NEW YORK — New York & Company Inc., once known as Lerner New York, has eliminated any trace of its former moribund self.
Now it’s planning to open outlets for the first time, and roll out at least 50 regular-price stores annually for the next few years, including sites in Manhattan where the chain operates two. The moderate-priced chain is also playing up accessories through a “side-by-side” dual-store format launched November 2003.
According to chairman and chief executive Richard P. Crystal, the 490-unit, $1.04 billion company could grow to 800 stores and 100 outlets — and that doesn’t include the vision for Jasmine, the upscale contemporary 14-unit retailer purchased this week and operating stores called JasmineSola and Luisa Luisa.
Crystal declined to discuss specific growth plans for Jasmine, or its price tag, but he did say why he thinks his New York & Co. chain is ready to ramp up growth. “There is no trace of Lerner’s anymore,” said Crystal, who has been running New York & Co. since 1996 and before that ran Macy’s product development program. “Lerner’s was a big ship — a 900-store business doing $1 billion in sales. It took a long time to transition, but the business wasn’t totally broken or losing buckets of money. It was marginally profitable, but it wasn’t moving.”
Until now. “We’re expanding the business. Remodels are getting good results, and we are excited about what the accessory business provides for us.”
In 2002, Limited Brands sold Lerner New York to an investor group led by Crystal and Bear Stearns Merchant Banking for a total of $153.5 million in cash and notes. The company built teams for design, sourcing and production, downsized its store base and, as Crystal said, “moved from a store with brands to a brand that has stores.” In 1996, stores averaged $1 million in sales. “Now we are at $2.2 million.” All the Lerner nameplates were gone by July 2004.
The Boston-based Jasmine was New York & Co.’s first acquisition. “This is a good strategic fit,” Crystal said. Jasmine offers “a price point and customer base that doesn’t compete with New York & Co.” Asked about buying another business, Crystal said, “We are not in the market, but we always look for opportunities. Investment bankers call constantly. Our main thrust is to grow New York & Co. right now. We have planned 50 to 60 new stores annually over the next three to four years, and we are renovating 40 to 50 every year.” He described the renovations as “full scale,” costing 80 to 90 percent of the cost of a new store. Asked if there was a ceiling on the store count, he replied, “We have identified somewhere north of 800 stores.”One high-profile location is set for mid-November, a 14,700-square-foot store at 715 Lexington Avenue here, on the southeast corner of 58th Street, where a retail project is under construction. The store will have 3,800 square feet on the ground floor, 5,900 square feet on the second and 5,000 square feet on the lower level. “This is a no-brainer for New York & Co.,” said Robert K. Futterman, chairman and ceo of the real estate firm bearing his name, which completed the lease and is helping New York & Co. find additional sites. “The area has really settled in as a major shopping thoroughfare,” with the former Alexander’s site transformed into the Bloomberg headquarters, as well a site for a big H&M store, other retailers and condos. Bloomingdale’s, Zara, Levi’s and Diesel are nearby. “Crystal has a clear strategy” for growing New York & Co. in Manhattan, Futterman added. “He’s definitely interested in 34th Street, Broadway in SoHo, and perhaps Fifth Avenue.”
“I wouldn’t say we are obsessed about Manhattan,” Crystal said. “It’s part of our expansion program. If a store comes along we think is viable, we’re interested.” The chain’s other Manhattan stores are on Nassau Street downtown and uptown on 181st Street.
Crystal is also creating an outlet division, potentially with 100 units. The first opened two weeks ago in the Great Lakes Crossing center in Auburn Hills, Mich. Other outlets could be “hybrids” selling regular-priced goods and merchandise to be liquidated, he said.
Last year, New York & Co. began opening shops selling accessories “side by side” to the New York & Co. sportswear stores. There will be 58 by yearend. Crystal said the format generates more browsing, highlights accessories better than the standard format selling a mix of products and can be more productive. Side-by-side stores have a total of 6,500 square feet, whereas standard stores generally have about 5,500 square feet.
New York & Co. does best-selling stretch shirts, priced $24.50 to $39.50; cropped pants, $24.50 to $39.50; active bottoms and tops from $29.50 to $39.50, and targets women 25 and 45 with household incomes from $40,000 to $75,000.Last year, the company posted net earnings of $18.1 million, against earnings of $25.03 million in 2003. However, in the first quarter this year, net income rose 65.4 percent to $21.5 million.
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