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Stormy Outlook Hurts NY & Co. Stock Last Week

Shares of New York & Company Inc. lost over a quarter of their value last week after the firm disappointed investors with projections of second-quarter loss.

Shares of New York & Company Inc. lost more than a quarter of their value over two days last week after the firm disappointed investors with projections of a second-quarter loss.

The slide came despite the New York-based women’s apparel retailer’s report of a first-quarter loss that matched consensus estimates. The net loss was $4.9 million, or 8 cents a diluted share, against net income of $6.7 million, or 11 cents, in the year-ago period.

Net sales in the three months ended May 2 shrank 13.8 percent to $232.9 million as comparable-store sales slid 15 percent. Gross margin tumbled to 25.3 percent of sales from 31.1 percent in the year-ago quarter. Inventory fell about 8 percent per store, and selling, general and administrative expenses declined 8.3 percent.

Richard Crystal, chairman and chief executive officer, said the company has maintained strict management of its business, and planned “conservatively for the spring season, based upon consumers’ ongoing preference toward buying on discount versus regular price,” which has resulted in “tempered” expectations for the second quarter.

Accordingly, the company expects a second-quarter loss similar to the one logged in the first quarter, compared with the 7-cent profit analysts were anticipating. The projection contributed to a 27.6 percent erosion of the company’s shares Thursday, to $3.31. They finished unchanged on Friday.

During 2009, the retailer said it anticipated opening three stores, remodeling four units and closing between 10 and 15 stores.

Investors were kinder to Dress Barn Inc., which substantially raised earnings guidance after reporting a strong reaction to its spring assortment late Thursday.

Net income for the third quarter, ended April 25, fell 4.5 percent to $23.9 million, or 39 cents a diluted share, but was 8 cents above consensus estimates. Year-ago profits were $24.9 million, or 39 cents.

Sales rose 6.6 percent to $375.7 million while comps moved up 3 percent. By division, sales for Dress Barn stores gained 3 percent to $223.2 million as comps rose 2 percent. Sales at Maurices Stores jumped 12 percent to $152.5 million, while same-store sales gained 5 percent.

The company raised EPS guidance for the full year to between $1 and $1.05, up from its previous range of 70 to 85 cents. On Friday, shares of the Suffern, N.Y.-based retailer, which operates 1,549 stores under its two nameplates, advanced 1.4 percent to $15.05.

For the nine months, income declined 16.8 percent to $43.3 million, or 70 cents a diluted share, as sales gained 3.1 percent to $1.1 billion.

“Our customer has responded positively to our spring merchandise and enabled us to generate a comparable-store sales gain despite the ongoing challenging market environment,” said David R. Jaffe, president and ceo.