New York & Company, Inc. (Form: 10-Q, Received: 06/08/2006 16:32:44)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
		OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended April 29, 2006
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
		OF THE SECURITIES EXCHANGE ACT OF 1934

for the transition period from to .

COMMISSION FILE NUMBER: 1-32315

NEW YORK & COMPANY, INC.
(Exact name of registrant as specified in its charter)

DELAWARE		33-1031445
(State of incorporation)		(I.R.S. Employer Identification No.)
450 West 33 rd Street
5 th Floor
New York, New York 10001		(212) 884-2000
(Address of Principal Executive Offices,		(Registrant’s Telephone Number,
including Zip Code)		Including Area Code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark if the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer x

Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 26, 2006, the registrant had 55,444,090 shares of common stock outstanding.

PART I.
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

New York & Company, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)

	Three months ended April 29, 2006			Three months ended April 30, 2005
	(Amounts in thousands, except per share amounts)
Net sales		$	267,137		$	269,975
Cost of goods sold, buying and occupancy costs		188,034			171,665
Gross profit		79,103			98,310
Selling, general and administrative expenses		68,484			60,926
Operating income		10,619			37,384
Interest expense, net of interest income of $213 and $365, respectively		490			1,409
Income before income taxes		10,129			35,975
Provision for income taxes		4,072			14,495
Net income		$	6,057		$	21,480
Basic earnings per share		$	0.11		$	0.40
Diluted earnings per share		$	0.10		$	0.38
Weighted average shares outstanding:
Basic shares of common stock		55,226			53,340
Diluted shares of common stock		59,744			56,673

See accompanying notes.

New York & Company, Inc. and Subsidiaries
Consolidated Balance Sheets

	April 29, 2006				January 28, 2006				April 30, 2005
	(Unaudited)				(Audited)				(Unaudited)
	(Amounts in thousands, except per share amounts)
Assets
Current assets:
Cash and cash equivalents		$	26,897			$	57,436			$	85,134
Accounts receivable		22,544				15,581				23,312
Inventories, net		130,158				109,656				99,508
Prepaid expenses		16,874				18,770				15,778
Other current assets		2,454				1,515				1,997
Total current assets		198,927				202,958				225,729
Property and equipment, net		169,161				159,388				110,746
Goodwill and intangible assets		41,809				41,702				14,843
Other assets		2,106				2,227				3,545
Total assets		$	412,003			$	406,275			$	354,863
Liabilities and stockholders’ equity
Current liabilities:
Current portion, long-term debt		$	6,000			$	6,000			$	—
Accounts payable		85,930				90,980				64,982
Accrued expenses		50,680				55,261				45,741
Income taxes payable		—				—				9,908
Deferred income taxes		1,740				3,016				1,684
Total current liabilities		144,350				155,257				122,315
Long-term debt, net of current		30,000				31,500				75,000
Deferred income taxes		4,133				4,723				6,966
Deferred rent and other liabilities		42,228				35,745				24,658
Total liabilities		220,711				227,225				228,939
Commitments and contingencies		—				—				—
Stockholders’ equity:
Common stock, voting, par value $0.001; 300,000 shares authorized; 55,394, 54,629 and 53,476 shares issued and outstanding at April 29, 2006, January 28, 2006, and April 30, 2005, respectively		55				55				53
Additional paid-in capital		132,675				126,490				110,611
Retained earnings		59,031				52,974				15,964
Accumulated other comprehensive loss		(469		)		(469		)		(704		)
Total stockholders’ equity		191,292				179,050				125,924
Total liabilities and stockholders’ equity		$	412,003			$	406,275			$	354,863

See accompanying notes.

New York & Company, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)

	Three months ended April 29, 2006				Three months ended April 30, 2005
	(Amounts in thousands)
Operating activities
Net income		$	6,057			$	21,480
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		7,676				5,446
Amortization of deferred financing costs		73				289
Share-based compensation		622				212
Deferred income taxes		(1,866		)		164
Changes in operating assets and liabilities:
Accounts receivable		(9,257		)		(10,243		)
Inventories, net		(20,502		)		(6,129		)
Prepaid expenses		1,896				2,097
Accounts payable		(5,050		)		(9,063		)
Accrued expenses		(4,231		)		(6,061		)
Income taxes payable		—				9,908
Other assets and liabilities		5,406				6,332
Net cash (used in) provided by operating activities		(19,176		)		14,432
Investing activities
Capital expenditures		(17,370		)		(15,411		)
Net cash used in investing activities		(17,370		)		(15,411		)
Financing activities
Proceeds from public offering		2,294				—
Payment of public offering costs		(453		)		—
Repayment of debt		(1,500		)		—
Tax benefit from exercise of stock options		5,003				901
Proceeds from exercise of stock options		663				51
Net cash provided by financing activities		6,007				952
Net decrease in cash and cash equivalents		(30,539		)		(27		)
Cash and cash equivalents at beginning of period		57,436				85,161
Cash and cash equivalents at end of period		$	26,897			$	85,134

See accompanying notes.

New York & Company, Inc.
Notes to Consolidated Financial Statements
April 29, 2006
(Unaudited)

1. Organization and Basis of Presentation

New York & Company, Inc. (together with its subsidiaries, collectively the “Company”) is a leading specialty retailer of fashion-oriented, moderately-priced women’s apparel. The Company designs and sources its proprietary branded New York & Company™ merchandise sold exclusively through its national network of retail stores. The target customers for the Company’s New York & Company™ merchandise are fashion-conscious, value-sensitive women between the ages of 25 and 45. On July 19, 2005, the Company acquired Jasmine Company, Inc. (“JasmineSola”), a Boston-based, privately held women’s retailer of upscale and contemporary apparel, footwear and accessories sold through its chain of JasmineSola ™ branded retail stores. As of April 29, 2006, the Company operated 530 retail stores in 45 states, including 17 JasmineSola stores. Trademarks referenced in this Quarterly Report on Form 10-Q appear in italic type and are the property of the Company.

The accompanying consolidated financial statements include the accounts for New York & Company, Inc. and all of its subsidiaries, including Lerner New York Holding, Inc. (“Lerner Holding”); Lerner New York, Inc.; Lernco, Inc.; Nevada Receivable Factoring, Inc. and JasmineSola. On a stand alone basis, without the consolidation of its subsidiaries, New York & Company, Inc. has no significant independent assets or operations. All significant intercompany balances and transactions have been eliminated in consolidation.

