0001688522-17-000005.txt : 20170426
0001688522-17-000005.hdr.sgml : 20170426
20170425224701
ACCESSION NUMBER: 0001688522-17-000005
CONFORMED SUBMISSION TYPE: SC 13D
PUBLIC DOCUMENT COUNT: 2
FILED AS OF DATE: 20170426
DATE AS OF CHANGE: 20170425
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: New York & Company, Inc.
CENTRAL INDEX KEY: 0001211351
STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-WOMEN'S CLOTHING STORES [5621]
IRS NUMBER: 331031445
FISCAL YEAR END: 0131
FILING VALUES:
FORM TYPE: SC 13D
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-80433
FILM NUMBER: 17782358
BUSINESS ADDRESS:
STREET 1: 330 WEST 34TH STREET - 9TH FLOOR
CITY: NEW YORK
STATE: NY
ZIP: 10001
BUSINESS PHONE: 212-884-2110
MAIL ADDRESS:
STREET 1: 330 WEST 34TH STREET - 9TH FLOOR
CITY: NEW YORK
STATE: NY
ZIP: 10001
FORMER COMPANY:
FORMER CONFORMED NAME: NY & CO GROUP INC
DATE OF NAME CHANGE: 20021220
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: Philotimo Fund, LP
CENTRAL INDEX KEY: 0001688522
IRS NUMBER: 000000000
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D
BUSINESS ADDRESS:
STREET 1: 5850 CORAL RIDGE DRIVE, SUITE 309
CITY: CORAL SPRINGS
STATE: FL
ZIP: 33076
BUSINESS PHONE: 631-863-3100
MAIL ADDRESS:
STREET 1: 5850 CORAL RIDGE DRIVE, SUITE 309
CITY: CORAL SPRINGS
STATE: FL
ZIP: 33076
SC 13D
1
KWM_13D_NWY.txt
KWM SC 13D FILING NWY
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ________)*
NEW YORK & COMPANY, INC.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
649295102
(CUSIP Number)
Mr. David L. Kanen
Kanen Wealth Management LLC
5850 Coral Ridge Drive, Suite 309
Coral Springs, FL 33076
Simon Riveles
Riveles Wahab LLP
40 Wall St. 28th Floor
New York, NY 10005
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 24, 2017
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition that is the subject of this
Schedule 13D, and is filing this schedule because of
240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See
240.13d-7 for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to
the liabilities of that section of the Act but shall be subject
to all other provisions of the Act (however, see the Notes).
CUSIP No. 649295102 SCHEDULE 13D
1 Names of Reporting Persons
Kanen Wealth Management, LLC
2 Check the Appropriate Box if a Member of a Group
(a) [ ]
(See instructions) (b) [ ]
3 SEC USE ONLY
4 Source of Funds (See Instructions) OO
5 Check if Disclosure of Legal Proceeding is Required
Pursuant to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Florida, USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 Sole Voting Power
634,284
8 Shared Voting Power 0
9 Sole Dispositive Power 634,284
10 Shared Dispositive Power 0
11 Aggregate Amount Beneficially Owned by each Reporting
Person
634,284 (1)
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13 Percent of Class Represented by Amount in Row (11)
.99%
14 Type of Reporting Person
IA
(1) KWM is the beneficial owner of 634,284 shares held by the
Philotimo Fund, LP. David L. Kanen is the managing member of KWM
and may be deemed to share voting and dispositive power over such
shares with KWM.
1 Names of Reporting Persons
David Kanen, Managing Member of Kanen Wealth Management, LLC
2 Check the Appropriate Box if a Member of a Group
(a) [ ]
(See instructions) (b) [ ]
3 SEC USE ONLY
4 Source of Funds
PF
5 Check if Disclosure of Legal Proceeding is Required
Pursuant to Items 2(d) or 2(e)
6 Citizenship or Place of Organization USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 Sole Voting Power
66,868
8 Shared Voting Power
3,231,953 (2)
9 Sole Dispositive Power
3,281,953 (3)
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by each Reporting
Person
3,281,953
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13 Percent of Class Represented by Amount in Row (11)
5.09%
14 Type of Reporting Person
IA
(2) Includes 66,896 shares of Common Stock held by Mr. Kanen
for his own account.
