By  on June 16, 2010

New York & Company Inc.’s top two design executives have abruptly quit.

According to sources, Marie Holman-Rao, chief design officer, and Anne-Charlotte Windal, senior vice president and general manager of design, both resigned this week. A search for their successors is expected to begin immediately. In the meantime, Greg Scott, president, will lead the design and visual teams.

Sources said the departures might be related to Scott joining the organization on June 1. Richard Crystal, chairman and chief executive officer, could not be reached for comment Wednesday. Windal is expected to stay at N.Y. & Co. for awhile until the company rebuilds the design team.

The departures compound the challenges confronting the $1 billion specialty chain. Due to inventory buildups and some fashion misses, the company expects to report a second-quarter loss surpassing the year-ago second-quarter loss of $4.8 million. The performance has also been pulling down the stock price, which closed down 6.7 percent Wednesday on the New York Stock Exchange to $2.65. Its 52-week high is $6.53. The retailer needs to sharpen its image selling sexy, modern and moderate price apparel and accessories targeting women 25 to 45.

Scott, a former ceo of Bebe Stores Inc. steeped in specialty store experience and no stranger to controversy, is slated to succeed Crystal, who is retiring Feb. 11. Scott resigned as Bebe’s ceo in January 2009 amid concerns over some of the strategies he implemented and the company’s performance. When he joined Bebe, The Wet Seal Inc. sued him for breach of contract. Scott resigned as president of Wet Seal’s Arden B. division a month before being hired at Bebe. The suit was dismissed.

New York & Co. operates about 600 stores in 44 states and an e-commerce site, and is 51 percent owned by Irving Place Capital.

It won’t be easy to find someone of the caliber of Holman-Rao, who was with New York & Co. for about two years and previously served as president of Limited Design Services, a unit of Limited Brands Inc., and president of Banana Republic.

Last month, another design executive at New York & Co., Sofie Pavitt, left to join the Gap brand of Gap Inc. and work with Patrick Robinson, executive vice president of design. The news on Pavitt, an accessories designer, prompted speculation that Gap was starting an accessories chain. However, Gap firmly denied the rumors.

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