The consolidated financial statements as of April 29, 2006 and April 30, 2005 and for the thirteen weeks (“three months”) ended April 29, 2006 and April 30, 2005 are unaudited and are presented pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Accordingly, these unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended January 28, 2006 (“fiscal year 2005”), which were filed with the Company’s Annual Report on Form 10-K with the SEC on April 7, 2006. The fiscal year ending February 3, 2007 is referred to herein as “fiscal year 2006.” In the opinion of management, the accompanying consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary to present fairly the financial condition, results of operations and cash flows for the interim periods.

Due to seasonal variations in the retail industry, the results of operations for any interim period are not necessarily indicative of the results expected for the full fiscal year.

2. Public Offering of Common Stock

On January 25, 2006, the Company completed a public offering of 8,050,000 shares of common stock, including the underwriters’ over-allotment option, of which 130,000 shares were offered by the Company and 7,920,000 shares were offered by certain selling stockholders at a price to the public of $18.50 per share. Upon consummation of the public offering on January 31, 2006, net proceeds of $2.3 million and $139.8 million were distributed to the Company and selling stockholders, respectively.

The net proceeds received by the Company will be used to pay the fees and expenses of the offering, as well as for general corporate purposes.

New York & Company, Inc.
Notes to Consolidated Financial Statements (Continued)
April 29, 2006
(Unaudited)

3. Acquisition

On July 19, 2005, the Company entered into a Stock Purchase Agreement to acquire all of the outstanding common stock of JasmineSola for $22.5 million in cash and 350,000 shares of New York & Company, Inc. common stock, $0.001 par value, valued at $8.1 million based upon the closing stock price of New York & Company, Inc. on July 19, 2005. The purchase price is subject to a post-closing adjustment based on JasmineSola’s working capital, long-term indebtedness and certain other liabilities as of the acquisition date, and acquisition fees and expenses. This post-closing adjustment, if any, has not yet been determined. In addition, the Company will issue up to 200,000 shares of its common stock as additional consideration for the acquisition of JasmineSola contingent upon the achievement of certain growth targets over the three full fiscal years following the acquisition. These contingent shares, if issued, will be recorded as an adjustment to the purchase price and goodwill.

The acquisition was accounted for under the purchase method of accounting with a full basis adjustment. The purchase price allocation has been prepared on a preliminary basis and changes to this preliminary allocation are expected as additional information concerning asset and liability valuations are finalized. The preliminary allocation resulted in goodwill of $9.8 million and indefinite lived intangible assets related to trademarks of $17.2 million.

4. Earnings Per Share

Basic earnings per share are computed by dividing net income by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per share are calculated based on the weighted average number of shares of common stock outstanding plus the dilutive effect of stock options as if they were exercised. A reconciliation between basic and diluted earnings per share is as follows:

	Three months ended April 29, 2006			Three months ended April 30, 2005
	(Amounts in thousands, except per share amounts)
Net income		$	6,057		$	21,480
Basic EPS
Weighted average shares outstanding:
Basic shares of common stock		55,226			53,340
Basic EPS		$	0.11		$	0.40
Diluted EPS
Weighted average shares outstanding:
Basic shares of common stock		55,226			53,340
Plus impact of stock options		4,518			3,333
Diluted shares of common stock		59,744			56,673
Diluted EPS		$	0.10		$	0.38

New York & Company, Inc.
Notes to Consolidated Financial Statements (Continued)
April 29, 2006
(Unaudited)

4. Earnings Per Share (Continued)

The calculation of diluted earnings per share for the three months ended April 29, 2006 and April 30, 2005 exclude options to purchase 495,836 and 30,000 shares, respectively, due to their antidilutive effect as the options’ exercise price exceeded the average market price of the common stock.

5. Share-Based Compensation

In December 2004, the Financial Accounting Standards Board (“FASB”) published SFAS No. 123 (Revised 2004), “Share-Based Payment” (“SFAS 123-R”). SFAS 123-R retains certain requirements of the original SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”) and requires all forms of share-based payment to employees, including employee stock options, to be treated as compensation and recognized in the consolidated statement of operations. The Company adopted SFAS 123-R in December 2004, utilizing the modified prospective method. Prior to the Company’s adoption of SFAS 123-R, the Company followed SFAS 123 and treated all forms of share-based payments as compensation recognized in the consolidated statement of operations. Therefore, the adoption of SFAS 123-R did not have a material impact on the Company’s consolidated financial statements.

In connection with the consummation of the public offering on January 31, 2006, BSMB/NYCG, LLC, an affiliate of Bear Stearns Merchant Banking and the controlling stockholder of the Company, realized a cash return in excess of 3.0 times its investment in the Company; as such, 2,777,311 options to purchase common stock issued pursuant to grants under the Company’s stock option plan vested and became immediately exercisable.

The Company recorded share-based compensation expense in the amount of $0.6 million for the three months ended April 29, 2006 and $0.2 million for the three months ended April 30, 2005. Included in the $0.6 million of share-based compensation expense for the three months ended April 29, 2006 is $0.2 million of expense related to the 2,777,311 stock options that vested on January 31, 2006.

The Company issued 764,455 shares of common stock upon exercise of stock options during the three months ended April 29, 2006.

6. Pension Plan

The Company sponsors a single-employer defined benefit pension plan covering substantially all union employees. Employees covered by collective bargaining agreements are primarily non-management store associates, representing approximately 10% of the Company’s total employees. The Company’s collective bargaining agreement with the Local 1102 unit of the Retail, Wholesale and Department Store Union (RWDSU) AFL-CIO that was set to expire in August 2005 is under renegotiation. A signed extension agreement is in effect until June 30, 2006.

New York & Company, Inc.
Notes to Consolidated Financial Statements (Continued)
April 29, 2006
(Unaudited)

6. Pension Plan (Continued)

The plan provides retirement benefits for union employees who have attained the age of 18 and completed 425 hours of service in the twelve-month period following the date of employment. The plan provides benefits based on length of service. The Company’s funding policy for the plan is to contribute annually the amount necessary to provide for benefits based on accrued service. The Company does not anticipate the need for a material contribution to the plan for the remainder of the current fiscal year. Net periodic benefit cost includes the following components:

	Three months ended April 29, 2006				Three months ended April 30, 2005
	(Amounts in thousands)
Service cost		$	67			$	73
Interest cost		135				143
Expected return on plan assets		(180		)		(188		)
Net periodic benefit cost		$	22			$	28

7. Income Tax Provision

The income tax provisions for interim periods are based upon management’s estimate of the Company’s annualized effective tax rate. Effective tax rates differ from statutory federal income tax rates primarily due to provisions for state and local taxes.