(3) Represents 2,647,669 shares of Common Stock held by Mr. Kanen
for his own account and held in customer accounts, over all of
which KWM has dispositive power pursuant to investment advisory
agreements. KWM has discretionary voting rights 2,597,669 shares.
Mr. Kanen is the managing member of KWM and may be deemed to
share voting and dispositive power over such shares with KWM.
Item 1. Security and Issuer.
This Schedule 13D relates to the common stock (the "Common Stock")
of New York & Company, Inc (the "Issuer").
Item 2. Identity and Background.
(a)
This statement is filed by:
(i) Kanen Wealth Management LLC ("KWM"), an investment adviser
registered as such in Florida, New York and Texas; and
(ii) David L. Kanen, the managing member of KWM.
The foregoing persons are hereinafter sometimes collectively
referred to as the "Reporting Persons." Any disclosures
herein with respect to persons other than the Reporting
Persons are made on information and belief after making
inquiry of the appropriate party.
(b) The principal business address of the Reporting Persons
is 5850 Coral Ridge Drive, Suite 309 Coral Springs, FL 33076.
(c) KWM is a registered investment adviser as set forth in
Item 2(a) above. The principal business of KWM is purchasing,
holding and selling securities for investment purposes.
Mr. Kanen is the managing member of KWM.
(d) None of the Reporting Persons have, during the last five years,
been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors).
(e) None of the Reporting Persons have, during the last five years,
been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and, as a result of such proceeding,
was, or is subject to, a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating
activities subject to, Federal or State securities laws or finding
any violation with respect to such laws.
(f) KWM is a limited liability company organized under the laws
of the State of Florida. Mr. Kanen is a citizen of the United
States of America.
Item 3. Source or Amount of Funds or Other Consideration.
The Reporting Persons purchased the shares of Common Stock of the
Issuer in the ordinary course of business. The Common Stock of the
Issuer beneficially owned by KWM was acquired on behalf of the
investment advisory clients of KWM under discretionary authority
granted by KWM. In addition, Mr. Kanen purchased Common Stock of
the Issuer for his own account. Because substantially all of the
shares of Common Stock beneficially owned by KWM were acquired by
customers prior to entering into investment advisory agreements
with KWM, the aggregate amount of funds used to acquire the
Common Stock set forth in this Item 3 is to the best knowledge
of the Reporting Persons. In addition, none of the funds used
to purchase the Common Stock of the Issuer were provided through
borrowings of any nature.The aggregate amount of funds used
to purchase all of the Common Stock reported in this filing
totaled approximately $6,621,85.
Item 4. Purpose of Transaction.
The 66,896 shares of Common Stock beneficially owned by Mr. Kanen
for his own account were purchased and are held by Mr. Kanen for
investment purposes. Depending on market conditions and other
factors Mr. Kanen may deem relevant, Mr. Kanen may acquire
additional shares of the Common Stock, or dispose of the
shares of Common Stock, from time to time, in open market
or privately negotiated transactions.
The 2,647,669 shares beneficially owned by KWM were purchased
and are held for investment purposes on behalf of client accounts
over which KWM, together with Mr. Kanen, has sole discretionary
dispositive and voting power. Depending on market conditions
and other factors KWM may deem relevant, KWM may, on behalf of
client accounts as part of its ongoing portfolio management
process, acquire additional shares of the Common Stock, or
dispose of the shares of Common Stock, from time to time,
in open market or privately negotiated transactions.
KWM is the beneficial owner of 634,284 shares held for the
Philotimo Fund, LP. Depending on market conditions and
other factors KWM may deem relevant, KWM may, on behalf of
the fund as part of its ongoing portfolio management process,
acquire additional shares of the Common Stock,
or dispose of the shares of Common Stock, from time to time,
in open market or privately negotiated transactions.
Item 5. Interest in Securities of the Issuer.
(a)-(b) KWM may be deemed, for purposes of Rule 13d-3 under
the Securities Exchange Act of 1934, as amended, to be the
beneficial owner of an aggregate of 634,284 shares of Common
Stock which represent 0.99% of the Issuer's outstanding
shares of Common Stock.
