New York & Co.

Nov 4 (Reuters) - Women's apparel chain New York & Co Inc (NWY.N) said it expects to post a profit in the third quarter as merchandise margins increase due to fewer discounts, sending its shares up 19 percent.

New York & Co forecast earnings of 1-3 cents a share, which includes a gain of 6 cents a share due to certain non-operating adjustments.

Analysts on average were expecting a loss of 20 cents a share, before items, according to Thomson Reuters I/B/E/S.

New York & Co said customer response to its fall product offerings has been "positive," but it sees the retail environment remaining highly promotional going forward.

Third-quarter same-store sales rose 3.6 percent, said the company, which has a market value of about $194 million.

On Thursday, several U.S. retailers reported October same-store sales above Wall Street expectations, helped by unique merchandise and cheap prices.

New York & Co's shares, which have gained more than half of their value since it reported second-quarter results in August, were up 46 cents at $3.70 in Thursday morning trade.

The stock touched a 5-month high of $3.85 earlier in the session and was among the top percentage gainers on the New York Stock Exchange.

(Reporting by NR Sethuraman in Bangalore; Editing by Anne Pallivathuckal)