Market Overview

I think you’ll love what you hear,
what you’ll see and the opportunities
that will be set before you.
- Jon Najarian
GET TICKETS

RTW Retailwinds, Inc. Announces 2018 4th Quarter and Full Year Results

Share:

~ Comparable Store Sales Increased 0.4% for the Full Year ~

~ GAAP Operating Income of $6.5 Million for the Full Year and a Loss
of $1.6 Million in the Fourth Quarter ~

~ Non-GAAP Operating Income of $10.2 Million for the Full Year
Increasing 32.9% from Prior Year ~

~ Fourth Quarter Non-GAAP Operating Income of $0.1 Million Meeting
Guidance ~

~ Reports $33.2 Million of Adjusted EBITDA for the Full Year ~

~ Reports $95.5 Million in Cash with no Debt Outstanding or $1.45 Per
Diluted Share ~

RTW Retailwinds, Inc. (NYSE:RTW), formerly known as New York & Company,
Inc. (NYSE:NWY), an omni-channel specialty apparel retail platform for
powerful celebrity and consumer brands, today announced results for the
fourth quarter and full year fiscal 2018 representing the 13-weeks and
52-weeks ended February 2, 2019, respectively. This compares to the
14-week fourth quarter and 53-week full year of fiscal 2017, which ended
February 3, 2018.

Gregory Scott, RTW Retailwinds, Inc. CEO stated: "While our fourth
quarter results were in line with our updated guidance and the year
included significant progress toward our goals, we were disappointed to
see the momentum in our business soften in January. The challenges we
experienced in the fourth quarter reflected declines in traffic and new
customer acquisition as well as decreased product acceptance in our SoHo
Jeans sub-brand. We are rebalancing are marketing media mix towards new
customer acquisition, have made leadership changes in our digital
organization, and are adjusting our go-forward assortments in SoHo Jeans
to improve the overall trend. Despite this, 2018 was a highly productive
year. In fact, financially the year saw increased comparable sales,
expansion in gross margin, expense discipline, and inventory management
resulting in a $2.5 million increase in adjusted operating income as
compared to fiscal 2017. Strategically, the year included a significant
milestone for our Company, as we changed our name to RTW
Retailwinds. This transformation to RTW establishes a strong and
distinct corporate identity reflecting our vision to maximize the
power of our platform to create destination celebrity and lifestyle
brand assortments across categories and channels. Throughout 2018, we
delivered positive comp results in our celebrity collaborations,
including our successful Eva Mendes and Gabrielle Union collections, as
well as comp increases in our largest sub-brand, 7th Avenue.
We also introduced Kate Hudson as our SoHo Jeans sub-brand ambassador
and look forward to improving results across our casual
sub-brand. Finally, we are pleased to end the year with a strong balance
sheet that gives us the flexibility to fund our growth initiatives and
deliver positive cash flow."

"We begin 2019 focused on the execution of our multi-brand portfolio
vision and believe we have identified the right actions to address our
traffic, customer acquisition, and digital opportunities," Mr. Scott
continued. "We remain intensely focused on the future growth of our core
New York & Company brand where our celebrity collaborations continue to
drive brand awareness and a critical point of differentiation. We are
executing against our strategic plan to grow our Fashion to Figure
business. In addition, we are bringing to market two digitally native
brands, including Happy x Nature, Kate Hudson's first ready-to-wear
collection launching on April 4th, and Uncommon Sense, our
lingerie lifestyle brand which we believe is positioned to capture share
given the disruption that is occurring in this market. While first
quarter guidance reflects the expectation that the trends we saw in
January continued, we are confident in our strategy and expect the
execution of our initiatives to position us to achieve our goal of
long-term sustained profitable growth."