8. Long-Term Debt and Credit Facilities

On January 4, 2006, the Company’s credit facilities were amended to include: (i) an additional $37.5 million term loan facility maturing on March 17, 2009 bearing interest at the Eurodollar rate plus 2.50% (“January 4, 2006 term loan”), (ii) an extension of the term of the Company’s existing $90.0 million revolving credit facility to March 17, 2009 (contains a sub-facility available for issuance of letters of credit of up to $75.0 million), and (iii) a reduction of certain interest rates under the revolver by as much as 50 basis points, depending upon the Company’s financial performance. Using the $37.5 million of proceeds from the January 4, 2006 term loan plus $38.0 million of cash on-hand, the Company prepaid in full the $75.0 million term loan entered into on March 16, 2004 (“March 16, 2004 term loan”), which was bearing interest at the Eurodollar rate plus 5.00%, and $0.5 million in fees related to the refinancing. In connection with the prepayment of the March 16, 2004 term loan, $0.9 million of unamortized deferred financing costs were written-off in the fourth quarter of fiscal year 2005.

As of April 29, 2006, the Company had availability under its revolving credit facility of $62.0 million, net of letters of credit outstanding of $9.4 million, as compared to availability of $43.6 million, net of letters of credit outstanding of $12.1 million, as of April 30, 2005.

New York & Company, Inc.
Notes to Consolidated Financial Statements (Continued)
April 29, 2006
(Unaudited)

8. Long-Term Debt and Credit Facilities (Continued)

The revolving loans under the credit facilities bear interest, at the Company’s option, either at a floating rate equal to the Eurodollar rate plus a margin of between 1.00% and 2.00% per year, depending upon the Company’s financial performance, or the Prime rate. The Company pays the lenders under the revolving credit facility a monthly fee on outstanding letters of credit at a rate of between 1.00% and 1.50% per year, depending upon the Company’s financial performance. The Company pays the lenders under the revolving credit facility a monthly fee on a proportion of the unused commitments under that facility at a rate of between 0.25% and 0.50% per year, depending upon the Company’s financial performance. The term loan bears interest at a floating rate equal to the Eurodollar rate plus 2.50% per year. For so long as any default under the revolving credit facility continues, at the option of the agent or lenders, interest on the revolving loans may increase to 4.00% per year above the Eurodollar rate for all Eurodollar rate loans and 2.00% per year above the Prime rate for all Prime rate loans, and interest on the term loan may increase to the Eurodollar rate plus 4.50% per year.

The Company’s credit facilities contain certain covenants, including restrictions on its ability to pay dividends on its common stock, incur additional indebtedness and to prepay, redeem or repurchase other debt. Subject to such restrictions, the Company may incur more debt for working capital, capital expenditures, acquisitions and for other purposes. The terms of the Company’s credit facilities also subject it to certain maintenance covenants in the event its borrowing availability under its revolving credit facility, plus cash on-hand, falls below $40.0 million. These covenants include maintaining a minimum trailing twelve-month EBITDA (as defined in the Company’s amended and restated credit agreement) and a maximum leverage ratio. This ratio and the calculation of EBITDA under the amended and restated credit agreement are not necessarily comparable to other similarly titled ratios and measurements of other companies due to inconsistencies in the method of calculation. In addition, in the event that the Company’s borrowing availability under its revolving credit facility, plus cash on-hand, falls below $50.0 million and it fails to maintain a minimum trailing twelve-month EBITDA, then the outstanding principal amount of the $37.5 million term loan must be prepaid down to $25.0 million, subject to certain restrictions. The Company is currently in compliance with the financial covenants referred to above.

The lenders have been granted a pledge of the common stock of Lerner Holding and certain of its subsidiaries, and a first priority security interest in substantially all other tangible and intangible assets of New York & Company, Inc. and certain of its subsidiaries, as collateral for the Company’s obligations under the credit facilities. In addition, New York & Company, Inc. and certain of its subsidiaries have fully and unconditionally guaranteed the credit facilities, and such guarantees are joint and several.

New York & Company, Inc.
Notes to Consolidated Financial Statements (Continued)
April 29, 2006
(Unaudited)

9. New Accounting Pronouncements

In October 2005, the FASB issued FSP No. FAS 13-1, ‘‘Accounting for Rental Costs Incurred during a Construction Period.’’ The FSP concluded that rental costs associated with ground or building operating leases that are incurred during a construction period should be recognized as rental expense. The rental costs should be included in income from continuing operations. The guidance does not change application of the maximum guarantee test in EITF Issue No. 97-10, ‘‘The Effect of Lessee Involvement in Asset Construction.’’ The guidance in this FSP shall be applied in the first reporting period beginning after December 15, 2005. Retrospective application in accordance with FASB Statement No. 154, ‘‘Accounting Changes and Error Corrections,’’ is permitted but not required; as such, the Company adopted the provisions of the FSP beginning in February 2006 and will apply them prospectively. The Company currently anticipates that the adoption of this pronouncement will result in approximately $2.4 million of additional rent expense in the current fiscal year, which prior to the adoption of this pronouncement would have been capitalized and amortized into depreciation expense on a straight-line basis over the lease term, commencing on the store’s opening date. For the three months ended April 29, 2006, $0.9 million of rent expense was recognized during the construction periods for stores, resulting in an after-tax charge to earnings of $0.5 million, or $0.01 per diluted share.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTORS

(Cautionary Statements Under the Private Securities Litigation Reform Act of 1995)

This Quarterly Report on Form 10-Q includes forward-looking statements. Certain matters discussed in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of this Quarterly Report on Form 10-Q are forward-looking statements intended to qualify for safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. Some of these statements can be identified by terms and phrases such as ‘‘anticipate,’’ ‘‘believe,’’ ‘‘intend,’’ ‘‘estimate,’’ ‘‘expect,’’ ‘‘continue,’’ ‘‘could,’’ ‘‘may,’’ ‘‘plan,’’ ‘‘project,’’ ‘‘predict’’ and similar expressions and include references to assumptions that the Company believes are reasonable and relate to its future prospects, developments and business strategies. Factors that could cause the Company’s actual results to differ materially from those expressed or implied in such forward-looking statements, include, but are not limited to those discussed under the heading “Item 3. Quantitative and Qualitative Disclosures About Market Risk” in this Quarterly Report on Form 10-Q and:

