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Zack’s Bear of the Day: New York & Company

The landscape continues to be challenging for many retailers despite improving economy, lower oil prices and healing labor markets. One such specialty retailer saw its share price plunge by more than 40% in 2014 but there are still no signs of a turnaround.
New York & Company (NYSE: NWY) is a specialty retailer of women’s fashion apparel and accessories. The company’s proprietary branded merchandise is sold exclusively through its national network of retail stores and online at its website. The Company operates about 500 stores in 43 states.
Disappointing Third Quarter Results
The company reported its Q3 ended November 1, 2014, results on December 3. Net sales for the quarter were $210 million, down from $217 million in the prior year quarter. Adjusted loss was $0.11 per share, slightly better than the Zacks Consensus Estimate for a loss of $0.12 per share. We may add that most analysts had adjusted their estimates downwards after the company reported its preliminary results and updated the outlook for the third quarter in November.
According to the management, top and bottom line results were impacted by shipping delays at West Coast ports, longer lead times, increased cost of goods diverted to the East Coast as part of their contingency plan and increased air freight for critical goods.
For the fourth quarter, the company expects net sales and comparable store sales to be flat to down in the low single-digit percentage versus last year.
Downward Revisions
Analysts have been cutting their estimates for the company after quarterly results and lowered guidance. Zacks Consensus Estimates for the current and next year are currently ($0.12) per share and $0.08 per share respectively, down from $0.06 per share and $0.22 per share, 60 days ago. Declining estimates sent the stock back to Zacks Rank # 5 last month.
The Bottom Line
Declining store traffic and highly promotional environment continue to present challenges for retailers. The Zacks industry rank for “Retail-Apparel/Shoes” is currently 174 out of 265 (Bottom 34%).
Investors seeking exposure to the industry could look at Shoe Carnival, which currently carries a Zacks Rank #1 (Strong Buy). 

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