Fourth Quarter Fiscal Year 2018 Results (13-week period ended
February 2, 2019 as compared to the 14-week period ended February 3,
2018):

As it relates to the fourth quarter of fiscal year 2018, the Company
noted the following:

  • Net sales were $247.3 million, as compared to $278.7 million in the
    prior year, reflecting a reduction in comparable store sales, a
    reduction in store count by 36 closed stores, and the impact of the
    53-week year in the prior year, partially offset by the inclusion of
    sales from Fashion to Figure. The 53rd week of sales in
    fiscal year 2017 contributed $12.5 million of sales.
  • Comparable store sales decreased 1.5%, as compared to the same period
    last year, representing a decline in the Company's brick-and-mortar
    business, partially offset by growth in the Fashion to Figure brand.
    All quarterly comparable store sales results are based on a 13-week
    comparable time period.
  • Gross profit as a percentage of net sales decreased 70 basis points to
    28.8% versus fiscal year 2017 fourth quarter gross profit percentage
    of 29.5%. The decrease reflects increased promotional activity,
    partially offset by increased leverage of buying and occupancy costs.
  • Selling, general and administrative expenses decreased by $4.3 million
    to $72.9 million, or 29.5% of net sales, as compared to $77.2 million,
    or 27.7% of net sales in the prior year period. The current year's
    quarterly results included $1.7 million of non-operating charges
    primarily related to executive severance expense. The prior year
    included $0.3 million of non-operating charges primarily related to
    certain consulting expenses. On a non-GAAP basis, selling, general and
    administrative expenses decreased by $5.8 million to $71.2 million, or
    28.8% of net sales, as compared to non-GAAP selling, general and
    administrative expenses of $77.0 million, or 27.6% of net sales in the
    prior year. The decrease reflects the reduction of payroll, a decrease
    in incentive compensation and the elimination of the extra 53rd
    week from last year.
  • GAAP operating results for the fourth quarter of fiscal year 2018,
    inclusive of $1.6 million of new business startup losses associated
    with the three new businesses, $1.1 million of non-cash asset
    impairment costs and $1.7 million of severance and other non-operating
    charges, reflected a loss of $1.6 million, as compared to operating
    income of $5.0 million in the prior year. Excluding the non-operating
    charges, non-GAAP operating income was $0.1 million, which met the
    Company's guidance of approximately breakeven, and compares to the
    prior year's non-GAAP operating income of $5.3 million.
  • Provision for income taxes was $2.4 million in the quarter reflecting
    a $1.6 million assessment related to a multi-year state tax audit, as
    well as the adjustment of various other state tax reserves. The
    Company continues to maintain a valuation allowance of $56.0 million,
    offsetting all deferred tax benefits.
  • GAAP net loss for the fourth quarter of fiscal year 2018 was $3.6
    million, or a loss of $0.06 per diluted share, as compared to GAAP net
    income of $4.7 million, or earnings of $0.07 per diluted share in the
    prior year. On a non-GAAP basis, the fourth quarter adjusted net loss
    was $0.3 million, or breakeven per diluted share, as compared to
    adjusted net income of $5.0 million, or earnings of $0.08 per diluted
    share last year.

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 2, 2019 and
the 14 weeks ended February 3, 2018. GAAP is defined as Generally
Accepted Accounting Principles in the United States.

Full Fiscal Year 2018 Results (52-week period ended February 2, 2019
as compared to the 53-week period ended February 3, 2018):

