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Bear of the Day: New York & Company (NWY)

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The landscape continues to be quite challenging for many retailers due to consumers’ rising preference for shopping online and at off-price stores.
Headquartered in New York City, New York & Company (NWY) is a specialty retailer of women's fashion apparel and accessories. The company's proprietary branded merchandise is sold exclusively through its national network of retail stores and online at its website. The Company operates 488 stores in 43 states.
Disappointing First Quarter Results and Downbeat Guidance
The retailer reported a loss of $5.7 million, or $0.09 per share, compared with a loss of $4.7 million, or $0.07 per share, a year ago and much worse than the Zacks Consensus Estimate for earnings of $0.04 per share. This was the third miss for the company in the past four quarters.
According to the CEO “we began the quarter with positive sales trends; however, as we entered the last week of March, we experienced a slowdown in traffic to our brick-and-mortar stores, that continued into April, and led to sales and profitability below our expectations.”
For the current quarter, the company expects net sales and comparable store sales to be flat to slightly negative and diluted earnings to be between $0.00 and $0.01 per share.
Shares plunged more than 40% the day after the report.
Falling Estimates
Analysts have been cutting their estimates for the company after quarterly results. Zacks Consensus Estimates for the current and next year are currently $0.03 per share and $0.16 per share respectively, sharply down from $0.28 per share and $0.39 per share, before the results. Declining estimates sent the stock back to Zacks Rank # 5.
The following chart shows negative earnings and price momentum for the company for the last several quarters:

The Bottom Line
Declining store traffic and highly promotional environment continue to present challenges for retailers. The company has been closing stores and also converting full prices stores to outlet stores. But so far their strategy and turnaround efforts have not been successful.
The Zacks industry rank for “Retail-Apparel/Shoes” is currently 241 out of 265 (Bottom 9%).
Investors seeking exposure to the industry could look at Children’s Place (PLCE), which currently carries a Zacks Rank #2 (Buy), with Zacks Style Scores of “A” each for Growth and Value.
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