Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

RTW Retailwinds, Inc. Announces 2019 4th Quarter and Full Year Results


RTW Retailwinds, Inc. (NYSE:RTW), an omni-channel specialty apparel retail platform for powerful celebrity and consumer brands, today announced results for the fourth quarter and full year fiscal 2019 representing the 13-weeks and 52-weeks ended February 1, 2020, respectively. This compares to the 13-week fourth quarter and 52-week full year of fiscal 2018, which ended February 2, 2019.

Gregory Scott, Chief Executive Office of RTW Retailwinds, stated: "We continue our strategic transition to a digitally dominant retailer supported with a portfolio of celebrity and lifestyle brands that unlock distinct market opportunities. While we delivered near record results in 2018, we were disappointed with our fourth quarter and fiscal 2019 performance stemming from declines in store traffic and continued weakness in our casual lifestyle sub-brand. These challenges offset growth in our core New York & Company digital brand, celebrity brands and another double-digit comp increase for our Fashion to Figure business in excess of 50%, emphasizing the ability to adapt to the challenges we face as a business."

Mr. Scott continued: "In light of our performance and given the current environment, we are taking decisive action and accelerating our strategic transformation agenda and have engaged an outside consultancy to assist with recalibrating our business to support a profitable and more balanced direct to consumer operating model. Today we are announcing our plan to permanently close up to 150 locations in the next 18 months as part of our transformation to a digital first portfolio of brands. In addition, we have re-aligned our internal Design and Merchandising organization to be product focused and away from two distinct lifestyle teams, allowing us to improve clarity of offer, optimize organizational efficiencies, and reduce development expense. Finally, we are reviewing our entire go-to-market process in conjunction with an external consultancy to identify additional opportunities to improve our operating model. These initiatives along with our previously announced customer first strategy and digital re-platform, will allow us to successfully adapt and navigate the retail environment of today and tomorrow."

Commenting on RTW's transformation to a digitally dominant retailer, Traci Inglis, President, Chief Customer and Marketing Officer added: "We have made significant investments in our Customer First initiative over the past 9 months, including paid digital marketing to support customer acquisition and relaunching all of our brands on a new digital platform this Fall to enhance and advance our customer experience. The combined impact of our strategies positions our portfolio of brands to compete in today's dynamic retail environment, setting us up for success as we transition to being a digitally-dominant retailer."

Regarding the first quarter, Mr. Scott added: "We opened the quarter with well-managed inventory levels declining (8%). While February and early March trends were largely in-line with our expectations, the recent developments surrounding the coronavirus (COVID-19) have negatively impacted mall traffic. We realize that the situation is evolving and the safety of our customers and associates is our primary concern. In the immediate term, we are temporarily closing all New York & Company and Fashion to Figure stores through March 28th, 2020 in response to the increased impact from COVID-19. We appreciate that the road ahead is a challenging one, but we believe that once the benefits of our strategy are fully realized they will add significant value to our portfolio of brands and to our shareholders."

Fourth Quarter Fiscal Year 2019 Results (13-week period ended February 1, 2020 as compared to the 13-week period ended February 2, 2019):

As it relates to the fourth quarter of fiscal year 2019, the Company noted the following:

Please refer to the "Reconciliation of GAAP to Non-GAAP Financial Measures" in Exhibit 5 of this press release, which delineates the non-operating adjustments for the 13 weeks ended February 1, 2020 and the 13 weeks ended February 2, 2019. GAAP is defined as Generally Accepted Accounting Principles in the United States.

Full Fiscal Year 2019 Results (52-week period ended February 1, 2020 as compared to the 52-week period ended February 2, 2019)

Please refer to the "Reconciliation of GAAP to Non-GAAP Financial Measures" in Exhibit 5 of this press release, which delineates the non-operating adjustments for the 52 weeks ended February 1, 2020 and the 52 weeks ended February 2, 2019.

