Spinoff New York & Co.: "East Coast Girls Are Hip..."

Includes: CSD, NWY
by: Andrew Corn

The New York City based New York & Company Inc. (NYSE:NWY) is a retail company noted for its popular clothing for women. It is a constituent in the Clear Spin-Off Index which is licensed to Claymore for the popular ETF whose symbol is CSD. I am CEO and founder of Clear Indexes, the publisher of the index.

NWY operates over 560 stores in 45 states and is still growing from the first store opened in 1918. Targeting women from the ages of 25 to 45, the company strives to provide high quality, fashionable clothing at a price that is affordable to most. NWY was spun-off from Limited Brands and has now established itself as a dynamic public corporation.

The company engages in the design, marketing and sales of wear-to-work and casual apparel. NWY primarily creates and sells pants, jackets, knit tops, blouses, sweaters, denim, t-shirts, activewear, handbags and jewelry. By positioning themselves as a high end brand, the company is able to offer seemingly exclusive clothing at prices that are competitive with department stores with less brand equity. This has proven a reliable formula for success and growth in the company.

NWY has become a trendsetter building its franchise to a current market capitalization of almost $800 million and annual revenues of $1.13 billion. Recently, it has shed some light on its goals for the future. By the end of the decade, NWY plans to be a globally recognized brand, grow to a $3 billion business, become an employer of choice in its industry, and be known as a responsible social citizen. Setting high expectations for itself, the company is trying to speed up its expansion, opening eight stores in the last month alone.

The company may very well meet its goals because it has clearly demonstrated superior growth and financial performance. For instance, in the most recent quarter its year over year revenues rose 6.72%, and earnings for the quarter increased a stellar 130.90% year over year.

The financial performance of the retailer has also continued with an operating margin of 6.48% that is just below the industry average of 6.60% recorded over the past year. Even so, the company has proved more profitable than average in the apparel industry with a solid 23.37% return on equity [ROE] over the past twelve months compared to the industry average of 18.10%.

The algorithms driving our multi-factor models calculate that such growth and performance still have not yet been adequately reflected in its stock price. Its one year price to earnings (P/E) ratio of 19.45 compared to the industry average of 20.25 and its price to earnings to growth [PEG] ratio of 0.99 compared to a 1.02 industry average shows that it is being priced on par with its peers.

Adding to other fundamental data contradicting traders, its price to book (P/B) value is 3.77, considerably lower than the 4.47 average of its peers. Perhaps a major sell-side analyst needs to cover the firm once again. The way we see the data it is as an indicator of benchmark-beating returns.

NWY since spinoff:


Disclosure: New York & Company Inc. (NWY) is a constituent in the Clear Spin-Off index licensed for the Claymore/Clear Spin-Off ETF. Mr. Corn is CEO and founder of Clear Indexes LLC and owns shares of the ETF symbol CSD.