  • Net sales were $893.2 million for fiscal year 2018, as compared to
    $926.9 million for fiscal year 2017. The reduction reflects a
    reduction in store count and the elimination of the 53rd
    week from last year, partially offset by the addition of Fashion to
    Figure and growth in eCommerce. Comparable store sales increased 0.4%,
    as compared to the same period last year. All full fiscal year
    comparable store sales results are based on a 52-week comparable time
    period.
  • GAAP operating income was $6.5 million. On a non-GAAP basis, adjusted
    operating income was $10.2 million. This compares to GAAP operating
    income of $6.9 million and non-GAAP, adjusted operating income of $7.7
    million for fiscal year 2017.
  • Net income was $4.2 million, or earnings of $0.06 per diluted
    share. On a non-GAAP basis, adjusted net income was $9.6 million, or
    earnings of $0.15 per diluted share. This compares to the prior fiscal
    year net income of $5.7 million, or earnings of $0.09 per diluted
    share. On a non-GAAP basis, prior year adjusted net income was $6.4
    million, or earnings of $0.10 per diluted share.
  • Adjusted EBITDA for fiscal year 2018 was $33.2 million, as compared to
    $30.4 million in fiscal year 2017. Please refer to the "Reconciliation
    of Net Income (Loss) to Adjusted EBITDA" in Exhibit 7 of this press
    release, which reconciles net income (loss) to adjusted EBITDA for the
    fourth quarter and full year of fiscal 2018 and fiscal 2017.

Please refer to the "Reconciliation of GAAP to Non-GAAP Financial
Measures" in Exhibit 6 of this press release, which delineates the
non-operating adjustments for the 52 weeks ended February 2, 2019 and
the 53 weeks ended February 3, 2018.

Other Financial and Operational Highlights:

  • Total quarter end inventory decreased 2.0%, as compared to the prior
    year period, reflecting lower store count and reductions in eCommerce
    inventory, partially offset by an increase due to the growing Fashion
    to Figure business.
  • Capital expenditures for the fourth quarter of 2018 were $4.8 million,
    as compared to $4.7 million in the prior year period.
  • During the fourth quarter, the Company opened 1 Fashion to Figure
    store, closed 18 locations, and remodeled/refreshed 1 existing
    location ending the fourth quarter with 411 stores, including 119
    Outlet stores (which includes 58 clearance stores) and 2.0 million
    selling square feet in operation.
  • The Company ended the fourth quarter with $95.5 million of cash
    on-hand, no outstanding borrowings under its revolving credit facility
    and no long-term debt.

Outlook:

Regarding expectations for fiscal year 2019, the Company continues to
focus on growth and focus on improving its operating results to drive
increases in both annual operating income and EBITDA.

As has been widely reported, February's retail industry performance has
been below expectations and the Company believes its results were
impacted by factors that are temporary and macro-related which are
negatively impacting traffic, further exacerbated by customer
acquisition which the Company is addressing by rebalancing its marketing
media mix towards new customer acquisition and leadership changes to the
digital organization. For the Spring season, combined first and second
quarter of fiscal year 2019, the Company expects comparable store sales
to decrease in the low single-digit percentage range. The Company
expects GAAP operating income to be in the range of breakeven to a
profit of $2 million, with losses in the first quarter offset by
profitability in the second quarter. These results are inclusive of
approximately $2.5 million of new business startup losses for the
combined new businesses during the full spring season.

For the first quarter, the Company is expecting the following:

  • Net sales are expected to decrease in the high single-digit range,
    reflecting the reduced store count, combined with reductions in
    comparable store sales in the mid single-digit percentage range.
  • Gross margin on a GAAP basis is expected to decrease 100 to 150 basis
    points, reflecting continued improvements in product margin, resulting
    from decreased product cost and reduced promotional activity, offset
    by increased shipping costs.
  • Selling, general and administrative expenses on a GAAP basis are
    expected to decrease by approximately $1 million versus the prior
    year's first quarter. This reflects reductions in variable
    compensation and reduced payroll, partially offset by an increase in
    marketing to drive sales and an increase in selling expenses driven by
    higher eCommerce variable costs.

