New York & Company: Zacks’ Bear of the Day Play

New York & Company, Inc. (NWYFree Report) is struggling to stay alive in a tough apparel retail environment. This Zacks Rank #5 (Strong Sell) expects to report negative same store sales for the important holiday quarter.

New York & Company operates 483 stores in 41 states specializing in women’s fashion apparel and accessories. It also operates a website at nyandcompany.com.

Disappointing Fourth Quarter Results

On Jan 10, New York & Company provided preliminary results for its holiday quarter and the fourth quarter. For the 9 weeks ending on Dec 31, comparable store sales fell about 1.7%.

For the full quarter, sales were expected to be down in the low single-digit percentage range.

That’s an operating loss of $2.5 million to a loss of $4.5 million.

The company blamed soft traffic and the highly promotional environment. 70% off sales were not uncommon at many apparel retailers during the holiday period.

The bright spots continue to be the success of the Eva Mendes Collection and dresses. But it saw weakness in woven and knit tops, denim and jewelry. Its eCommerce business is also growing.

It believes that fourth quarter markdowns will allow it to start the spring season “clean.”

Can It Survive?

New York & Company is heavily mall based. Its usually located next to or near Express (EXPRFree Report) and others like Wet Seal and the Limited, both of which are in financial trouble. The Limited, which also specializes in women’s apparel and accessories, recently closed all of its stores and said it would sell only online.

New York & Company said it had $80 million cash on hand at the end of the year versus $60 million a year ago.

But earnings continue to drop. It lost $0.04 a year last year and analysts expect it to lose another $0.14 in fiscal 2016.

One estimate has been lowered for fiscal 2016 in the last 30 days.

Shares Sink Over the Last 5 Years

It’s not a good time to own the apparel retailers and New York & Company is no exception.

If you look at the 5-year chart, it doesn’t look real positive for investors.

There’s nothing on the horizon that suggests the story is about to get better for these apparel specialty retailers.

If you must own a company in this space, you might want to consider going bigger with Gap (GPSFree Report) . It’s a Zacks Rank #2 (Buy) and has some brands, like Athleta, in the athleisure area, which are performing well.

So Where Are the Profitable Trades?

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Express, Inc. (EXPR) – free report >>

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