· the Company’s ability to open and operate stores successfully;

· seasonal fluctuations in the Company’s business;

· the Company’s ability to anticipate and respond to fashion trends and launch new product lines successfully;

· general economic conditions, consumer confidence and spending patterns;

· the Company’s dependence on mall traffic for its sales;

· the susceptibility of the Company’s business to extreme and/or unseasonable weather conditions;

· the Company’s ability to retain and recruit key personnel;

· the Company’s reliance on third parties to manage some aspects of its business;

· changes in the cost of raw materials, distribution services or labor;

· the Company’s reliance on foreign sources of production;

· the potential impact of natural disasters and health concerns relating to outbreaks of widespread diseases, particularly on manufacturing operations of the Company’s vendors;

· the ability of the Company’s manufacturers to manufacture and deliver products in a timely manner while meeting its quality standards;

· the Company’s ability to successfully integrate acquired businesses into its existing business;

· the Company’s reliance on manufacturers to maintain ethical business practices;

· the Company’s ability to protect its trademarks and other intellectual property rights;

· the Company’s ability to maintain, and its reliance on, its information systems infrastructure;

· the Company’s dependence on the success of its brand;

· competition in the Company’s market, including promotional and pricing competition;

· the Company’s reliance on the effective use of customer information;

· the effects of government regulation;

· the control of the Company by its sponsors; and

· risks and uncertainties as described in the Company’s documents filed with the SEC, including its Annual Report on Form 10-K, as filed on April 7, 2006.

The Company undertakes no obligation to revise the forward-looking statements included in this Quarterly Report on Form 10-Q to reflect any future events or circumstances. The Company’s actual results, performance or achievements could differ materially from the results expressed or implied by these forward-looking statements.

Overview

The Company is a leading specialty retailer of fashion-oriented, moderately-priced women’s apparel. The Company designs and sources its proprietary branded New York & Company merchandise sold exclusively through its national network of New York & Company retail stores. The target customers for the Company’s New York & Company merchandise are fashion-conscious, value-sensitive women between the ages of 25 and 45. On July 19, 2005, the Company acquired JasmineSola, a Boston-based, privately held women’s retailer of upscale and contemporary apparel, footwear and accessories sold through its chain of JasmineSola branded retail stores. As of April 29, 2006, the Company operated 530 retail stores in 45 states, including 17 JasmineSola stores.

The Company views the retail apparel market as having two principal selling seasons: spring (first and second quarter) and fall (third and fourth quarter). The Company’s business experiences seasonal fluctuations in net sales and operating income, with a significant portion of its operating income typically realized during its first and fourth quarters. Seasonal fluctuations also affect inventory levels. The Company must carry a significant amount of inventory, especially before the holiday season selling period.

Net sales for the three months ended April 29, 2006 decreased 1.1% to $267.1 million, as compared to $270.0 million for the three months ended April 30, 2005. Comparable store sales decreased 9.2% in the three months ended April 29, 2006, as compared to a comparable store sales increase of 3.9% for the three months ended April 30, 2005. Net sales per average selling square foot for the three months ended April 29, 2006 decreased 3.5% to $82, as compared to $85 for the three months ended April 30, 2005. Net income for the three months ended April 29, 2006 decreased to $6.1 million, or $0.10 per diluted share, as compared to $21.5 million, or $0.38 per diluted share, for the three months ended April 30, 2005. For a discussion of the more significant factors impacting these results, see “Results of Operations” below.

Capital spending for the three months ended April 29, 2006 was $17.4 million, as compared to $15.4 million for the three months ended April 30, 2005. The $17.4 million of capital spending represents $16.6 million related to the construction of new stores and the remodeling of existing stores and $0.8 million related to non-store capital projects, which principally represent information technology enhancements. During the three months ended April 29, 2006, the Company opened 14 new stores, including one JasmineSola store, closed three stores and completed five remodels, ending the period operating 530 stores in 45 states, as compared to 482 stores as of April 30, 2005. Total selling square footage as of April 29, 2006 was 3.282 million, as compared to 3.196 million as of April 30, 2005.

The Company’s balance sheet at April 29, 2006 included $26.9 million in cash and $54.6 million of working capital, as compared to $85.1 million in cash and $103.4 million of working capital at April 30, 2005. The decrease in working capital compared to last year was primarily the result of the January 2006 prepayment of a $75.0 million term loan using $37.5 million of cash on-hand plus proceeds from the January 4, 2006 term loan. At April 29, 2006, the Company’s inventory was $130.2 million, including $6.6 million of inventory attributable to the JasmineSola business, as compared to $99.5 million of inventory at April 30, 2005. The increase in inventory compared to last year is primarily to support new

stores, planned increases to support the Mother’s Day selling period and lower sales during the first quarter.

The Company’s business is impacted by economic conditions which affect the level of consumer spending on the merchandise the Company offers. These economic factors include interest rates, economic growth, unemployment levels, energy prices, consumer confidence and consumer spending, among others. Consumer preferences and economic conditions may change from time to time in the markets in which the Company operates and may negatively impact the Company’s net sales and profitability. As these economic conditions change, there can be no assurance that future trends and fluctuations in economic factors will not have a material adverse effect on the Company’s financial condition and results of operations. The Company’s strategy is to focus on its customers, current fashion trends, merchandise testing, value pricing and responsive inventory management to enable it to react quickly to changes as they occur.

General

Net Sales. Net sales consist of sales from comparable and non-comparable stores. A store is included in the comparable store sales calculation after it has completed 13 full fiscal months of operation from the store’s original opening date or once it has been reopened after remodeling. Non-comparable store sales include stores which have not completed 13 full fiscal months of operations, sales from closed stores and stores closed during periods of remodeling. Net sales are recorded when the customer takes possession of the merchandise and the purchases are paid for, primarily with either cash or credit card. A reserve is provided for projected merchandise returns based on prior experience.

The Company issues gift cards which do not contain provisions for expiration or inactivity fees. The portion of the dollar value of gift cards that ultimately is not used by customers to make purchases is known as breakage. The Company estimates gift card breakage and records such amounts as revenues as gift cards are redeemed. The Company’s estimate of gift card breakage is based on analysis of historical redemption patterns as well as the remaining balance of gift cards for which the Company believes the likelihood of redemption to be remote.

