Yesterday, New York & Co.’s
The 6.6% decline in comparable sales proved enough to send total sales down 1.5% to $270.1 million, but could improve as the year progresses -- management expects a low- to mid- negative single-digit range for the full year. It also plans to open 25 to 30 new stores during fiscal 2008, which should keep the top line steady until consumers start to see some relief from record gas and food prices.
Like every other retailer, management at New York & Co. is keeping a tight lid on inventory and undertaking various other cost controls. Its savvy expense management for the quarter boosted gross margins and also put operating cash flow firmly in positive territory. It’s also a key reason why management felt comfortable enough to boost its full-year earnings guidance range two pennies, to $0.44-$0.54.
That puts the forward P/E between 14 and 17 times earnings, in line with where rivals Ann Taylor
Speaking of the company’s value price tag, I think it’s worth noting that this discount could persist -- earnings results have been volatile in the past, so it may be prudent to see if first-quarter outperformance can persist for at least a few more quarters. There have also been concerns regarding management credibility, and it remains to be seen whether management can permanently reconnect with its core customer. A lower valuation definitely helps allay some of these concerns, but I'll be keeping a close eye on New York & Co. for any setbacks that could get in the way of the company’s improved performance.
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