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Aeropostale Losses Accelerate, Closing More Stores

By  +Follow August 23, 2013 8:15AM
Tickers Mentioned:

Joining a growing list of retailers to limp through the second quarter, Aeropostale, Inc. (ARO) delivered its financial report for the quarter that was short on both top and bottom lines.  The mall-based specialty retailer further delivered bleak guidance for the current quarter and said it is shuttering more stores than it originally anticipated. To a degree, the soft report was expected as the company pre-announced that sales were falling, but that didn't stop shares from getting hammered in after-hours trading.

Net sales for the quarter ended August 3 fell by 6 percent to $454.0 million from $485.3 mllion in the second quarter last year.  Wall Street was expecting revenue of $453.97 million.

The company reported a net loss of $33.7 million, or 43 cents per share, compared to a net profit of $71,000, or nil per share, in last year’s quarter.  On an adjusted based, which excludes one-time items like after-tax charges, the net loss was trimmed to $26.9 million, or 34 cents per share.  Analysts were expecting an adjusted net loss of 34 cents per share.

Same-store sales, a closely watched metric of growth that compares sales at stores open more than one year, decreased by 15 percent compared to the second quarter of 2012.  Aeropostales’ comparable sales include its e-commerce business as well.

Net sales from the e-commerce business rose 22 percent to $39.0 million from $31.9 million last year, but also included revenue from the company’s purchase of GoJane.com in November 13, 2012.

Deep discounts stung gross profit margin, which fell 740 basis points to 17.9 percent.

“Our business was pressured by a challenging teen retail environment with weak traffic trends and high levels of promotional activity.  Our results were particularly disappointing given the level of change we have registered with the Aeropostale brand in recent periods," said Thomas P. Johnson, chief executive at Aeropostale in a statement.

During the quarter, the company closed 9 Aeropostale stores and one of its P.S. from Aeropostale stores.  The New York-based company previously said that it would be closing between 15 and 20 Aeropostale stores during 2013.  Today, they hiked that number to between 30 and 40 locations.

To make matters worse, the company said it expects to lose between 21 cents and 26 cents per share during the third quarter as it continues to face hefty headwinds from a lot of promotions in the competitive teen retail environment, even through the back-to-school period.  Analysts were expecting earnings of 25 cents per share.  In the third quarter of 2012, Aeropostale banked a profit of 31 cents per share.

Companies focused on teen apparel have been getting lumped up recently as their core market seems to be shifting to different brands and what they spend their money on, often preferring electronics it seems. Abercrombie & Fitch (ANF) , once one of the hottest brands around, whiffed on second-quarter results today as well, sending shares 17.7 percent lower. American Eagle (AEO) delivered soft guidance on Wednesday, pitching shares from $16.40 to $14.75.  The circle of lower sales and profits is being perpetuated as each of the companies is on a slashing prices spree trying to lure in shoppers.

Shares of ARO have had a tough month, to say the least.  From a high of $15.73 on August 1, shares have sunk 30 percent through Thursday’s close at $10.98.  The bleeding is not stopping in extended trading following the earnings report, with shares down to $9.70 an hour after the news hit.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.

