Most U.S. retailers complained weaker-than-expected summer sales this year, hurt by a delayed back-to-school shopping season and high gas prices that cut consumers' trips to the mall.
New York & Co. President and Chief Financial Officer Ron Ristau said the company expects to earn between a penny and six cents a share in the third quarter, far less than the Street's range of 10 to 18 cents.
"It's a general malaise in all the shopping categories," says Brean Murray Carret & Co. analyst Eric Beder. "Their core customer is very economically affected right now, and New York & Co. has had to be more aggressive in discounting all types of merchandise." Neely Tamminga, an analyst with Piper Jaffray, called the new guidance worse than expected and wrote in a Thursday note that recovery may not be in the cards any time soon. "Given that this is the eighth downward earnings revision that we have made to our estimates thus far [this year], we recognize that the company is clearly in a show-me situation," she wrote. But customers are starting to like what New York is selling, Beder said in a Wednesday report on a recent national retail survey.
"New York & Co. has received rave reviews for its pant offerings, and the new striped tops have also received a thumbs-up from customers. That said, the weak accessories offerings continue to be a drag and the company remains forced to drive traffic with significant storewide sales." He said its current "buy one get one 50% off" sale on virtually all new fall apparel has driven shopping traffic, but not spending, as customers remain "somewhat economically pinched."
