New York & Company, Inc. Reports Positive Comp Store Sales and Improved Operating Performance in the

New York & Company, Inc. Reports Positive Comp Store Sales and Improved Operating Performance in the Second Quarter

~ Comp Store Sales Increased 2.1% ~

~ Operating Loss Reduced to $2.2 Million ~

NEW YORK--(BUSINESS WIRE)-- New York & Company, Inc. (NYS: NWY) , a specialty apparel chain with 512 retail stores, today announced results for the second quarter and six months ended August 3, 2013. For the second quarter of fiscal year 2013, net sales were $223.1 million, as compared to $227.7 million for the second quarter of fiscal year 2012. Comparable store sales for the second quarter of fiscal year 2013 increased 2.1%, as compared to flat comparable stores sales in the prior year's second quarter.

Operating loss for the second quarter of fiscal year 2013 narrowed approximately 50% to $2.2 million, from an operating loss of $4.4 million in the prior year second quarter and marked the Company's third consecutive year of improvement in second quarter operating results.

Net loss for the second quarter of fiscal year 2013 was $2.7 million, or $0.04 per diluted share and compares to a net loss of $4.3 million, or $0.07 per diluted share in the prior year second quarter.

Gregory Scott, New York & Company's CEO, stated: "We are pleased to deliver positive comparable store sales and improved operating results in the second quarter, which were well within our expectations. Our results marked the third consecutive year in which we delivered an improved second quarter performance, which we attribute to our focus on our six key strategies for success. During the quarter, we saw a favorable response to our strategic merchandise change to a new 'wear-now' assortment in July. We also continue to be pleased with our event-driven promotions which generated a great customer response, particularly in the selling period leading up to Mother's Day and Memorial Day. As we enter the fall season, we are encouraged by the initial response to our signature pant and denim event - which speaks strongly to a core strength of our brand. We are especially excited about the launch of our collaboration with Eva Mendes in mid-September, which we expect will broaden our consumer reach and create additional purchases for existing customers with a sought-after fashion collection found exclusively at New York & Company."

The Company continues to execute its Six Keys to Success, which it expects will drive another year of operating performance improvement. These include: Maximizing sales and profitability during peak traffic times of the year; increasing brand awareness and driving traffic; maintaining dominance in wear-to-work while furthering opportunity in the pant and denim category; reducing markdowns through business process improvements; investing in technology to seamlessly integrate all business channels -- ultimately delivering a compelling omni-channel customer experience; and continuing to expand its growing eCommerce and Outlet channels.

During the quarter the Company accomplished the following:

• The Company's eCommerce channel produced continued growth with sales increasing over 20% from the year-ago period representing 7.6% of total sales in the second quarter of fiscal year 2013 versus 6.1% in the same period last year.

• Outlets also continued to be a highly productive and profitable channel for the Company with strong comps and growth to 10.4% of total sales in the second quarter of fiscal year 2013 versus 8.0% in the same period last year.

• Gross profit as a percentage of net sales improved by 160 basis points versus the prior year period, driven by improved product costs and sourcing efficiencies, along with lower markdowns, partially offset by slight increases in buying and occupancy costs. This resulted in the Company's highest gross margin performance in the second quarter since fiscal year 2008.

• Selling, general and administrative expenses as a percentage of net sales increased slightly compared to the prior year period reflecting continued investments in marketing and the Company's growing eCommerce and Outlet channels. Excluding a benefit of $1.1 million from insurance recoveries in the year-ago period, selling, general and administrative expenses as a percentage of net sales in the second quarter of fiscal year 2013 were flat versus last year.

• Total quarter-end inventory at cost (including in-transit inventory) increased by 3.2% as compared to the end of last year's second quarter reflecting an increase in in-transit inventory to support the Company's pant and denim event in August.

• The Company ended the quarter with $59.5 million of cash-on-hand versus $39.4 million in the same period last year, and no outstanding borrowings under its revolving credit facility.

• The Company remodeled one existing store and closed seven stores, ending the quarter with 512 stores versus 537 stores last year, including 45 Outlet stores, and 2.7 million selling square feet in operation.

• Capital spending for the second quarter of fiscal year 2013 was $4.0 million, as compared to $3.7 million in last year's second quarter, reflecting the remodeling of existing locations and investments in information technology, including the Company's eCommerce replatform project.

For the six months ended August 3, 2013, net sales were $450.5 million, as compared to $455.4 million for the six months ended July 28, 2012. Comparable store sales were flat for the six months ended August 3, 2013 as compared to a decrease of 1.5% in the prior year period. Operating loss for the six months ended August 3, 2013 was $1.0 million; a notable improvement from the prior year's operating loss of $4.5 million. Net loss for the six months ended August 3, 2013 narrowed to $1.1 million, or $0.02 per diluted share. This compares to the prior year net loss of $4.5 million, or $0.07 per diluted share.