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Results for ARO
17 Sep 14 17:24:12
RT @Trefis: Here's Why We Believe Aeropostale's Revenue Per Square Feet Can Recover http://t.co/8gxYJlrqqj by Trefis Team $ARO $GPS $ANF
Kubilay Nacak
17 Sep 14 16:55:14
$ARO - Want to Save Money on Fashion? Try Buying Pink http://t.co/WQ9Q9wjy5g
17 Sep 14 16:55:11
$ARO - Want to Save Money on Fashion? Try Buying Pink http://t.co/fwFhrkN1zW
17 Sep 14 16:55:09
$ARO - Want to Save Money on Fashion? Try Buying Pink http://t.co/ACjyx6mr7M
VisualStock Resource
17 Sep 14 16:55:03
$ARO - Want to Save Money on Fashion? Try Buying Pink http://t.co/qMNJicjFyI
Thomas Collins
17 Sep 14 14:00:43
$ARO Aeropostale, Inc. Announces Julian R. Geiger To Rejoin Company As Chief ... http://t.co/RWyVMCMAoT
17 Sep 14 12:20:02
Want to Save Money on Fashion? Try Buying Pink http://t.co/RVHt4bmZt9 $ARO $GPS $NKE
17 Sep 14 10:52:09
Here's Why We Believe Aeropostale's Revenue Per Square Feet Can Recover http://t.co/8gxYJlrqqj by Trefis Team $ARO $GPS $ANF
Alexander Morris
17 Sep 14 08:08:34
$ARO: Exc 1DyHIGH=3.82, hits:2, ch:+2.3%, 0phNewHi:BrkPLo[+202.7%], tf:1f, MedFlt[54.2M], HiPctSht[37%:4d], DyVol:400T:0.2x:0.1x
Charts 123
17 Sep 14 03:52:03
Sell Signal: $ADXS $ARO $BTH $CBPX $CGA $CLVS $CORT $CSUN $DHT $ECYT $INO http://t.co/PMGekB0ecu #stocks
Analyst Ratings
16 Sep 14 16:32:52
Get the latest ratings for $BBT $RY $AEO $ARO $CSCO in your inbox with ARN Daily http://t.co/nSJuDsYidj
Trader News Daily
16 Sep 14 15:30:52
http://t.co/PeRPkYu8Uk ranks #1 with over 80% in alert gains today. Related: $YGE $BLTA $NEWL $GSAT $ARO $KWK $MTG $FMCC $SNTA $MCP $DVAX
Samuel Brown
16 Sep 14 14:01:49
$ARO Post-Earnings Review and Insight - Aeropostale http://t.co/jzkvFD8aBY
16 Sep 14 13:36:19
$ARO high open interest range is 4.00 to 4.00 for option expiration 09/20/2014. http://t.co/0gkLVVtFIG
16 Sep 14 13:24:07
$ARO Max Pain = 3.50. Maturity = 09/20/2014. Previous close = 3.74. http://t.co/Lb7H4No3GL
Patrick Henderson
16 Sep 14 09:46:25
@jimcramer $ARO. Any shot this company rebounds?
Cristobal Barberis
16 Sep 14 09:11:11
AEROPOSTALE INC Financials $ARO http://t.co/yiKJ4lpr25
Zero Filter
16 Sep 14 07:44:36
Despite #recovery signs #SycamorePartners still #mute / #pursestrings closed on $EXPR $ARO #aeronow #cnbcfastmoney #jimcramer #zerohedge
16 Sep 14 04:27:46
Parabolic Sar Sell Signals 1/3 $ACAD $AFFX $AGIO $AINV $ALGN $AMAT $ARO $ARR $ARWR $ASPS $ATML $ATRO $AVGO $AXL $BBBY http://t.co/NBxHowDTNW
Charts 123
16 Sep 14 03:52:02
Sell Signal: $ADES $ARO $ASPX $CECO $CGA $CLVS $CSUN $DRL $EMKR $EVRY $GRPN http://t.co/mymhVSNHtv #stocks
15 Sep 14 20:15:42
Aeropostale Inc. (ARO) Drops 7.32% on September 15 $ARO http://t.co/Hl6mYLDd5G
Trader News Daily
15 Sep 14 18:26:15
http://t.co/PeRPkYu8Uk ranked #1 for alerts last week with 275% in gains. Related: $BSBR $GSAT $CIG $DRYS $MDR $ARO $GGB $BLDP $KWK $CMLS
15 Sep 14 17:25:07
Vote @BethanyMota tonight on #DWTS $aro #aeronow
Jeffrey Blake
15 Sep 14 15:31:02
$ARO Aeropostale, Inc. Announces Julian R. Geiger To Rejoin Company As Chief ... http://t.co/wKwrskG6GN
15 Sep 14 12:21:03
@JeffClarktrader @macnsontile I am in more profit (sold $ARO Jan 4 puts, instead of buying Jan 3 calls). Selling puts is better. Correct???