Additional Outlook:

  • On-hand inventory at the end of the first quarter is expected to
    increase in the mid single-digit percentage range, as compared to the
    prior year, largely reflecting increased inventory levels to support
    new businesses and a shift in the timing of receipts.
  • Capital expenditures for the first quarter of fiscal year 2019 are
    projected to be approximately $3 million to support new businesses and
    ongoing store remodel activity, as compared to $0.3 million of capital
    expenditures in the first quarter of the prior year. For the full
    year, capital expenditures are projected to be $12 million to $13
    million, as compared to $8.5 million in capital expenditures in the
    prior year.
  • Depreciation and amortization expense for the first quarter of fiscal
    year 2019 is estimated to be approximately $17 million, inclusive of
    approximately $12 million attributable to amortization of the
    Company's Right-Of-Use Asset resulting from the adoption of Accounting
    Standards Codification 842, "Leases" on the first day of fiscal year
    2019.
  • During the first quarter of fiscal year 2019, the Company expects to
    open 1 New York & Company store and 2 Fashion to Figure stores,
    remodel/refresh 4 existing stores, and close 2 locations.
  • For fiscal year 2019, the Company expects to open approximately 8 New
    York & Company stores and 8 Fashion to Figure stores, remodel/refresh
    8 existing stores, and close 15 to 20 stores, ending the fiscal year
    with roughly 407 to 412 stores, and approximately 2.0 million selling
    square feet.

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 store, including Fashion to Figure eCommerce sales, and
private label credit card royalties and related revenue are included in
comparable store sales. Fashion to Figure retail locations are not
included in comparable store sales calculations until they complete 13
full fiscal months of operation. 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 21, 2019 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 13688189 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 21, 2019 until 11:59 p.m. Eastern Time on March 28, 2019 and can
be accessed by dialing (844) 512-2921 and entering conference ID number
13688189.

As a supplement to this press release, slides with information regarding
the fourth quarter results and outlook for Spring 2019 will also be
available at: www.nyandcompany.com
at approximately 4:20 p.m. Eastern Time on Thursday, March 21, 2019.

About RTW Retailwinds

RTW Retailwinds, Inc. (formerly known as New York & Company, Inc.) is a
specialty women's omni-channel and digitally enabled retailer with a
powerful multi-brand lifestyle platform providing curated lifestyle
solutions that are versatile, on-trend, and stylish at a great value.
The specialty retailer, first incorporated in 1918, has grown to now
operate 411 retail and outlet locations in 34 states while also growing
a substantial eCommerce business. The Company's portfolio includes
branded merchandise from New York & Company, Fashion to Figure, and
collaborations with Eva Mendes, Gabrielle Union and Kate Hudson. Its
branded merchandise is sold exclusively at its retail and outlet
locations and online at www.nyandcompany.com,
www.fashiontofigure.com
and www.nyandcompanycloset.com.
Additionally, certain product, press releases and SEC filing information
concerning the Company are available at the Company's website: www.nyandcompany.com.

2019 Annual Meeting of Stockholders

The Company's 2019 Annual Meeting of Stockholders will be held at 10:00
a.m., Eastern Daylight Time, on June 11, 2019 at the Company's corporate
headquarters, 330 West 34th Street, 9th Floor, New York, NY 10001.

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" and
"Additional 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; and (xvi) 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 2, 2019

% of
net sales
14 weeks
ended

February 3, 2018

% of
net sales
Net sales $ 247,267 100.0 % $ 278,713 100.0 %
 
Cost of goods sold, buying and occupancy costs 175,965 71.2 % 196,467 70.5 %
 
Gross profit 71,302 28.8 % 82,246 29.5 %
 
Selling, general and administrative expenses 72,936 29.5 % 77,240 27.7 %
 
Operating (loss) income (1,634) (0.7) % 5,006 1.8 %
 
Net interest (income) expense (360) (0.1) % 137 %
 
(Loss) income before income taxes (1,274) (0.6) % 4,869 1.8 %
 
Provision for income taxes 2,374 0.9 % 122 0.1 %
 
Net (loss) income $ (3,648) (1.5) % $ 4,747 1.7 %
 
 
Basic (loss) earnings per share $ (0.06) $ 0.07
 
Diluted (loss) earnings per share $ (0.06) $ 0.07
 
Weighted average shares outstanding:
Basic shares of common stock 64,084 63,452
Diluted shares of common stock 64,084 64,690
 
