. recently initiated an organizational realignment based on the analysis, and expects to save $9 million to $10 million in annual payroll and related costs, with $1.5 million in savings expected during the fourth quarter of fiscal 2014.

In connection with this reorganization, the company expects to record a charge of $2.2 million for severance and related benefits during the fourth quarter. The business process analysis is ongoing.

“There were several positives in the quarter that reinforce our belief that we are implementing the right strategies to increase sales productivity and long term profitability,” said Gregory Scott, CEO. “We experienced positive traffic and increases in our average unit retail. We were also pleased to advance our omnichannel initiatives in the third quarter and were pleased with the continued strength in our outlet and e-commerce businesses.”

For the fourth quarter, New York & Co. expects higher SG&A expenses, as well as net sales and same-store sales that are flat to slightly down.