Dive Brief:

• New York & Co., Inc. on Tuesday announced a new growth strategy, with an aim of "well over $1 billion" in annual sales, and a rebranding that entails a name change to "RTW Retailwinds."

• That will include expanding its portfolio of sub-brands, including more partnerships with celebrities, like the recent tie-up with Kate Hudson for its SoHo denim label and its Eva Mendes collection, and a soon-to-be-introduced lingerie label. RTW Retailwinds also sees potential for growth in e-commerce and in plus sizes, according to a press release; the company acquired plus size label Fashion to Figure late last year.

• Last month, the company reported that second quarter net sales fell to $216.4 million from $224.1 million in the prior year, reflecting store closures and a shift in where Mother's Day fell on the calendar, as store comps rose 0.6%, led by rising digital sales and strength in outlet stores. 

Dive Insight:

Founded in 1918 and public since 2004, with a stint as a sub-brand of The Limited from 1985 to 2002, New York City-based New York & Co., (make that RTW Retailwinds), now runs 425 stores in the U.S. Like many specialty apparel retailers, the company has run into headwinds of late, shuttering stores and pushing back against an activist investor who had advocated for a new board member and criticized the company's share price.

But it's not highly leveraged, and CEO Greg Scott said in a statement that the company is primed for growth. "Today, over 30% of our sales are generated digitally, we have optimized our retail footprint, and have the talent and infrastructure to capitalize on our strengths," he said, noting that the company's second quarter comp increase was its fourth straight quarter of growth in that metric, along with "our highest gross margin rate achieved in the second quarter since 2005."

Apparel sales are indeed moving online. Digital sales accounted for 27.4% of overall U.S. apparel sales last year, up from 23.5% in 2016 and 20.7% in 2015, according to the most recent Internet Retailer Online Apparel Report.

But moving so aggressively to boost sales through that channel is missing the reality of apparel shopping, according to branding strategist Brian Kelly, president of consultancy Brian Brands, who compares RTW Retailwinds' new strategy to Amazon's apparel sales approach. "Both have [the] same objective: get [the consumer] to reconsider her fashion provider, aka closet filler," he told Retail Dive in an email. "But while online captures investor attention, she still wants to go to a store. Just not a lousy store. ... Each point of engagement must be relevant."

The company is also entering highly competitive segments. Plus-size customers, for example, seem poised to provide a major opportunity for retailers. The plus-size market in 2015 accounted for 17% of U.S. women's apparel sales, according to the NPD Group, with U.S. sales of special sizes (plus-size/full-figure, petite plus, and junior plus sizes), rising 3% in the 12 months ending February 2016 to $20.4 billion. But specialty banners aren't doing well because women of all sizes simply want to be able to shop for apparel anywhere, according to Jane Hali, CEO of investment research firm Jane Hali & Associates. 

Lingerie is especially competitive at the moment, with L Brands' stalwart Victoria's Secret faltering as styles move to less sexy, more comfortable fashion. "It is ironic that [L Brands CEO and The Limited founder] Les [Wexner] is struggling [with] Vickie's, after he liquidated his fashion portfolio," Kelly said. "Scott is headed right into that strategy, albeit online based, to satisfy the long tail of individual preference."

There are several open questions around RTW Retailwinds' new strategy, Kelly also said, including whether all brands will launch at the same time or if there will be a series of rollouts.