Cost of Goods Sold, Buying and Occupancy Costs. Cost of goods sold, buying and occupancy costs are comprised of direct inventory costs for merchandise sold, distribution, payroll and related costs for design, sourcing, production, merchandising, planning and allocation personnel, and store occupancy and related costs.

Gross Profit. Gross profit represents net sales less cost of goods sold, buying and occupancy costs.

Selling, General and Administrative Expenses. Selling, general and administrative expenses include selling, store management and corporate expenses, including payroll and employee benefits, employment taxes, management information systems, marketing, insurance, legal, store pre-opening and other corporate level expenses. Store pre-opening expenses include store level payroll, grand opening event marketing, travel, supplies and other store opening expenses.

Results of Operations

The following tables summarize the Company’s results of operations as a percentage of net sales and selected store operating data for the three months ended April 29, 2006 and April 30, 2005:

	Three months ended April 29, 2006			Three months ended April 30, 2005
Net sales		100.0	%		100.0	%
Cost of goods sold, buying and occupancy costs		70.4	%		63.6	%
Gross profit		29.6	%		36.4	%
Selling, general and administrative expenses		25.6	%		22.5	%
Operating income		4.0	%		13.9	%
Interest expense, net		0.2	%		0.5	%
Income before income taxes		3.8	%		13.4	%
Provision for income taxes		1.5	%		5.4	%
Net income		2.3	%		8.0	%

	Three months ended April 29, 2006				Three months ended April 30, 2005
	(Dollars in thousands, except square foot data)
Selected operating data:
Total net sales (decline) growth		(1.1		)%		7.1		%
Comparable store sales (decrease) increase		(9.2		)%		3.9		%
Net sales per average selling square foot(1)		$	82			$	85
Net sales per average store(2)		$	509			$	564
Average selling square footage per store(3)		6,193				6,631

(1) Net sales per average selling square foot is defined as net sales divided by the average of beginning and end of period selling square feet.

(2) Net sales per average store is defined as net sales divided by the average of beginning and end of period number of stores.

(3) Average selling square footage per store is defined as end of period selling square feet divided by end of period number of stores.

	Three months ended April 29, 2006						Three months ended April 30, 2005
	Store Count			Selling Square Feet			Store Count			Selling Square Feet
Store count and selling square feet:
Stores open, beginning of period		519			3,254,465			476			3,189,770
New stores		14			64,312			8			32,908
Closed stores		(3	)		(18,147	)		(2	)		(10,644	)
Net impact of remodeled stores on selling square feet		—			(18,297	)		—			(15,823	)
Stores open, end of period		530			3,282,333			482			3,196,211

Three Months Ended April 29, 2006 Compared to Three Months Ended April 30, 2005

Net Sales. Net sales for the three months ended April 29, 2006 decreased 1.1% to $267.1 million, as compared to $270.0 million for the three months ended April 30, 2005. The decrease is attributable to a $24.1 million, or 9.2%, decrease in comparable store sales. The decrease in comparable store sales was offset by a $21.2 million, or 281.4%, increase in non-comparable store sales, primarily driven by new stores. In the comparable store base, average dollar sales per transaction decreased 2.0% and the number of transactions per average store declined 7.4%, as compared to the same period last year.

Gross Profit. Gross profit decreased $19.2 million to $79.1 million, or 29.6% of net sales, for the three months ended April 29, 2006, as compared to $98.3 million, or 36.4% of net sales, for the three months ended April 30, 2005. The decrease in gross profit is primarily attributable to the decrease in comparable store sales and an increase in merchandise markdowns for the three months ended April 29, 2006, as compared to the same period last year. In addition, buying and occupancy costs increased as a percentage of net sales due to increases in real estate costs related to the cumulative impact of new stores since April 30, 2005 combined with the impact of lower comparable store sales.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $7.6 million to $68.5 million, or 25.6% of net sales, for the three months ended April 29, 2006 from $60.9 million, or 22.5% of net sales, for the three months ended April 30, 2005. As a percentage of net sales, selling, general and administrative expenses increased for the three months ended April 29, 2006, as compared to the three months ended April 30, 2005, due to the decrease in comparable store sales. The increase in selling, general and administrative expenses for the three months ended April 29, 2006 is primarily due to higher store selling expenses as a result of the cumulative impact of new stores since April 30, 2005.

Operating Income. The decrease in gross profit and higher selling, general and administrative expenses, as explained above, resulted in a $26.8 million decrease in operating income to $10.6 million, or 4.0% of net sales, for the three months ended April 29, 2006, as compared to $37.4 million, or 13.9% of net sales, for the three months ended April 30, 2005.

Interest Expense, Net. Net interest expense decreased $0.9 million to $0.5 million, or 0.2% of net sales, for the three months ended April 29, 2006 from $1.4 million, or 0.5% of net sales, for the three months ended April 30, 2005. The decrease in net interest expense is due to reductions in borrowings and a reduction in interest rates obtained through the Company’s prepayment of a $75 million term loan on January 4, 2006 using proceeds from a new $37.5 million term loan facility plus cash on-hand.

Provision for Income Taxes. The effective tax rate for the three months ended April 29, 2006 was 40.2%, as compared to 40.3% for the three months ended April 30, 2005.

Net Income. For the reasons discussed above, net income decreased $15.4 million to $6.1 million, or 2.3% of net sales, for the three months ended April 29, 2006 from $21.5 million, or 8.0% of net sales, for the three months ended April 30, 2005.

Non-GAAP Financial Measure

The Company has provided a non-GAAP financial measure to adjust net income for the three months ended April 29, 2006 and April 30, 2005. This information reflects, on a non-GAAP adjusted basis, the Company’s net income before interest expense, net; provision for income taxes; and depreciation and amortization (“EBITDA”). The calculation for EBITDA is provided to enhance the user’s understanding of the Company’s operating results. EBITDA is provided because management believes it is an important measure of financial performance commonly used to determine the value of companies and to define standards for borrowing from institutional lenders. The non-GAAP financial information should be considered in addition to, not as an alternative to, net income, as an indicator of the Company’s operating performance, and cash flows from operating activities, as a measure of the Company’s liquidity, as

determined in accordance with accounting principles generally accepted in the United States. The Company may calculate EBITDA differently than other companies.