Outlook

Regarding expectations for the third quarter of fiscal year 2013, the Company provided the following:

• Total sales are expected to increase by a low single-digit percentage with 21 fewer stores in operation compared to the third quarter of fiscal year 2012. The Company expects comparable store sales to increase by a low to mid-single-digit percentage for the third quarter of fiscal year 2013.

• Gross margin is expected to increase between 100 and 200 basis points from the prior year's rate driven by the combination of continued improvements in product costs and lower levels of markdowns, and leveraging of buying and occupancy expenses.

• Selling, general and administrative expenses as a percentage of net sales are expected to be up approximately 100 basis points versus the prior year's third quarter. On a dollar basis, selling, general and administrative expenses are expected to increase between $3 million and $5 million from the third quarter last year due to the combination of marketing costs associated with the launch of the Eva Mendes collection, along with expenses associated with the growth of the Company's eCommerce and Outlet channels.

• Operating results for the third quarter of fiscal year 2013 are projected to range between breakeven and an operating loss of $4 million, as compared to an operating loss of $3.8 million in the year-ago period. This reflects the impact of 21 fewer stores in operation along with increases in marketing and expenses associated with the Company's growing eCommerce and Outlet channels since last year's third quarter.

• The Company expects the effective tax rate for the third quarter and full fiscal year 2013 to be approximately 0% excluding certain required state and local taxes which are expected to be approximately $0.2 million per quarter. As previously announced, the Company continues to provide for adjustments to the deferred tax valuation allowance initially recorded in the second quarter of fiscal year 2010, offsetting any future tax provisions or benefits resulting in an approximately 0% effective tax rate.

• The Company expects total inventory at cost (including in-transit inventory) at the end of the third quarter of fiscal year 2013 to be up by a mid to high single-digit percentage versus the end of the third quarter of last year. Inventory per average store at the end of the third quarter is planned to be up between a high single-digit and low double-digit percentage reflecting timing differences due to the shift in the retail calendar. As the Company moves beyond the first week of the fourth quarter, inventory levels are expected to normalize.

• Capital expenditures are expected to be between $10 million and $12 million for the third quarter of fiscal year 2013, primarily reflecting the opening of new stores, remodeling of existing locations, and continued investments in the Company's information technology infrastructure, including the replatform of its eCommerce site. This compares to $4.4 million of capital expenditures in the third quarter of last year. Depreciation expense for the third quarter of fiscal year 2013 is estimated at $8 million.

• During the third quarter of fiscal year 2013, the Company expects to open six new stores, including five Outlet stores and one New York & Company store. The Company also expects to remodel two existing New York & Company locations - including its location in Columbia, Maryland where the Company will debut its new store prototype. The Company also plans to close three New York & Company stores, ending the third quarter of fiscal year 2013 with 515 stores, including 50 Outlet stores.

• The Company does not anticipate the need to borrow under its credit facility during the third quarter of fiscal year 2013.

Conference Call Information

A conference call to discuss the second quarter of fiscal year 2013 results is scheduled for today, Thursday, August 22, 2013 at 4:30 pm Eastern Time. Investors and analysts interested in participating in the call are invited to dial (888) 430-8691, referencing conference ID number 5963186, approximately ten minutes prior to the start of the call. The conference call will also be web-cast live at www.nyandcompany.com.

A replay of this call will be available at 7:30 p.m. Eastern Time on August 22, 2013 until midnight on August 29, 2013 and can be accessed by dialing (877) 870-5176 and entering conference ID number 5963186.

About New York & Company

New York & Company, Inc. is a leading specialty retailer of women's fashion apparel and accessories, and the modern wear-to-work destination for women, providing perfectly fitting pants and NY Style that is feminine, polished, on-trend and versatile. The Company's proprietary branded New York & Company® merchandise is sold exclusively through its national network of retail stores and eCommerce store at www.nyandcompany.com. The Company operates 512 stores in 43 states. Additionally, certain product, press release 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 within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Some of these statements, including those under "Outlook" above, 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 are subject to various risks and uncertainties that could cause actual results to differ materially. These include, but are not limited to: (i) the impact of general economic conditions and their effect on consumer confidence and spending patterns; (ii) changes in the cost of raw materials, distribution services or labor; (iii) the potential for current economic conditions to negatively impact the Company's merchandise vendors and their ability to deliver products; (iv) the Company's ability to open and operate stores successfully; (v) seasonal fluctuations in the Company's business; (vi) the Company's ability to anticipate and respond to fashion trends; (vii) the Company's dependence on mall traffic for its sales; (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 sponsors and any potential change of ownership of those sponsors; 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.