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New York & Co. Plummets 24% (Updated)

Jeanine Poggi

Despite merchandise improvements and cost-cutting initiatives, the women's apparel retailer swung to a loss in the first-quarter, sending shares tumbling more than 24% in afternoon trading.

The women's apparel retailer recorded a loss of $4.9 million during the quarter, or 8 cents a share, in-line with analysts' expectations. This compares with a profit of $6.7 million, or 11 cents, in the year-ago period.

Sales dropped 14% to $232.9 million from $270.1 million last year. Same-store sales sank 15%.

"As we look ahead, the environment remains challenging, and while we believe our assortments are fashion-right, we continue to see customers reluctant to purchase at regular price," Chairman and CEO Richard P. Crystal said in a statement.

As a result, the company said it expects the second quarter will bring a similar loss as the first quarter. New York & Company did not provide full-year guidance.

"While we believe the company has made material progress in reducing overall costs and creating the potential for material margin increases when the consumer returns, it is increasingly obvious that the current environment does not allow for New York & Co. to 'cost cut' its way to bottom-line upside," Eric Beder, analyst at Brean Murray Carret & Co. wrote in a note on Thursday.

Once the economy turns around, however, New York & Co. is poised to regain market share and boost profit, Beder said.

On Wednesday, rival AnnTaylor Stores(ANN Quote) also reported a loss in its first quarter and warned of continued sales pressure.