Reconciliation of Net Income to EBITDA

	Three months ended April 29, 2006						Three months ended April 30, 2005
	Amounts in thousands			As a % of net sales			Amounts in thousands			As a % of net sales
Net income		$	6,057		2.3	%		$	21,480		8.0	%
Add back:
Interest expense, net		490			0.2	%		1,409			0.5	%
Provision for income taxes		4,072			1.5	%		14,495			5.4	%
Depreciation and amortization		7,676			2.9	%		5,446			2.0	%
EBITDA		$	18,295		6.9	%		$	42,830		15.9	%

Liquidity and Capital Resources

The Company’s primary uses of cash are to fund working capital, operating expenses, debt service and capital expenditures related primarily to the construction of new stores, remodeling of existing stores and development of the Company’s information systems infrastructure. Historically, the Company has financed these requirements from internally generated cash flow. The Company intends to fund its ongoing capital and working capital requirements, as well as debt service obligations, primarily through cash flows from operations, supplemented by borrowings under its credit facilities, if needed. The Company is in compliance with all debt covenants as of April 29, 2006.

The following tables contain information regarding the Company’s liquidity and capital resources:

	April 29, 2006		January 28, 2006			April 30, 2005
	(Amounts in thousands)
Cash and cash equivalents	$	26,897		$	57,436	$	85,134
Working capital	$	54,577		$	47,701	$	103,414

	Three months ended April 29, 2006				Three months ended April 30, 2005
	(Amounts in thousands)
Net cash (used in) provided by operating activities		$	(19,176	)		$	14,432
Net cash used in investing activities		$	(17,370	)		$	(15,411	)
Net cash provided by financing activities		$	6,007			$	952

Operating Activities

Net cash used in operating activities was $19.2 million for the three months ended April 29, 2006, as compared to net cash provided by operating activities of $14.4 million for the three months ended April 30, 2005. The decrease in cash flow provided by operating activities for the three months ended April 29, 2006, as compared to the three months ended April 30, 2005, is primarily related to the decrease in net income, and changes in inventories and income taxes payable, partially offset by changes in accounts receivable, accounts payable and accrued expenses. Cash provided by other assets and liabilities for the three months ended April 29, 2006 and April 30, 2005 includes $5.7 million and $6.2 million of construction allowances, respectively.

Investing Activities

Cash used in investing activities was $17.4 million for the three months ended April 29, 2006, as compared to $15.4 million of cash used in investing activities for the three months ended April 30, 2005.

The increase reflects capital expenditures primarily related to the construction of new stores and the remodeling of existing stores.

The Company opened 14 new stores and completed five remodels in the three months ended April 29, 2006, as compared to eight new stores and eight remodels in the three months ended April 30, 2005. The Company plans to open approximately 50 to 60 stores, including eight to ten JasmineSola stores, in fiscal year 2006, ending the year operating approximately 572 stores. The Company’s future capital requirements will depend primarily on the number of new stores it opens, the number of existing stores it remodels and the timing of these expenditures.

Financing Activities

Net cash provided by financing activities was $6.0 million for the three months ended April 29, 2006, as compared to net cash provided by financing activities of $1.0 million for the three months ended April 30, 2005. Net cash provided by financing activities for the three months ended April 29, 2006 represents proceeds of $2.3 million from the public offering of common stock, consummated on January 31, 2006; the payment of $0.5 million in fees and expenses related to the offering; the $1.5 million quarterly repayment of the $37.5 million January 4, 2006 term loan; and $5.7 million of proceeds from the exercise of stock options and the related tax benefit to the Company. Net cash provided by financing activities for the three months ended April 30, 2005 resulted from the exercise of stock options and the related tax benefit to the Company.

Long-Term Debt and Credit Facilities

On January 4, 2006, the Company’s credit facilities were amended to include: (i) an additional $37.5 million term loan facility maturing on March 17, 2009 bearing interest at the Eurodollar rate plus 2.50%, (ii) an extension of the term of the Company’s existing $90.0 million revolving credit facility to March 17, 2009 (contains a sub-facility available for the issuance of letters of credit of up to $75.0 million), and (iii) a reduction of certain interest rates under the revolver by as much as 50 basis points, depending upon the Company’s financial performance. Using the $37.5 million of proceeds from the January 4, 2006 term loan plus $38.0 million of cash on-hand, the Company prepaid in full the $75.0 million March 16, 2004 term loan, which was bearing interest at the Eurodollar rate plus 5.00%, and $0.5 million in fees related to the refinancing. In connection with the prepayment of the March 16, 2004 term loan, $0.9 million of unamortized deferred financing costs were written-off in the fourth quarter of fiscal year 2005.

The revolving loans under the credit facilities bear interest, at the Company’s option, either at a floating rate equal to the Eurodollar rate plus a margin of between 1.00% and 2.00% per year, depending upon the Company’s financial performance, or the Prime rate. The Company pays the lenders under the revolving credit facility a monthly fee on outstanding letters of credit at a rate of between 1.00% and 1.50% per year, depending upon its financial performance. The Company pays the lenders under the revolving credit facility a monthly fee on a proportion of the unused commitments under that facility at a rate of between 0.25% and 0.50% per year, depending upon its financial performance. The term loan bears interest at a floating rate equal to the Eurodollar rate plus 2.50% per year. For so long as any default under the revolving credit facility continues, at the option of the agent or lenders, interest on the revolving loans may increase to 4.00% per year above the Eurodollar rate for Eurodollar rate loans and 2.00% per year above the Prime rate for all Prime rate loans, and interest on the term loan may increase to the Eurodollar rate plus 4.50% per year.

Critical Accounting Policies

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that impact the amounts reported on the Company’s consolidated financial statements and related notes. On an ongoing basis, management evaluates its estimates and judgments, including those related to inventories, long-lived assets, goodwill and other intangible assets. Management bases its estimate and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ materially from these judgments. Management believes the following estimates and assumptions are most significant to reporting the Company’s results of operations and financial position.

Inventory Valuation. Inventories are principally valued at the lower of average cost or market, on a weighted average cost basis, using the retail method. The Company records a charge to cost of goods sold, buying and occupancy costs for all inventory on-hand when a permanent retail price reduction is reflected in its stores. In addition, management makes estimates and judgments regarding, among other things, initial markup, markdowns, future demand and market conditions, all of which significantly impact the ending inventory valuation. If actual future demand or market conditions are different than those projected by management, future period merchandise margin rates may be unfavorably or favorably affected. Other significant estimates related to inventory include shrink and obsolete and excess inventory which are also based on historical results and management’s operating projections.

