• Q4 earnings down 34.3%
  • Gross margin at 28.4%
  • Sales fall 9%

Specialty apparel chain New York & Co has said it expects lower sales and gross margin in its current quarter as it revealed a 34.3% drop in fourth-quarter earnings.

In the three months ended 1 February, earnings dropped to US$6.9m from $10.5m a year earlier. Last year's quarter included an extra week and a $4.3m favorable adjustment reflecting breakage income from unused merchandise credits.

Gross margin increased 150 basis points to 28.4% from 26.9% a year earlier.

Net sales, however, were down 9% to $271m versus revenues of $291.8m in the year ago period. Comparable store sales edged up 1.2%.

CEO Gregory Scott said: "These results marked the eighth consecutive quarter of improved operating performance versus prior year periods, on an adjusted basis. We also continue to be pleased with our growth initiatives in e-commerce and outlets. We ended the year with a strong balance sheet, which positions us well as we begin 2014."

Nonetheless, the company said its expectations for the first quarter reflect "softer than anticipated business" in February due to a reduction in traffic to its stores driven by a combination of factors including unfavorable weather conditions versus last year.

As a result, the company has guided for net sales to decrease slightly versus last year and comparable store sales to remain flat versus the prior year period. Gross margin is expected to decline slightly.

In a separate announcement, the company said it has signed a 16-year lease to relocate its corporate headquarters to West 34th Street in New York City by the end of 2014.