New York & Company, Inc. (NWY) was founded in 1918, is a leading specialty retailer of fashionoriented, moderately-priced women’s apparel, serving customers for over 90 years. The retailer’s proprietary branded New York & Co merchandise is sold exclusively through its national network of New York & Company retail stores. The company operates over 580 retail stores in 44 states. Its target customers are fashion-conscious, value-sensitive women between the ages of 25 and 45.

We are initiating coverage of New York & Co. with a Hold rating and six-month target price of $2.50. The company’s sales trends worsened throughout fiscal 2008, and we expect its sales trends to remain weak for the next several quarters.

To better deal with a softer consumer spending environment, the company announced a restructuring and cost reduction plan. That plan is expected to reduce operating costs by $30 million in 2009 and $175 million over the next 5 years. While that is a step in the right direction, it does very little to help spur the company’s sales growth which is the real problem at this point.

Its stock is trading at roughly 12.5x our fiscal 2010 EPS estimate. That valuation is not exactly cheap when compared to other retail stocks.

Read the full analyst report on NWY

“NWY” Free Stock Analysis: Buy? Sell? Hold?
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