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Analyst Blog

On May 28, 2013, Zacks Investment Research upgraded New York & Company, Inc. (NWY - Snapshot Report) to a Zacks Rank #1 (Strong Buy). Shares of this specialty retailer of women's fashion attire and accessories have amassed an impressive year-to-date return of 49.5%.

Why the Upgrade?

New York & Company has been witnessing rising earnings estimates owing to impressive first-quarter fiscal 2013 results, on the back of improved margins and tax benefits associated to the reversal of an uncertain tax position.

The company declared strong bottom-line results on May 23, 2013, wherein earnings of 2 cents a share fared better than the Zacks Consensus Estimated loss of 7 cents as well as from the comparable year-ago quarter’s break-even earnings.

New York & Company, which primarily competes with Gap Inc. (GPS - Analyst Report) and Express Inc. (EXPR - Snapshot Report), outperformed the Zacks Consensus Estimate in 4 straight quarters by an average of 51.1%. The long-term expected earnings growth rate for the stock is 20.0%.

Net sales remained almost flat year-over-year at $227.5 million. Gross profit for the quarter increased 2.8% to $66.3 million, whereas gross margin expanded 90 basis points to 29.2%, benefiting from increased markups from sourcing efficiencies and lower product costs.

The Zacks Consensus Estimated loss for second-quarter fiscal 2013 improved 40% to 3 cents per share from a loss of 5 cents estimated 7 days ago. For fiscal 2013, the Zacks Consensus Estimate stands at 6 cents per share compared with a loss per share of 2 cents estimated 7 days ago.

Other Stocks to Consider

Other well performing stocks in the non-food retail, wholesale sector include Bon-Ton Stores Inc. (BONT) carrying a Zacks Rank #1 (Strong Buy). Shares of this department store chain retailer have yielded a year-to-date return of 75.5%.

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