The landscape continues to be challenging for many retailers despite improving economy, lower oil prices and healing labor markets.
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 about 500 stores in 43 states.
Disappointing Third Quarter Results
The company reported its Q3 results on December 2. While results were better compared to the same period last year, they fell short of Zacks Consensus Estimates.
Gross profit increased 180 basis points to 29% of net sales, versus the prior year gross margin rate of 27.2% of net sales, driven mainly by decreases in buying & occupancy costs and home office payroll resulting from the organizational realignment initiated as part of Project Excellence.
Adjusted operating loss was $2.6 million and represented a significant improvement from an adjusted loss of $6.7 million in the prior-year quarter.
Adjusted EPS (per Zacks calculations) was a negative $(0.05) per share, versus the Zacks Consensus Estimate of $0.00 per share. The company has missed in three out of four past quarters and with Zacks Earnings ESP (Expected Surprise Prediction) of a negative 9.1%, it is expected to miss again for the current quarter.
Downward Revisions
Analysts have been cutting their estimates for the company after quarterly results. Zacks Consensus Estimates for the current and next year are currently $0.00 per share and $0.22 per share respectively, down from $0.10 per share and $0.23 per share, 30 days ago. Declining estimates sent the stock back to Zacks Rank # 5.
The Bottom Line
Declining store traffic and highly promotional environment continue to present challenges for retailers. The company is going through a turnaround attempt and may succeed in the longer term if its efforts bear fruit and consumer spending finally picks up, but the short-term outlook remains cloudy.
The Zacks industry rank for “Retail-Apparel/Shoes” is currently 215 out of 265 (Bottom 19%).
Investors seeking exposure to the industry could look at Abercrombie (ANF) , which currently carries a Zacks Rank #1 (Strong Buy), with Zacks Style Scores of “A” each for Growth and Value.
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