Despite a 71.4 percent decrease in fourth-quarter profits, shares of New York & Company Inc. soared because investors liked the retailer’s business plan for 2008.

The company said it would reduce inventory and improve on its fashion offerings. Investors sent shares of the retailer up 20.68 percent to close at $5.72 in trading Thursday on the Big Board.

For the three months ended Feb. 2, fourth-quarter earnings fell to $6.9 million, or 11 cents a diluted share, from $24 million, or 40 cents, in the year-ago period. Sales fell 4.7 percent to $359.4 million from $377.3 million, while total same-store sales fell 3.5 percent.

For the full-year period, the company posted a loss of $4.9 million, or 8 cents a diluted share, against profits of $46.2 million, or 77 cents, last year. Sales grew 3.6 percent to $1.19 billion from $1.15 billion.

The company ended the year with $73.7 million in cash and reduced its debt.

“We continue to see strength in our wear-to-work categories. We began to see improved product offerings in our accessory assortment, and our e-commerce business continued to grow and exceed plans. Finally, we are very disciplined in managing our inventory and expenses,” Richard Crystal, chairman and chief executive officer, said.

Increased fashion offerings in the wear-to-work and dress businesses resulted in positive comps for the year, while the launch of the company’s e-commerce site brought in $22 million in sales during the first full year of operation.

“The company is pleased with their March floor set and are experiencing an upswing in accessories, which had been killing them in the past.” Mark Montagna, retail analyst at C.L. King & Associates, said. “I didn’t see any negative trends, that in itself is a positive.”

As of Feb. 2 the company completed the closure of its JasmineSola stores. The chain posted a loss of $4.3 million, or 7 cents a diluted share, in the fourth quarter.

New York & Co. forecast negative low- to mid-single-digit comps for the first quarter, and earnings in the range of 4 to 8 cents a diluted share. For the year the company expects earnings between 42 cents and 52 cents a diluted share.