(i) Sole power to vote or direct vote: 634,284
(ii) Shared power to vote or direct vote: 0
(iii) Sole power to dispose of or direct the disposition:
634,284
(iv) Shared power to dispose of or direct the disposition: 0
Mr. Kanen may be deemed, for purposes of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, to be the
beneficial owner of an aggregate of 3,281,953 shares of Common
Stock which represent 5% of the Issuer's outstanding shares
of Common Stock.
(i) Sole power to vote or direct vote: 66,896
(ii) Shared power to vote or direct vote: 3,231,953
(iii) Sole power to dispose of or direct the disposition:
3,281,953
(iv) Shared power to dispose of or direct the disposition: 0
For purposes of calculating the percentages set forth in this
Item 5, the number of shares of Common Stock outstanding is
64,437,073, as of the date of April 24, 2017.
KWM, in its role as investment manager to several customer
accounts (collectively, the "Accounts") to which it furnishes
investment advice, and Mr. Kanen, as the managing member of KWM,
may each be deemed to beneficially own shares of the Issuer's
Common Stock held in the Accounts.
In addition to those shares of Common Stock held in the Accounts
over which Mr. Kanen shares voting and/or dispositive power with
KWM, Mr. Kanen beneficially owns 66,896 shares of the Issuer's
Common Stock held for his own account.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
Except for the investment advisory agreements between the
Reporting Persons and the owners of the Accounts, there are
no contracts, arrangements, understandings or relationships
(legal or otherwise) between the Reporting Persons and any
other person with respect to any
securities of the Issuer.
Item 7. Material to Be Filed as Exhibits.
Exhibit A - Letter from KWM to the Issuer's Board of Directors,
April 26, 2017
SIGNATURE
After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in
this statement is true, complete and correct.
April 25, 2017
Date
KANEN WEALTH MANAGEMENT LLC
/s/ David L. Kanen
Signature
David L. Kanen, Managing Member
Name/Title
DAVID L. KANEN
/s/ David L. Kanen
Signature
EX-1
2
NWY_Letter.txt
LETTER FROM KWM TO NWY BOARD
KWM
Kanen Wealth Management, LLC Philotimo Fund, L.P.
5850 Coral Ridge Drive, Suite 309 Coral Springs, FL 33321
P: (631) 863-3100 F: (631) 863-3103
April 26, 2017
New York & Company 330 W. 34th St., 9th Floor New York, NY 10001
Dear NWY Board of Directors and Executive Management,
We are writing to highlight the losing record of the board of
directors and company management. We want to formally express
our view that the results of the company and the share price have
been awful. The status quo is unacceptable; only a few people at
the top are benefiting from representation, while minority
shareholders are suffering at the bottom.
Over the last five months, through private discussions with
company management and the board, we have attempted to
amicably effect positive change at New York and Company
and are deeply frustrated with management's lack of action
and results to date. Maybe you view our 5% stake, as well
as other larger shareholder's ownership, less significant
than Irving Place Capital's ownership and not worthy of a
seat at the table.
We intend to vigorously represent ourselves, and perhaps
other non-Irving Place shareholders feel the same way.
Let us summarize the scorecard of events over the past 4 years:
1) Stock performance on a relative basis - In July of 2013 our
stock was approximately $6.72 a share. Currently the stock trades
at approximately $1.80 a share; this represents approximately
a 73% decline in value. During the same timeframe our
benchmark, XRT (S&P Retail ETF), is up 6.87% before dividends.
Over this period of 73% decline in stock price, executive
management has received modest base salary increases.
2) Four years ago, in calendar 2013 (FY14), our gross margin (GM)
was 28.15%, our selling, general, and administration expenses
(SG&A) as a percentage of total sales were 27.82% leaving
us with an operating margin of 0.33%.
3) If we fast forward 4 years to calendar year 2016 (FY17), our
GM was 28.41% and SG&A as a percentage of total sales was 30.07%
leaving us with a negative operating margin of 1.66%.
1)
During the aforementioned 4-year period, management has guided
for an engagement in cost saving initiatives in SG&A and COGS to
maximize profits and expand margins. These initiatives, however,
have failed to translate to the company's earnings performance.