Selected operating data:
(Dollars in thousands, except square foot data)
Comparable store sales (decrease) increase (1.5) % 3.0 %
Net sales per average selling square foot (a) $ 117 $ 123
Net sales per average store (b) $ 583 $ 617
Average selling square footage per store (c) 4,981 5,026
Ending store count 411 432

 

(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 2, 2019

% of
net sales
53 weeks
ended

February 3, 2018

% of
net sales
Net sales $ 893,224 100.0 % $ 926,868 100.0 %
 
Cost of goods sold, buying and occupancy costs 614,212 68.8 % 644,041 69.5 %
 
Gross profit 279,012 31.2 % 282,827 30.5 %
 
Selling, general and administrative expenses 272,541 30.5 % 275,899 29.8 %
 
Operating income 6,471 0.7 % 6,928 0.7 %
 
Net interest (income) expense (813) (0.1) % 815 0.1 %
 
Loss on extinguishment of debt 239 % %
 
Income before income taxes 7,045 0.8 % 6,113 0.6 %
 
Provision for income taxes 2,815 0.3 % 438 %
 
Net income $ 4,230 0.5 % $ 5,675 0.6 %
 
 
Basic earnings per share $ 0.07 $ 0.09
 
Diluted earnings per share $ 0.06 $ 0.09
 
Weighted average shares outstanding:
Basic shares of common stock 63,825 63,273
Diluted shares of common stock 65,913 64,054
 
Selected operating data:
(Dollars in thousands, except square foot data)
Comparable store sales increase 0.4 % 1.0 %
Net sales per average selling square foot (a) $ 418 $ 401
Net sales per average store (b) $ 2,082 $ 2,019
Average selling square footage per store (c) 4,981 5,026
 

(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 2, 2019 February 3, 2018*
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 95,542 $ 90,908
Accounts receivable 9,879 12,528
Inventories, net 82,803 84,498
Prepaid expenses 16,921 16,447
Other current assets 1,818 2,039
Total current assets 206,963 206,420
 
Property and equipment, net 63,791 77,906
Intangible assets 16,813 17,125
Other assets 1,311 1,505
Total assets $ 288,878 $ 302,956
Liabilities and stockholders' equity
Current liabilities:
Current portion—long-term debt $ $ 841
Accounts payable 77,050 70,089
Accrued expenses 68,585 70,677
Income taxes payable 375 28
Total current liabilities 146,010 141,635
 
Long-term debt, net of current portion 10,644
Deferred rent 25,090 27,217
Other liabilities 31,165 36,599
Total liabilities 202,265 216,095
 
Total stockholders' equity 86,613 86,861
Total liabilities and stockholders' equity $ 288,878 $ 302,956
                 

* Derived from the audited consolidated financial statements included in
the Company's Annual Report on Form 10-K for the fiscal year ended
February 3, 2018.

   

Exhibit (4)

 

RTW Retailwinds, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

(Amounts in thousands)

52 weeks

ended

February 2, 2019

53 weeks

ended

February 3, 2018

 
Operating activities
Net income $ 4,230 $ 5,675
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 21,044 21,729
Loss from impairment charges 1,598 997
Amortization of intangible assets 312
Amortization of deferred financing costs 56 189
Write-off of unamortized deferred financing costs 239
Share-based compensation expense 2,335 2,223
Changes in operating assets and liabilities:
Accounts receivable 2,274 (691)
Inventories, net 1,695 (6,454)
Prepaid expenses (474) 2,299
Accounts payable 6,961 2,021
Accrued expenses (7,975) 1,242
Income taxes payable 347 (146)
Deferred rent (2,127) (2,822)
Other assets and liabilities   (3,443)   (5,084)
Net cash provided by operating activities   27,072   21,178
 