Thomas Moore
15 Sep 14 11:07:16
I sold half of my $aro a little while ago for $3.88, ill add it back when it looks like its bottomed.
tanvir ahmed
15 Sep 14 10:27:29
In $aro at 3.91
15 Sep 14 09:20:06
Mall retailers out of fashion http://t.co/8hmHoHCkQ6 $LULU $EXPR $PSUN $ARO
Thomas Moore
15 Sep 14 06:54:01
just going to hold my long positions, $bbry, $jcp, $aro and $de until things look like they might have bottomed. No swing trades.
Julian Close
15 Sep 14 06:36:16
Critical Alerts for $ULTA, $CNVR, $MSFT, $ARO, $XOM from InvestorsObserver today: http://t.co/gA2Yg2AXPL #OptionsTrading #CoveredCalls
Investors Observer
15 Sep 14 06:36:16
Critical Alerts for $ULTA, $CNVR, $MSFT, $ARO, $XOM from InvestorsObserver today: http://t.co/blVMKP9lIA #OptionsTrading #CoveredCalls
14 Sep 14 07:00:39
$ARO 30 min long shot but 4.20 watch http://t.co/EY0Jis1Zsp
Zubeyr Kamil Açıksar
12 Sep 14 13:21:19
RT @beckyhiu: $ARO closed green. $XRT #strong
Becky Hiu
12 Sep 14 13:20:36
$ARO closed green. $XRT #strong
Daily Contracts
12 Sep 14 09:16:00
Real-Time feed of company contracts, original agreements and executive updates from Aéropostale $ARO http://t.co/alc5rr5Nkd
Thomas Moore
12 Sep 14 07:28:10
$aro is still a gamble, imo, it will take a couple of qtrs to see if the New/Old ceo can turn things around.
Thomas Moore
12 Sep 14 07:26:31
Added to long positions in $bbry, $de and $aro, still holding $crox for a swing trade.
Alexander Morris
12 Sep 14 06:50:12
$ARO: At 1DyHIGH=4.12, hits:1, ch:+1.2%, 1phNewHi:BrkPLo+PHi[+201.5%], tf:47, MedFlt[56.6M], HiPctSht[36%:4d], DyVol:110T:0.1x:0x
John Turner
12 Sep 14 05:30:53
$ARO Top Services Small-Cap Star for September 4 is Aeropostale Inc. (ARO) http://t.co/lfXiZhLIAV
11 Sep 14 21:24:33
#SmallCap Best & Worst Report $INFN $CBK $BELFB $CMTL $AVID $EVC $GIGM $ARNA $BEAT $ARO http://t.co/UDN1Yq5JGZ
11 Sep 14 19:38:05
Hot Tweets Pertaining to $ARO on 09/12/2014 http://t.co/6ShaIoqBPz
11 Sep 14 19:11:22
@NKondratiev $ARO going concern worth at least 0.5x EV/Rev. Fair value $8.00+ as the business sits. AERO brand viable, Sycamore M&A likely.
Nikolai Kondratiev
11 Sep 14 16:47:54
$ARO turnaround? 3 Directors purchased shares incl Chairwoman; Google Trends data shows first YoY growth in 4 yrs, awareness is up.
11 Sep 14 16:37:05
RT @rustinonthevine: best bottom plays $LQDT $NILE $GMAN $OIBR $PT $WTW $TZOO $WTSL $NDLS $ARO
11 Sep 14 16:26:43
best bottom plays $LQDT $NILE $GMAN $OIBR $PT $WTW $TZOO $WTSL $NDLS $ARO
11 Sep 14 15:00:04
#SmallCap Best & Worst Report $INFN $CBK $BELFB $CMTL $AVID $EVC $GIGM $ARNA $BEAT $ARO http://t.co/laVn7UgCcF
Alexander Morris
11 Sep 14 07:21:43
$ARO: At 1DyHIGH=4.12, hits:1, ch:+1.1%, 2phNearHi, PrvCHi, 2:1Accel+, tf:4f, MedFlt[56.6M], HiPctSht[36%:4d], DyVol:506T:0.2x:0.1x
Charts 123
11 Sep 14 03:52:03
Sell Signal: $ARO $EVRY $KKD $NX $ONTX $POWR $SGOC $TOPS $VHI http://t.co/76JCycGUvD #stocks
$hane Obata
10 Sep 14 15:54:48
$JCP $RSH $BBRY $BBY $ARO #amidiversified? @jimcramer @MadMoneyOnCNBC
Harry Walkman
10 Sep 14 13:31:34
$ARO Aeropostale Inc ( ARO): Insider Buying – Clustering at the Bottom? http://t.co/Qxcn9m35a4
By  +Follow August 23, 2013 8:15AM



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