Impairment of Long-Lived Assets. The Company evaluates long-lived assets in accordance with SFAS No. 144, ‘‘Accounting for the Impairment or Disposal of Long-Lived Assets’’ (‘‘SFAS 144’’). Long-lived assets are evaluated for recoverability in accordance with SFAS 144 whenever events or changes in circumstances indicate that an asset may have been impaired. In evaluating an asset for recoverability, the Company estimates the future cash flow expected to result from the use of the asset and eventual disposition. If the sum of the expected future undiscounted cash flow is less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying amount over the fair value of the asset, is recognized. An impairment loss could have a material adverse impact on the Company’s financial condition and results of operations. The Company’s evaluation for the three months ended April 29, 2006 resulted in no material asset impairment charge.

Goodwill and Other Intangible Assets. SFAS No. 142, ‘‘Goodwill and Other Intangible Assets,’’ prohibits the amortization of goodwill and intangible assets with indefinite lives. The Company’s intangible assets relate primarily to the New York & Company and JasmineSola trademarks and goodwill associated with the acquisition of JasmineSola on July 19, 2005. The trademarks were initially valued using the ‘‘relief from royalty method’’ and were determined to have indefinite lives by an independent appraiser. The Company tests for impairment of intangible assets annually as required by this Statement. Management’s estimate of future cash flow is based on historical experience, knowledge, and market data. These estimates can be affected by factors such as those outlined in ‘‘Cautionary Note Regarding Forward-Looking Statements and Risk Factors.” An impairment loss could have a material adverse impact on the Company’s financial condition and results of operations. The fair value assigned to the JasmineSola trademarks is $17.2 million. The $9.8 million of goodwill associated with the acquisition of JasmineSola is preliminary and is expected to be adjusted as additional information concerning asset and liability valuations are finalized.

Income Taxes. Income taxes are calculated in accordance with SFAS No. 109, ‘‘Accounting for Income Taxes,’’ which requires the use of the liability method. Deferred tax assets and liabilities are recognized based on the difference between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Inherent in the measurement of deferred balances are certain judgments and interpretations of enacted tax laws and published guidance with respect to applicability to the Company’s operations. Deferred tax assets are believed to be fully realizable as management expects

future taxable income will be sufficient to recover the asset values and, as such, no related valuation allowance has been provided for.

Adoption of New Accounting Standards

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rates. The Company’s market risks relate primarily to changes in interest rates. The Company’s credit facilities carry floating interest rates that are tied to the Eurodollar rate and the Prime rate and therefore, the consolidated statements of operations and the consolidated statements of cash flows will be exposed to changes in interest rates. A 1.0% interest rate increase would increase interest expenses by $0.4 million annually. The Company historically has not engaged in interest rate hedging activities.

Currency Exchange Rates. The Company historically has not been exposed to currency exchange rate risks with respect to inventory purchases as such expenditures have been, and continue to be, denominated in U.S. Dollars. The Company purchases some of its inventory from suppliers in China, for which the Company pays U.S. Dollars. In July 2005, China announced that it would increase the value of the Chinese Yuan and abandon its fixed exchange rate against the U.S. Dollar to now link to a basket of world-currencies. If the exchange rate of the Chinese Yuan to the U.S. Dollar continues to increase, the Company may experience fluctuations in the cost of inventory purchased from China and the Company would adjust its supply chain accordingly.

ITEM 4. CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures . The Company’s management, with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report. Based on such evaluation, the Company’s Principal Executive Officer and Principal Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective.

(b) Internal Controls Over Financial Reporting . There have not been any changes in the Company’s internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II.

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There have been no material changes in the Company’s legal proceedings from what was reported in its Annual Report on Form 10-K filed with the SEC on April 7, 2006.

ITEM 1A. RISK FACTORS

There have been no material changes in the Company’s risk factors from what was reported in its Annual Report on Form 10-K filed with the SEC on April 7, 2006.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following exhibits are filed with this report and made a part hereof.

10.1		Amendment to Transition Services Agreement, dated as of November 27, 2002, between Lerner New York Holding, Inc.; New York & Company, Inc. as successor-in-interest to NY & Co. Group, Inc. and Limited Brands, Inc., as amended on April 19, 2006.
31.1		Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2		Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32.1		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		NEW YORK & COMPANY, INC.
		/s/ RONALD W. RISTAU
		By:	Ronald W. Ristau
		Its:	Chief Operating Officer and
			Chief Financial Officer
			(Principal Financial Officer)
		Dated:	June 8, 2006

EXHIBIT 10.1

AMENDMENT TO TRANSITION SERVICES AGREEMENT

This Amendment to the Transition Services Agreement, dated November 27, 2002, is made and entered into by and between Limited Brands, Inc. (“Limited Brands”) and Lerner New York Holding, Inc. and New York & Company, Inc., successor in interest to New York & Co. Group, Inc. (collectively, “Buyer” and/or “Lerner”). Defined terms that are used but not defined herein shall be as defined in the Agreement between Limited Brands and Buyer. The Parties wish to amend the Agreement and Schedules as described below. It is therefore agreed as follows:

1. Section 5.02 (a) (v), is deleted in its entirety and replaced with the following:

“For any reason, upon 24-months advance written notice, which notice shall be given no earlier March 1, 2007, Buyer may terminate (A) all (but not less than all) Logistics Services, (B) the Logistics Services described under the heading “Compliance Support Services” in Schedule III, or (C) if the Logistics Services described under the heading “Compliance Support Services” in Schedule III have been terminated earlier, all (but not less than all) of the remaining Logistics Services (such termination right, as applicable, to be exercisable more than once).”

2. Section 5.02 (c) is deleted in its entirety and replaced with the following:

“For any reason, upon 24-months advance written notice, which notice shall be given no earlier March 1, 2007, Limited Brands may terminate (A) all (but not less than all) Logistics Services, (B) the Logistics Services described under the heading “Compliance Support Services” in Schedule III, or (C) if the Logistics Services described under the heading “Compliance Support Services” in Schedule III have been terminated earlier, all (but not less than all) of the remaining Logistics Services (such termination right, as applicable, to be exercisable more than once).