Investing activities
Capital expenditures (8,527) (12,530)
Insurance recoveries 375
Acquisition of Fashion to Figure intangible assets (2,246)
Acquisition of Fashion to Figure fixed assets         (176)
Net cash used in investing activities   (8,152)       (14,952)
 
Financing activities
Repayment of long-term debt (11,750) (1,000)
Principal payments on capital lease obligations (1,994) (1,676)
Shares withheld for payment of employee payroll taxes (580) (388)
Repurchase of treasury stock (623)
Proceeds from exercise of stock options   38  
Net cash used in financing activities   (14,286)   (3,687)
 
Net increase in cash and cash equivalents 4,634 2,539
Cash and cash equivalents at beginning of period   90,908   88,369
Cash and cash equivalents at end of period $ 95,542 $ 90,908
Non-cash capital lease transactions $ $ 856
 
 

Exhibit (5)

RTW Retailwinds, Inc. and Subsidiaries
Reconciliation of
GAAP to Non-GAAP Financial Measures

(Unaudited)

A reconciliation of the Company's GAAP to non-GAAP financial statement
information for the 13 weeks ended February 2, 2019 and the 14 weeks
ended February 3, 2018 is indicated below. This information reflects, on
a non-GAAP basis, the Company's adjusted operating results after
excluding certain non-operating adjustments. This non-GAAP financial
information is provided to enhance the user's overall understanding of
the Company's current financial performance. Specifically, the Company
believes the non-GAAP adjusted results provide useful information to
both management and investors by excluding expenses and credits that the
Company believes are not indicative of the Company's continuing
operating results. The 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.

   

 

13 weeks ended February 2, 2019

Cost of goods         Selling, general             (Loss)
sold, buying and Operating earnings per

 

and occupancy Gross administrative (loss) diluted

(Amounts in thousands, except per share amounts)

costs profit expenses income Net loss share
GAAP as reported $ 175,965 $ 71,302 $ 72,936 $ (1,634 ) $ (3,648 ) $ (0.06 )

Adjustments affecting comparability

Certain severance expense 1,537 1,537 1,537
Income tax audit assessment 1,643
Other non-operating expenses           178   178     178    
Total adjustments (1)           1,715   1,715     3,358     0.06  

Non-GAAP as adjusted

$ 175,965   $ 71,302   $ 71,221   $ 81   $ (290 ) $ (0.00 )
 

 

14 weeks ended February 3, 2018

Cost of goods Selling, general
sold, buying and Earnings per

 

and occupancy Gross administrative Operating Net diluted

(Amounts in thousands, except per share amounts)

costs profit expenses income income share
GAAP as reported $ 196,467 $ 82,246 $ 77,240 $ 5,006 $ 4,747 $ 0.07

Adjustments affecting comparability

Consulting expense 291 291 291
Other non-operating credits   (6 )   (6 )   (35 ) (41 )   (41 )  
Total adjustments (1)   (6 )   (6 )   256   250     250     0.01  

Non-GAAP as adjusted

$ 196,473   $ 82,240   $ 76,984   $ 5,256   $ 4,997   $ 0.08  
 
(1)   The tax effect of the $1.7 million and $0.3 million of non-operating
adjustments during the 13 weeks ended February 2, 2019 and the 14
weeks ended February 3, 2018, respectively, is offset by a full
valuation allowance against deferred tax assets.
 

Exhibit (6)

RTW Retailwinds, Inc. and Subsidiaries
Reconciliation of
GAAP to Non-GAAP Financial Measures

(Unaudited)

A reconciliation of the Company's GAAP to non-GAAP financial statement
information for the 52 weeks ended February 2, 2019 and the 53 weeks
ended February 3, 2018 is indicated below. This information reflects, on
a non-GAAP basis, the Company's adjusted operating results after
excluding certain non-operating adjustments. This non-GAAP financial
information is provided to enhance the user's overall understanding of
the Company's current financial performance. Specifically, the Company
believes the non-GAAP adjusted results provide useful information to
both management and investors by excluding expenses and credits that the
Company believes are not indicative of the Company's continuing
operating results. The 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.

