Dude, are you [golf word]-ing this up?

That Walter Sobchak special, from the "Ringer" scene in The Big Lebowski, was the first thing to cross my mind this morning when I read the latest news release from New York & Co. (NYSE:NWY).

Here's the quick version: "Christine Munnelly has been appointed to the position of Executive Vice President responsible for Merchandising, Visual Merchandising, and Planning for JasmineSola."

Now, look past the whole executive-promotion thing and read down a bit further. Pay special attention to what's between the lines regarding the prior JasmineSola team of Luciano and Stacey Manganella. See how now they're both gone? See the little line about litigation? (This is the first time that's been mentioned in any filing I can dig up, by the way.)

Still a bit unclear? Let me give you my translation.

"We had to promote someone to be in charge of our new little growth engine just one year after we bought it. Turns out, we can't work with those dynamic founders for whom we had so much praise only 12 months back, and things are in fact so bad that we're gonna take this to court. But hey, look over there! Something shiny!"

If you remember back to July 2005, the experience and fashion-retailing savvy of the Manganellas was one of the primary assets of the Jasmine acquisition, at least going by what New York & Co.'s management said at the time:

"Luciano Manganella, Jasmine Company, Inc.'s ("JasmineSola") President and Founder and architect of its success, together with Stacey Manganella, JasmineSola's Executive Vice President, Merchandising, will continue to lead the JasmineSola organization and implement its growth initiatives. ... [W]e are pleased to be able to participate in this growth and equally delighted to welcome Luciano and Stacey Manganella and the entire JasmineSola team to our company. The opportunity to acquire the caliber of talent of the JasmineSola team was a major factor for us when we evaluated this acquisition."

A year later, and they're in court?

Dude, are you [golf word]-ing this up?

That's a valid fear for shareholders to harbor, because New York & Co. has proved it has a great capacity for screwing up big time, with month after month of disastrous sales and fashion mishaps. Management at this company has clearly not performed well, and the stock has tanked in response.

Understand that JasmineSola is a small part of revenues, and so even a complete disaster here wouldn't condemn the overall finances. But the speed at which things seem to have gone so wrong makes me wonder ... as does the pretty thick sugarcoating that management put on it.

It's little comfort for those of us who hold stubs that have taken a 50% haircut, but at least we can say there's already a world of pessimism priced in. The company's enterprise value is half of its revenues. You pay more than 2.5 times revenue for premium goods like Chico's FAS (NYSE:CHS) -- which is five times more than you'd pay for New York & Co. -- and you need to shell out more than two times sales for unproven J. Crew (NYSE:JCG). Even mediocre Talbots (NYSE:TLB) trades for 0.8 times sales.

Does that make it a buy? Even the ugliest pig in the pen is worth something, am I right? I've made good money in retail turnarounds such as Guess? (NYSE:GES) and Ann Taylor (NYSE:ANN), which I sold far too early. But these were companies I bought when the turnarounds were clearly in sight.

New York & Co. looks more like Gap (NYSE:GPS) to me: Buy now, and you're banking on something good happening without any evidence that it's on the way. And in New York & Co.'s case, the irreconcilable differences with JasmineSola make me wonder how hard-headed a crowd we have in the corner offices.

So, fellow Fool, invest in this Motley Fool Hidden Gems pick with care. It's cheap, but it's ugly. Sometimes, things don't turn ever around, but on the other hand, even as frumpy a flop as J. Jill eventually found a suitor. There's a lot of money out there looking for a place to roost.

New York & Co. is one of those Motley Fool Hidden Gems recommendations that has done the down thing. For the most part, they do the up thing, outpacing the S&P 500 by 18 percentage points. A free trial of this small-cap service is just a click away.

Seth Jayson tries not to fret about his sunk costs. At the time of publication, he had shares of New York & Co. and Guess? but no positions in any other company mentioned. View his stock holdings and Fool profile here. Gap is a Motley Fool Stock Advisor and Inside Value recommendation. Fool rules are here.