By and  on January 11, 2010

New York & Co. said Monday it plans to enter the outlet channel with 20 to 25 stores this year.

The outlets initially will sell the same merchandise as the company’s current stores, but eventually will include exclusive merchandise produced specifically for them. The retailer said it based its decision to enter the outlet channel on favorable responses to tests conducted last year.

“We tested this concept during this past year with great success,” Richard Crystal, chairman and chief executive officer, said Monday at the Cowen & Co. Consumer Conference. “It fits our ongoing goal to meet the customer’s needs.”

Initiated as part of a pop-up strategy, the outlet concept was expanded based on what Crystal described as “significant growth potential” and “great margins.”

The company expects its financial performance to improve during the first half of this year despite infrastructure costs and preopening expenses associated with the outlets that are anticipated to negatively impact first-half results.

The retailer reaffirmed its guidance of fourth-quarter earnings of 4 cents to 6 cents a diluted share, excluding charges, upon completion of the three-month period on Jan. 30. New York & Co. said it based its guidance partly on comparable-store results for holiday that “improved slightly” over those of its third quarter, when comps declined 8.4 percent.

Asked at the conference if consumers were returning to stores, Crystal said: “I’d be hard-pressed to say I have a great deal of confidence.”

The firm expects positive cash flow during the fourth quarter and a cash balance of about $70 million at the end of the fiscal year. In addition, the company said it’s on track to achieve $30 million in pretax cost savings in the current year from restructuring and expense reductions.

As of Oct. 31, New York & Co. operated 592 stores in 44 states and an e-commerce site at nyandcompany.com.

The retailer’s shares Monday closed at $4.45, up 3 cents, or 0.7 percent.

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