Shares of New York & Company Inc. tumbled 22.1 percent to $4.13 on Thursday after the women’s apparel retailer projected that growing promotional pressures would drive its second-quarter loss higher than last year’s level.

 

Still, the New York-based firm was able to meet analysts’ first-quarter expectations, but it did so by increasing promotions during the quarter and sacrificing margins.

 

For the period ended May 1, the company posted a net loss of $4.9 million, or 8 cents a diluted share, the same as in the year-ago quarter. Net sales edged up 1.8 percent to $237 million from $232.9 million, a year earlier. Analysts were looking for a loss of 8 cents on revenue of $233.7 million, Yahoo said.

 

According to the retailer, comparable-store sales rose 2.9 percent, but gross margin declined to 24.7 percent of sales from 25.3 percent a year ago.

 

Explaining on the company conference call that the firm’s customers “remain selective in their purchasing and are consistently looking for a deal,” Richard Crystal, chairman and chief executive officer, attributed the margin decline to an increase in promotional activity.

 

He noted a “softening of business trends” since the beginning of May and pointed out that in order to “drive top-line sales throughout the second quarter, higher levels of promotional activity might be needed to increase traffic and conversion.”

 

With promotional activity now expected to accelerate, second-quarter losses are expected to expand beyond the 8-cent net loss incurred in the year-ago period as margins further deteriorate. Comps, however, are projected to improve, Crystal said.

 

Analysts had expected a second-quarter loss of 5 cents on sales of $252.4 million.

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