   

 

52 weeks ended February 2, 2019

Cost of goods         Selling, general            
sold, buying and Earnings per

 

and occupancy Gross administrative Operating diluted

(Amounts in thousands, except per share amounts)

costs profit expenses income Net income share
GAAP as reported $ 614,212 $ 279,012 $ 272,541 $ 6,471 $ 4,230 $ 0.06

Adjustments affecting comparability

Company name change and Registration Statement 405 405 405
Certain severance expense 286 286 1,822 2,108 2,108
Reversal of certain employee relocation accruals (135 ) (135 ) (135 )
Consulting expense 670 670 670
Legal expenses 709 709 709
Income tax audit assessment               1,643    
Total adjustments (1)   286   286   3,471     3,757     5,400     0.09

Non-GAAP as adjusted

$ 613,926 $ 279,298 $ 269,070   $ 10,228   $ 9,630   $ 0.15
 

 

53 weeks ended February 3, 2018

Cost of goods Selling, general
sold, buying and Earnings per
and occupancy Gross administrative Operating diluted
(Amounts in thousands, except per share amounts) costs profit expenses income Net income share
GAAP as reported $ 644,041 $ 282,827 $ 275,899 $ 6,928 $ 5,675 $ 0.09

Adjustments affecting comparability

Certain severance expense 336 336 571 907 907
Certain executive relocation expense 502 502 502
Consulting expense 1,486 1,486 1,486
Legal settlement fees net accrual reversal       (2,125 )   (2,125 )   (2,125 )  
Total adjustments (1)   336   336   434     770     770     0.01

Non-GAAP as adjusted

$ 643,705 $ 283,163 $ 275,465   $ 7,698   $ 6,445   $ 0.10
 

(1)

 

The tax effect of $3.8 million and $0.8 million of non-operating
adjustments during the 52 weeks ended February 2, 2019 and the 53
weeks ended February 3, 2018, respectively, is offset by a full
valuation allowance against deferred tax assets.

 

Exhibit (7)

RTW Retailwinds, Inc. and Subsidiaries
Reconciliation of
Net Income (Loss) to Adjusted EBITDA

(Unaudited)

A reconciliation of the Company's GAAP net income (loss) to adjusted
EBITDA, a non-GAAP measure, is indicated below. This information
reflects, on a non-GAAP basis, the Company's adjusted EBITDA after
excluding certain non-operating adjustments. This non-GAAP financial
information is provided to enhance the user's overall understanding of
the Company's current financial performance. Specifically, the Company
believes adjusted EBITDA provides useful information to both management
and investors by excluding certain non-cash charges, as well as expenses
that the Company believes are not indicative of the Company's continuing
operating results. The 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 2, 2019

    14 weeks

ended

February 3, 2018

    52 weeks

ended

February 2, 2019

    53 weeks

ended

February 3, 2018

Net (loss) income $(3,648) $4,747 $4,230 $5,675
Provision for income taxes 2,374 122 2,815 438
Net interest (income) expense (360) 137 (813) 815
Depreciation and amortization 5,211 5,375 21,044 21,729
Amortization of intangible assets 78 312
Loss from impairment charges 1,112 386 1,598 997
Loss on extinguishment of debt 239
Non-operating adjustments (1) 1,715 250 3,757 770
Adjusted EBITDA $6,482 $11,017 $33,182 $30,424
 

(1)

 

Includes the non-operating adjustments reported in Exhibits 5 and
6, except for the $1.6 million income tax audit assessment which
is included in the ‘Provision for income taxes' line above for the
13 weeks and 52 weeks ended February 2, 2019.

View Comments and Join the Discussion!