After New York & Company, Inc. (NYSE: NWY) posted unwanted earnings results for 1Q2016, the management didn’t want to dwell on the past, instead choosing to talk about the future. But the question is whether investors will continue to be patient with the company’s prolonged turnaround or believe the story that the management is now selling. NWY missed both EPS and revenue expectations in 1Q2016, a sign that the rise of online shopping was taking a heavy toll on the specialty retailer’s core physical stores business.
What management New York & Company, Inc. (NYSE: NWY) is saying
New York & Company, Inc. (NYSE: NWY)’s CEO, Gregory Scott, addressed a wide range of issues in a press release that accompanied the company’s 1Q2016 results. First, Scott acknowledged that the retailer’s latest quarter results were underwhelming and seemed to blame the problem on reduced foot traffic to their stores.
However, going ahead and beginning in 2Q2016, Scott promised that things will be different if not better. For example, the CEO said that the management has embarked on adjusting their gameplan with the view of doubling down on strategies that have proven to be working well. At the same time, the retailer will be working harder to boost traffic to its stores.
Boosting marketing spending
In 2Q2016, New York & Company, Inc. (NYSE: NWY) plans to invest in marketing with the focus being on supporting the launch of the new line of Jennifer Hudson Jeans. The product line will be launched in toward the end of July 2016. The other reason for boosting marketing spending in 2Q2016 would be to support the growth of the Eva Mendes business.
Scott also said that New York & Company, Inc. (NYSE:NWY) will double down on its digital marketing efforts to support the growth of its e-commerce business. It is worth noting that NWY’s digital sales have been growing at double-digit rates. Management wants to increase the contribution of the digital business as a percentage of the company’s overall sales.
The other area that New York & Company, Inc. (NYSE: NWY) is promising to focus on in the coming quarters as part of its turnaround effort is differentiation of its product line.
1Q2016 in numbers
New York & Company, Inc. (NYSE: NWY) generated revenue of $216 million in 1Q2016, down from $223.4 million in the corresponding quarter of 2015 and short of the consensus estimate of $225 million. The company also posted worse than expected EPS, logging EPS loss of $0.09 against EPS loss of $0.07 a year ago and EPS profit of $0.04 that analysts modeled for the quarter.