(ALBANY, NY) -— Stores following the letter of New York City's new anti-sex shop zoning ordinance must be allowed to stay open, despite the city's questions about their sincerity, the state Court of Appeals said Monday.

While the Giuliani administration has frequently used the word "sham" to describe the shops' attempt to comply with the law, city officials cannot use overly broad definitions of the statute to move against the sex businesses, the top state court said in a 7-0 ruling.

The decision was hailed by gay groups and others who have fought against the ordinances, which are designed to zone the sex shops out of midtown Manhattan and residential neighborhoods and into remote industrial areas of the five boroughs.

Les Hommes, a gay book store on the West Side of Manhattan, brought the challenge to a move by city officials to close it down because it supposedly did not comply with the zoning law. Shops are considered "adult establishments" — and subject to the zoning prohibitions — if 40 percent or more of their floor space is used for displays of sexually explicit items or activities.

Les Hommes argued that once the sex shop zoning law went into effect, it made sure that at least 60 percent of its floor space was used for non-explicit wares.

The court Monday said the city was reading too much into the word "stock" in the sex shop zoning ordinance. City officials were arguing that Les Hommes and other sexually oriented businesses had merely added many items to their shelves that really weren't "stock" because the stores had no desire or expectation to rent or sell the merchandise.

Daniel Connolly of the city's corporation counsel said the ruling "exalts form over substance," but said the city does not plan to appeal.