New York & Co. establishes new low on 46% decline in Q2 net income
Shares of specialty apparel chain New York & Company, Inc. (NYSE: NWY) have tumbled to a new 52-week low, leading the small-cap percentage losers today, after reporting a 46% decrease in its second quarter bottom line and lowering full year guidance.
Shares of New York & Co. fell 15.3%, or $1.20, to a new 52-week low of $6.63 in mid-day trading. The specialty retailer had been trading in a band of $ 7.01 to $16.20 for the past year.
For the three months ended August 4, the women’s clothing line recorded net income of $3.5 million, or $0.06 per diluted share, including of a loss of $0.03 per diluted share in the company’s upscale and contemporary apparel, footwear and accessories brand, JasmineSola. The current quarter’s bottom line represents a 46% decline in net income from the second quarter of 2006 of $6.5 million, or $0.11 per diluted share, including a loss of $0.01 per diluted share in its JasmineSola brand. Ten analysts polled by Thomson Financial were, on average, expecting earnings of $0.05 per share.
“The problem here is that the core customer isn’t shopping,” said Brean Murray analyst Eric Beder. “The core customer is the middle to lower income women and the store cannot get that customer to shop. She’s shopping for anyone but herself.”
Beder said that to improve its current situation, the retailer will have to drive traffic through promotions and discounting.
While profit declined, New York & Co.’s top line increased 11.2% to $294.4 million, compared with revenue of $264.9 million in the second quarter of fiscal year 2006. New York & Co.’s revenues clocked in slightly above the consensus of eight analysts polled by Thomson Financial of $293.86 million.
Comparable store sales for the second quarter increased 4.7%, compared with a 4.0% decrease in the second quarter last year.
New York & Co. also downwardly revised guidance for the full fiscal year 2007 and initiated guidance for the third fiscal quarter to reflect a cautious sales and margin outlook based on uncertainty in consumer traffic and spending.
For the full fiscal year 2007, ending January 2008, the company said it now forecasts earnings per diluted share in the range of $0.32 to $0.45, compared with previous guidance in the range of $0.73 to $0.80. Eight analysts polled by Thomson Financial anticipated, on average, earnings of $0.58 per share. Last year New York & Co. booked earnings of $0.77 per share.
Beder, who currently has a “hold” rating on the stock, has revised earnings downward for fiscal year 2007 within the guidance range the company disclosed this morning; however, he noted that he has not published his numbers yet.
For the third quarter of fiscal year 2007, ending October 2207, New York & Co. said it expects earnings per diluted share in to be in the range of $0.01 to $0.06. 10 analysts surveyed by Thomson Financial expect, on average, earnings of $0.13 per share.