Other Financial and Operational Highlights:

Outlook:

Regarding expectations for fiscal year 2020, the Company continues to invest in the transformation of its business from a traditional brick-and-mortar retailer into a digitally dominant retailer. The Company remains focused on growth in its digital sales and improving its operating results to drive increases in both annual operating income and EBITDA. In light of the rapidly changing environment with the COVID-19 virus and its potential implications on the supply chain and mall traffic patterns, the Company is refraining from providing specific earnings guidance on metrics but is evaluating and preparing for a variety of scenarios.

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 fourth quarter results is scheduled for today, Thursday, March 19, 2020 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 13699637 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 March 19, 2020 until 11:59 p.m. Eastern Time on March 26, 2020 and can be accessed by dialing (844) 512-2921 and entering conference ID number 13699637.

About RTW Retailwinds

RTW Retailwinds, Inc. (together with its subsidiaries, the "Company") is a specialty women's omni-channel 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 387 retail and outlet locations in 33 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" 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; (xvii) risks associated with the spread of COVID-19 and its potential impact on the Company's sales and supply chain; and (xviii) 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

February 1, 2020

 

% of
net sales

 

13 weeks
ended

February 2, 2019

 

% of
net sales

 

Net sales

 

$

224,016

 

100.0

%

$

247,267

 

100.0

%

 

 

 

 

 

 

 

 

 

 

Cost of goods sold, buying and occupancy costs

 

169,791

 

75.8

%

175,965

 

71.2

%

 

 

 

 

 

 

 

 

 

 

Gross profit

 

54,225

 

24.2

%

71,302

 

28.8

%

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

74,274

 

33.2

%

71,824

 

29.1

%

 

 

 

 

 

 

 

 

 

 

Loss from impairment charges

 

19,787

 

8.8

%

1,112

 

0.4

%

 

 

 

 

 

 

 

 

 

 

Operating loss

 

(39,836)

 

(17.8)

%

(1,634)

 

(0.7)

%

 

 

 

 

 

 

 

 

 

 

Net interest income

 

(99)

 

?

%

(360)

 

(0.1)

%

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

(39,737)

 

(17.8)

%

(1,274)

 

(0.6)

%

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

498

 

0.2

%

2,374

 

0.9

%

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(40,235)

 

(18.0)

%

$

(3,648)

 

(1.5)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic loss per share

 

$

(0.62)

 

 

 

$

(0.06)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted loss per share

 

$

(0.62)

 

 

 

$

(0.06)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic shares of common stock

 

64,433

 

 

 

64,084

 

 

 

Diluted shares of common stock

 

64,433

 

 

 

64,084

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected operating data:

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except square foot data)

 

 

 

 

 

 

 

 

 

Comparable store sales decrease

 

(7.4)

%

 

 

(1.5)

%

 

 

Net sales per average selling square foot (a)

 

$

111

 

 

 

$

117

 

 

 

Net sales per average store (b)

 

$

550

 

 

 

$

583

 

 

 

Average selling square footage per store (c)

 

5,004

 

 

 

4,981

 

 

 

Ending store count

 

387

 

 

 

411

 

 

 

(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)

 

52 weeks
ended
February 1, 2020

 

% of
net sales

 

52 weeks
ended
February 2, 2019

 

% of
net sales

 

Net sales

 

$

826,990

 

100.0

%

$

893,224

 

100.0

%

 

 

 

 

 

 

 

 

 

 

Cost of goods sold, buying and occupancy costs

 

594,890

 

71.9

%

614,212

 

68.8

%

 

 

 

 

 

 

 

 

 

 

Gross profit

 

232,100

 

28.1

%

279,012

 

31.2

%

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

273,456

 

33.1

%

270,943

 

30.3

%

 

 

 

 

 

 

 

 

 

 

Loss from impairment charges

 

20,569

 

2.5

%

1,598

 

0.2

%

 

 

 

 

 

 

 

 

 

 

Operating (loss) income

 

(61,925)

 

(7.5)

%

6,471

 

0.7

%

 

 

 

 

 

 

 

 

 

 

Net interest income

 

(833)

 

(0.1)

%

(813)

 

(0.1)

%

 

 

 

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

?

