5 million to settle twoseparate class action lawsuits pending in the State of California

The Company plans to close stores that do not meet thisreturn on investment criteria in a staged approach over the next five years uponthe termination of the respective leases or upon the exercise of kickoutprovisions, and as a result, the Company does not presently anticipate that itwill incur significant lease exit costs associated with these decisions. TheCompany expects to record a non-cash charge of approximately $22 million relatedto asset impairments for underperforming stores in the fourth quarter of fiscalyear 2008. In fiscal year 2008 these stores are estimated to achieve $60 to $70million in sales and are expected to generate negative four-wall profitcontribution. The Company currently expects to close 10 to 15 of theseunderperforming stores in fiscal year 2009, with the remainder of the plannedstore closures occurring over fiscal years 2010 to 2013. Broad Based Cost ReductionsThe Company has initiated a corporate-wide program to identify and implementstrategic and structural cost improvements across all aspects of the Companysbusiness including store operations, sourcing, real estate, marketing, andgeneral home office operations. These efforts include the optimization ofexternal resources, reduction of discretionary spending, consolidation ofcertain purchasing activities to leverage scale, and the renegotiation ofexisting agreements to achieve cost reductions. The Company currently estimatesthat these efforts will result in annualized pre-tax savings of approximately$14 to $17 million per year beginning in fiscal year 2009.

Capital ExpendituresThe Company plans to limit new store openings over the next year and as aresult, expects capital expenditures to approximate $15 million, which is downby $35 million from its expected fiscal year 2008 capital expenditures. SummaryIn total, the strategic restructuring and cost reduction program is anticipatedto result in pre-tax restructuring charges of approximately $25 million duringthe fourth quarter of fiscal year 2008, which includes approximately $22 millionin non-cash charges associated with the impairment of store assets and $3million in cash charges related primarily to severance and various other costsnecessary to implement the restructuring and cost reduction program. The Companydoes not currently expect to record additional restructuring charges for thesematters in fiscal year 2009. The Company expects to achieve pre-tax savings ofapproximately $175 million over the next five years, of which approximately $30million is expected to be realized in fiscal year 2009 Richard P. The exceptionally challenging economic environment hasresulted in an extremely difficult year for many companies and New York &Company is not exempt from these difficulties. After completing a comprehensive review ofour entire business, we have proactively begun a restructuring and costreduction program to preserve profitability and maximize cash flow in the nearterm with our streamlining and efficiency enhancing initiatives positioning uswith an improved platform for growth, as the economy stabilizes and eventuallyimproves. We believe that thisrestructuring demonstrates our commitment to increasing long-term shareholdervalue." Comparable Store SalesIn the fourth quarter-to-date period (November and December 2008), comparablestore sales declined by 10.1.

As a result, the Company now expects fourthquarter 2008 comparable store sales to decline by approximately 10.0, andexpects full fiscal year 2008 comparable store sales to be in the high negativesingle-digit range. Based on quarter-to-dateresults, the Company currently expects the diluted loss per share for the fourthquarter and full fiscal year 2008 to be at the low end of its previously issuedguidance range. This guidance excludes the charges expected to be incurredduring the fourth quarter of fiscal year 2008 in connection with the Companysannounced restructuring and cost reduction program and also excludes ananticipated pre-tax one-time charge of approximately $1.5 million to settle twoseparate class action lawsuits pending in the State of California. The netimpact of these one-time charges on loss per diluted share for both the fourthquarter and full fiscal year of 2008 is expected to be approximately $0.26 perdiluted share. The Company expects to end the quarter with a strong balance sheet includingapproximately $50 million in cash, $75 million of working capital and $70million of availability under its revolving credit facility. The Company plans to report results for the fourth quarter of fiscal year 2008on March 19, 2009. Forward Looking Statements: This press release contains certain forward lookingstatements.