New York & Co. Q3 sales up, will exit JasmineSola business
Specialty apparel chain New York & Co., Inc. (NYSE: NWY) reported an increase in third-quarter sales this morning and said that it expects EPS to be at the high end of its previously issued guidance range. Additionally, the retailer said it will jettison its JasmineSola chain by the end of the fourth quarter
The information propped shares up 5.02%, or $0.32, to $6.70 at 10:37 a.m. ET. Shares of New York & Co. have been trading in the range of $5.69 to $16.20 for the past 52 weeks.
Consolidated net sales (including JasmineSola) for the three months ended Nov. 3 increased 5.9% to $287 million, compared with $270.9 million for third quarter of 2006. Sales clocked right in line with the $287.59 million sales figure nine analysts polled by Thomson Financial were on average forecasting.
While net sales increased, comparable store sales for the New York & Co. brand decreased 4.8%, compared with a comparable store sales increase of 0.6% for same quarter in 2006.
Net sales excluding the JasmineSola unit, increased 6.3% to $276.4 million for the quarter, compared with $260 million for the third quarter of 2006.
JasmineSola, which will be pitched next quarter, had net sales of $10.6 million for the third quarter, a 2.9% decline over the $10.9 million earned in the same quarter last quarter.
“The decision [to exit the JasmineSola business] allows the company to refocus on its core business,” Brean Murray & Carret analyst Eric Beder said. “I thought it was a key growth vehicle with significant growth potential, but they couldn’t get it to work. The Street seems to be cheering for the decision.”
New York & Co. also further specified earnings guidance for the third quarter stating that it currently expects earnings per share to be at the high end of its previously issued guidance range of $0.03 to $0.07 for the third quarter and within its previously issued guidance of $0.47 to $0.58 for the full year.
In the third quarter last year, the company clocked earnings of $0.16 per share. The consensus of eleven analysts polled by Thomson Financial is for earnings of $0.04 per share for the fourth quarter and earnings of $0.38 for the full year.
The company further noted that it expects the JasmineSola brand operating loss and exit costs to be within previously issued guidance ranges.
“New York & Co. is feeling the pain from the economy, as their customer is being pinched by higher gas prices,” Beder said. “They are going to continue to feel the pain in the fourth quarter along with other retailers.”
Beder is projecting earnings of $0.28 for the fourth quarter and $0.47 for the full fiscal year. Eleven analysts surveyed by Thomson Financial are projecting earnings for the fourth quarter of $0.26 per share and earnings of $0.38 per share for the full fiscal year. Last year the company had earnings of $0.40 per share.
Beder, who currently has a “hold” on the stock, maintains a conservative outlook for 2008. The analyst forecasts a turnaround with 15% EPS growth, but says that growth hinges on three factors, including, reducing inventory, improving product offering and waiting for the economy to heal. “They are already improving their product offering,” Beder said. “They just need to get their customers to buy more at higher margins and that’s going to hinge on the economy.”
New York & Co. (NWY) said it plans to report third quarter results on Nov. 20.
