NEW YORK — New York & Co. Inc.’s first-quarter profits were pulled down by weaker sales and gross margin, but the company anticipates that better balanced merchandising efforts will attract shoppers.
The specialty retailer, based here, said Thursday that net income dropped to $6.1 million, or 10 cents a diluted share, from $21.5 million, or 38 cents, in the same period last year on sales that declined 1.1 percent to $267.1 million from $270 million. Results were 1 cent shy of Wall Street analysts’ estimates, according to Thomson Financial.
The gross margin rate declined to 29.6 from 36.4 in the previous year. Operating income during the quarter fell to $10.6 million from $37.4 million last year.
Richard P. Crystal, chairman and chief executive officer, said in a statement that results “were well below our original expectations. While April sales rebounded from the double-digit comparable-sales declines we experienced during February and March, we were unable to make up the sales and margin shortfalls created during the first nine weeks of the quarter.”
Crystal quickly added that as the company moves forward the “assortments are better balanced with a mix of new fashion and core basics” that “will resonate better with our customers.”
The company said same-store sales for the second quarter are projected to be in the “low single-digit negative against the prior year.”
“During the latter part of the year, we expect to benefit from the changes in our design and merchandising teams, which we feel will improve our future offerings,” Crystal added.
For the second quarter, net income was estimated to be in the range of $4.6 million and $7 million, which compares with earnings of $12.3 million in the prior year. Diluted earnings per share were projected at 8 cents to 12 cents, which compares with 21 cents last year.
Net sales are expected to rise between 6 percent and 8 percent. “This estimate reflects comparable-store sales ranging from negative 1 percent to negative 3 percent,” the company said.
For the full year, the retailer cut its EPS estimate to a range of 70 cents to 80 cents from $1.06 to $1.16 on sales of $1.2 billion to $1.22 billion, which is below a previous estimate of $1.24 billion to $1.25 billion.
Piper Jaffray & Co. analyst Neely Tamminga said in a research note that the retailer “continues to be challenged on the macro level with wallet-crimping gas prices as well as on the company-level with an inconsistent merchandise offering.”
“While select casual offerings [such as the linen assortment] did not perform as expected in the first quarter, we are encouraged that NY & Co. is seeing an improvement in the customer reception to new silhouettes such as skinny pants, cropped pants and select dress sku’s,” Tamminga added. “We believe that this is consistent with some of the emerging trends we are currently seeing across the women’s apparel retail industry.”