 

?

%

239

 

?

%

 

 

 

 

 

 

 

 

 

 

(Loss) income before income taxes

 

(61,092)

 

(7.4)

%

7,045

 

0.8

%

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

531

 

0.1

%

2,815

 

0.3

%

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(61,623)

 

(7.5)

%

$

4,230

 

0.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic (loss) earnings per share

 

$

(0.96)

 

 

 

$

0.07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (loss) earnings per share

 

$

(0.96)

 

 

 

$

0.06

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic shares of common stock

 

64,346

 

 

 

63,825

 

 

 

Diluted shares of common stock

 

64,346

 

 

 

65,913

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected operating data:

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except square foot data)

 

 

 

 

 

 

 

 

 

Comparable store sales (decrease) increase

 

(5.4)

%

 

 

0.4

%

 

 

Net sales per average selling square foot (a)

 

$

406

 

 

 

$

418

 

 

 

Net sales per average store (b)

 

$

2,017

 

 

 

$

2,082

 

 

 

Average selling square footage per store (c)

 

5,004

 

 

 

4,981

 

 

 

 

(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)

 

February 1, 2020

 

February 2, 2019*

 

 

(Unaudited)

 

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

60,630

 

$

95,542

Accounts receivable

 

 

9,195

 

 

9,879

Inventories, net

 

 

76,122

 

 

82,803

Prepaid expenses

 

 

12,610

 

 

16,921

Other current assets

 

 

1,174

 

 

1,818

Total current assets

 

 

159,731

 

 

206,963

 

 

 

 

 

Property and equipment, net

 

 

44,896

 

 

63,791

Operating lease assets

 

 

189,794

 

?

Intangible assets

 

 

16,625

 

 

16,813

Other assets

 

 

938

 

 

1,311

Total assets

 

$

411,984

 

$

288,878

Liabilities and stockholders' equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

70,172

 

$

77,050

Accrued expenses

 

 

70,543

 

 

68,585

Current operating lease liabilities

 

 

40,350

 

?

Income taxes payable

 

 

110

 

 

375

Total current liabilities

 

 

181,175

 

 

146,010

 

 

 

 

 

Non-current operating lease liabilities

 

 

189,154

 

?

Deferred rent

 

?

 

 

25,090

Other liabilities

 

 

25,698

 

 

31,165

Total liabilities

 

 

396,027

 

 

202,265

 

 

 

 

 

Total stockholders' equity

 

 

15,957

 

 

86,613

Total liabilities and stockholders' equity

 

$

411,984

 

$

288,878

* 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)

 

52 weeks

ended

February 1, 2020

 

52 weeks

ended

February 2, 2019

 

Operating activities

 

 

 

 

 

Net (loss) income

 

$

(61,623)

 

 

$

4,230

 

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

19,925

 

 

 

21,044

 

Non-cash lease expense

 

 

45,498

 

 

 

?

 

Loss from impairment charges

 

 

20,569

 

 

 

1,598

 

Amortization of intangible assets

 

 

188

 

 

 

312

 

Amortization of deferred financing costs

 

 

45

 

 

 

56

 

Write-off of unamortized deferred financing costs

 

 

?

 

 

 

239

 

Share?based compensation expense

 

 

2,086

 

 

 

2,335

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

879

 

 

 

2,274

 

Inventories, net

 

 

6,681

 

 

 

1,695

 

Prepaid expenses

 

 

(852)

 

 

 

(474)

 

Accounts payable

 

 

(6,878)

 

 

 

6,961

 

Accrued expenses

 

 

1,683

 

 

 

(7,975)

 

Income taxes payable

 

 

(265)

 

 

 

347

 

Deferred rent

 

 

?

