RTW Retailwinds, formerly known as New York & Co., said Thursday it will shutter up to 30 stores in coming weeks. The announcement was shared in a conference call with analysts as transcribed by Seeking Alpha. Plans are to open one New York & Co. store and close 27 stores (19 New York & Co., four Fashion to Figure and four outlets), executives said. For the year, RTW expects to have opened nine stores and closed 31.
The apparel company, which runs a four-story headquarters in Manhattan, is looking into subleasing some of its office space, executives said. The brick-and-mortar contraction comes amid disappointing third quarter results, including a 5% net sales decline to $200.1 million from $210.8 million last year.
A 4% store comp decrease furthered that drop, as did last year's closure of 14 stores, according to a press release. E-commerce grew to 36% of sales from 32% last year. Gross profit as a percentage of sales declined 460 basis points to 27.8%, from 32.4% last year. Year-over-year results swung to a net loss of $11.6 million, from $1.7 million in net income a year ago.
RTW Chief Executive Greg Scott, in a conference call with analysts, tried to keep the focus on the company's achievements in the third quarter. Those included a 55% sales lift at the company's Fashion to Figure plus brand, acquired two years ago, positive digital comps and an acceleration in new customer growth.
But it was difficult to ignore the dark side. Store traffic declines and "challenges" at the company's SoHo Jeans brand drove the company into the red, bringing on an operating loss of $12.1 million in the quarter, from operating income of $1.6 million a year ago. "We acknowledge these challenges and are addressing with a sense of urgency," Scott said.
Most urgent is shuttering stores and stoking e-commerce, he also said, adding that 70% of the company's stores are on leases with terms of two-years or less, and that the company continues to "actively evaluate our store portfolio."
But RTW is facing significant headwinds in its segment. Fashion sales are being undermined by changes in customer needs, preferences and priorities. And mid-priced apparel like that found at RTW's brands is especially vulnerable, according to recent research from Refinitiv, which over the Black Friday weekend found discounts on about 74% of goods at mid-tier department stores, 48% at specialty stores and 39% at premium stores.