3. Section 6.0.6 (c) is deleted in its entirety and replaced with the following:

“If to Limited Brands, to:

Limited Brands, Inc.
Three Limited Parkway
Columbus, OH 43230
Fax: (614) 415-7188
Attention: General Counsel

With a copy (which shall not constitute notice for any legal proceeding) to:

Contract Services
Limited Brands, Inc.
Two Limited Parkway
Columbus, OH 43230
Facsimile: (614) 577-3051”

4. Schedule III, Section 1.1 is deleted in its entirety and replaced with the following:

“Except as otherwise provided in this Schedule III, Limited Brands’ obligation to provide or procure, and Lerner’s obligation to purchase, the Services described in this Schedule III (the “ Logistics Services ”) shall commence on the Closing Date and terminate on the earliest to occur of (i) the date which is twenty four (24) months after the date on which Limited Brands notifies Lerner in writing that it has elected to terminate its obligation to provide or procure the Logistics Services, which notice shall be given no earlier than March 1, 2007, (ii) the date which is twenty four (24) months after the date on which Lerner notifies Limited Brands in writing that it has elected to terminate its obligation to purchase the Logistics Services, which notice shall be given no earlier

than March 1, 2007, and (iii) the date specified for such termination in the applicable section of Section 5.02 of the Agreement, if Limited Brands or Lerner, as the case may be, terminates the Logistics Services in accordance with Section 5.02 of the Agreement. The period from the Closing Date until the date on which the Logistics Services are terminated is referred to as the “ Logistics Term ”.

5. In Schedule III, Section 5.1 of the Agreement, second sentence, after “PPV”, insert “Enterprise Resource Planning (“ERP”) Systems (specifically SAP)”. Also, the following language is inserted at the end of Section 5.1: “Limited Brands and Lerner will partner to enable both entity systems to communicate in a manner that replicates or improves the logistic support provided by Limited Brands as of the date of this Amendment. Limited Brands will provide interfaces for Lerner to use in order to send and receive information to and from Limited Brands’ systems. Lerner’s obligation (and its cost) with regard to Limited Brands’ system changes shall include but not be limited to providing technical project support as well as testing of the interfaces prior to implementation as specified by Limited Brands. Limited Brands shall be responsible for all costs, other than internal Lerner labor, associated with developing the interfaces that will be provided to Lerner. Lerner agrees that there will be no financial charge back to Limited Brands for time spent by Lerner employees and/or its agents or consultants on activities related to project support and testing. Limited Brands agrees to provide Lerner, at no additional cost to Lerner (beyond that already included in the LLS Customary Billing method charges or as otherwise stated herein), system access and appropriate training required by Lerner in connection with any replacement applications that are presently supported under this Schedule III, including without limitation Rockport.

In regard to any changes to Lerner’s systems, initiated by Lerner, Lerner shall be responsible for all costs, other than Limited Brands internal labor, associated with system changes and system compatibility matters needed for Lerner to send and receive information to and from Limited Brands’ systems. Limited Brand’s obligation (and its cost) with regard to Lerner system changes shall include but not be limited to providing technical project support as well as testing of the interfaces prior to implementation as specified by Limited Brands. Limited Brands agrees that there will be no financial charge back to Lerner for time spent by Limited Brands employees and/or its agents or consultants on activities related to project support and testing.”

6. In Schedule III, add an additional paragraph as follows:

“1.13 In addition to any other fees as stated herein, Lerner shall pay a Management Fee to Limited Brands in the amounts as specified below:

Management Fee Payment Schedule

Fiscal Year	2006		2007		2008		2009		2010
Management Fee	$	500,000	$	2,500,000	$	2,500,000	$	3,500,000	$	4,000,000

The payments for Fiscal Year 2006 shall begin in May 2006 and continue each month thereafter in equal installments. For all subsequent full Fiscal Years, the Management Fee shall be invoiced forty percent (40%) of the annual total in the months of February to July and sixty percent (60%) of the annual total in the months of August to January and invoiced in equal payments over each of those semiannual periods. For each successive annual period after the Fiscal Year 2010 payments, the annual amount of the Management Fee shall cumulatively increase each year thereafter based upon the CPI Adjustment. For any partial Fiscal Year at the end of the term, the Management Fee shall be reduced in proportion to the number of months in such Fiscal Year that this Agreement shall be effective, and the Management Fee shall be billed and paid each month in equal installments.”

7. This Amendment is supplementary to and modifies the Agreement. This Amendment shall be incorporated as part of the Agreement. The terms of this Amendment supersede provisions in the Agreement only to the extent that the terms of this Amendment and the Agreement expressly conflict. However, nothing in this Amendment should be interpreted as invalidating the Agreement, and provisions of the Agreement will continue to govern relations between the parties insofar as they do not expressly conflict with this Amendment.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above.

Lerner New York Holding, Inc.		Limitedbrands, Inc.

By:	/s/ Ronald W. Ristau	By:	/s/ Douglas L. Williams
Name:	Ronald W. Ristau	Name:	Douglas L. Williams
Title:	Chief Operating Officer and	Title:	General Counsel
	Chief Financial Officer	Date:	April 19, 2006
Date:	April 12, 2006

New York & Company, Inc.

By:	/s/ Ronald W. Ristau
Name:	Ronald W. Ristau
Title:	Chief Operating Officer and
	Chief Financial Officer
Date:	April 12, 2006

Exhibit 31.1

CERTIFICATION

I, Richard P. Crystal, Chief Executive Officer of New York & Company, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of New York & Company, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

(d) Disclosed in this report any changes in the registrant’s internal controls over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: June 8, 2006
		/s/ RICHARD P. CRYSTAL
		Richard P. Crystal
		Chairman, President and
		Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Ronald W. Ristau, Chief Operating Officer and Chief Financial Officer of New York & Company, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of New York & Company, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: June 8, 2006
		/s/ RONALD W. RISTAU
		Ronald W. Ristau
		Chief Operating Officer and
		Chief Financial Officer

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350
As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Solely for the purposes of complying with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we, the undersigned Chairman, President and Chief Executive Officer, and Chief Operating Officer and Chief Financial Officer of New York & Company, Inc. (the “Company”), hereby certify, based on our knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended April 29, 2006 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: June 8, 2006
		/s/ RICHARD P. CRYSTAL
		Richard P. Crystal
		Chairman, President and
		Chief Executive Officer
		/s/ RONALD W. RISTAU
		Ronald W. Ristau
		Chief Operating Officer and
		Chief Financial Officer

PART I. FINANCIAL INFORMATION
Item 1.		Financial Statements	2
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.		Controls and Procedures	19
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		20
Item 1A.	Risk Factors		20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		20
Item 3.	Defaults Upon Senior Securities		20
Item 4.	Submission of Matters to a Vote of Security Holders		20
Item 5.	Other Information		20
Item 6.	Exhibits		20