 

 

 

(2,127)

 

Operating lease liabilities

 

 

(48,131)

 

 

 

?

 

Other assets and liabilities

 

 

(4,348)

 

 

 

(3,443)

 

Net cash (used in) provided by operating activities

 

 

(24,543)

 

 

 

27,072

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(8,547)

 

 

 

(8,527)

 

Insurance recoveries

 

 

404

 

 

 

375

 

Net cash used in investing activities

 

 

(8,143)

 

 

 

(8,152)

 

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

Repayment of long-term debt

 

 

?

 

 

 

(11,750)

 

Principal payments on capital lease obligations

 

 

(1,761)

 

 

 

(1,994)

 

Payment of financing fees

 

 

(380)

 

 

 

?

 

Proceeds from exercise of stock options

 

 

?

 

 

 

38

 

Shares withheld for payment of employee payroll taxes

 

 

(85)

 

 

 

(580)

 

Net cash used in financing activities

 

 

(2,226)

 

 

 

(14,286)

 

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

 

(34,912)

 

 

 

4,634

 

Cash and cash equivalents at beginning of period

 

 

95,542

 

 

 

90,908

 

Cash and cash equivalents at end of period

 

$

60,630

 

 

$

95,542

 

Non-cash capital lease transactions

 

$

?

 

 

$

?

 

 

Exhibit (5)

RTW Retailwinds, Inc. and Subsidiaries
Reconciliation of GAAP to non-GAAP Financial Measures
(Unaudited)

A reconciliation of the Company's GAAP operating income (loss) to non?GAAP adjusted operating income (loss) is indicated below. Adjusted operating income (loss) is being presented because it is a key measure used by the Company's management and board of directors to understand and evaluate the Company's core operating performance and trends, to prepare the financial budget and to develop short and long?term operational plans. In particular, the exclusion of certain expenses in calculating adjusted operating income (loss) can provide a useful measure for period?to?period comparisons of the Company's core business. Accordingly, the Company believes that adjusted operating income (loss) provides useful information to investors and others in understanding and evaluating the Company's operating results in the same manner as the Company's management and its board of directors. This non?GAAP financial information should be considered in addition to, not as a substitute for or as being superior to, measures of financial performance prepared in accordance with GAAP.

 

 

(Amounts in thousands)

 

13 weeks

ended

February 1, 2020

 

13 weeks

ended

February 2, 2019

 

GAAP operating loss as reported

 

$(39,836)

 

$(1,634)

 

Adjustments affecting comparability

 

 

 

 

 

Loss on impairment charges

 

19,787

 

?

 

Accelerated depreciation ? eCommerce site

 

580

 

?

 

Uncommon Sense closeout

 

447

 

?

 

Certain severance expense

 

?

 

1,537

 

Company name change and Registration Statement

 

?

 

64

 

Consulting expense?Project Excellence

 

?

 

60

 

Legal expense

 

?

 

54

 

Total adjustments

 

20,814

 

1,715

 

Non?GAAP adjusted operating (loss) income

 

$(19,022)

 

$81

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands)

 

52 weeks

ended

February 1, 2020

 

52 weeks

ended

February 2, 2019

 

GAAP operating (loss) income as reported

 

$(61,925)

 

$6,471

 

Adjustments affecting comparability

 

 

 

 

 

Loss on impairment charges

 

20,569

 

?

 

Accelerated depreciation ? eCommerce site

 

580

 

?

 

Uncommon Sense closeout

 

4,672

 

?

 

Certain severance expense

 

578

 

2,108

 

Company name change and Registration Statement

 

?

 

405

 

Consulting expense?Project Excellence

 

?

 

670

 

Legal expense (reversal)

 

(209)

 

709

 

Reversal of certain employee relocation accruals

 

?

 

(135)

 

Total adjustments

 

26,190

 

3,757

 

Non?GAAP adjusted operating (loss) income

 

$(35,735)

 

$10,228

 

 


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