During this period, the companies operating margins declined from
33 bps to negative 166 bps. Unfortunately, the numbers speak for
themselves.
4) Below are some quotes from earnings calls dating back 4 years
that demonstrate management and the boards failure to execute:
a) March 2013 "In addition, buying and occupancy costs decreased
by 180 basis points as a percentage of net sales, largely due to
the company's continued focus on cost savings and reduced rent
expenses." "So it's really a combination of the 3 channels of our
business that will get us back to that peak operating margin in
the high single digits."
b) December 2014 - "In connection with our analysis, we recently
initiated an organizational realignment, which included the
elimination of numerous positions in our corporate offices.
As a result of the organizational changes made, we expect to
save $9 million to $10 million in expenses, $1.5 million of
which will be realized in the fourth quarter of fiscal year 2014."
c) August 2015 - "Turning to Project Excellence, our productivity
initiative.
As you know, our goal of Project Excellence is to improve our overall
operational efficiency and productivity. At the same time, increase
gross margin and mitigate expense increases and investments and
growth areas of our business. As previously announced, we
launched a comprehensive business reengineering project in
late 2014, and we now expect Project Excellence to produce savings
of approximately $30 million on an annualized basis, which has
been revised upward from our prior estimate of $20 million to
$25 million."
d) December 2015 - "So ultimately, our target goal over a longer
period of time is to get back to the high single digit operating
margins."
e) March 2016 - "From a bottom line benefit, we continue to expect
Project Excellence to produce an estimated $15 million in savings
in 2016 on top of the savings already achieved in 2015."
f) May 2016 - "We continue to be pleased with the success of
Project Excellence to date. And while we are excited that these
savings begin flowing through directly to our bottom line in 2016,
we still remain very focused on identifying new opportunities to
reduce costs, increase our speed to market, increase efficiency and
improve profitability."
Gross Margins are unacceptable!
Here are gross margins for some of New York & Co.'s peers:
* ASNA, 57.98%
* FRAN, 46.93%
* CATO, 37.07%
* CHS, 38.23%
* NWY at the bottom with a GM of 28.41%. Unacceptable!
Recommended Actions:
1) One new independent board member.
2) The formation of a special committee of independent directors
that represents minority shareholders (non-management, non-Irving
Place or have never worked at Irving Place) who's responsibility
will be to conduct an in-depth, comprehensive review of NWY's
operations for the purpose of maximizing gross profit and saving
on SG&A. Currently, there are 3 board members that work or have
worked at Irving Place Capital. We believe this would be an exercise
of "best practices" for corporate governance. This in-depth review
would satisfy and alleviate any concerns minority shareholders have
regarding their representation. It will also show us the company is
doing everything in its power to achieve its operating margin targets.
3) An enhanced capital allocation strategy that returns more
cash to shareholders. We would like to highlight the many positives
NWY has potential to build upon:
1) Our enterprise value is only $39 million.
2) Our enterprise value is only 4% of revenue.
3) The growth potential of Eva Mendes and Gabrielle Union.
4) The balance sheet has over $76 million in net cash ~ $1.20
per share.
5) Our revised private label credit card deal which should generate
$10-11 million in incremental high margin royalties this year.
6) A solid brand.
7) A majority of the leases are less than 1-2 years.
8) Tailwinds and opportunities from competitors closing stores.
9) The potential to drive gross margins higher (currently, well
below peer group).
1)
10) Loyal customer base with over 40% of sales coming from private
label credit card.
11) Dedicated employees at the store level.
In summary, we are calling for: board representation that gives
non-Irving Place Capital shareholders a true seat at the table;
formation of a special committee, which is truly independent,
that will conduct an in-depth review of operations to drive GM's
up and SG&A expenses down; and an enhanced capital allocation strategy.
A very wealthy shareholder at the top has been amply represented for
years; we believe minority shareholders deserve appropriate
representation!
Sincerely,
Dave Kanen
President, Portfolio Manager Kanen Wealth Management, LLC
Philotimo Fund, L.P.
P: (631) 863-3100
E: dkanen@kanenadvisory.com