Zacks Investment Research downgraded
) to a Zacks Rank #5 (Strong Sell) on Feb 2, 2013.
Why the Downgrade?
Aeropostale witnessed sharp downward estimate revisions after
reporting soft holiday sales numbers that prompted management to
take a conservative stance on its future earnings.
Total net sales came in at $645 million for the nine-week
period ended Dec 29, 2012, down 6% from $682.6 million reported
in the prior-year period. The specialty retailer of active and
casual apparel, footwear and accessories for the youth witnessed
an 8% decline in comparable-store sales (including the e-Commerce
channel) for the nine-week period. Excluding the contribution of
the e-Commerce channel, comparable-store sales dipped 9%.
The company stated that the decrease in sales on account of
lower traffic dented its December sales. Moreover, the company's
merchandising strategy backfired as its core offering, including
graphics and fleece, was not well received by the consumers.
Following soft holiday sales, Aeropostale now expects fourth
quarter fiscal 2012 earnings between 20 cents and 24 cents per
share, down from a range of 36 cents to 41 cents forecasted
The Zacks Consensus Estimate for the fourth quarter and fiscal
2012 dropped 35% and 17.9%, to 26 cents and 69 cents a share,
respectively, over the past 30 days. Moreover, for the first
quarter and fiscal 2013, the Zacks Consensus Estimate fell by
28.6% and 19.4% to 10 cents and 87 cents a share, respectively,
over the same time frame.
Other Stocks to Consider
Not all apparel, shoe store chains are performing as
disappointingly as Aeropostale.
Abercrombie & Fitch Co.
) holds a Zacks Rank #1 (Strong Buy), and is expected to continue
with its upbeat performance in the coming quarters. Other stocks
that should be merited are
Urban Outfitters Inc.
Foot Locker, Inc.
), both of which hold a Zacks Rank #2 (Buy) and look
ABERCROMBIE (ANF): Free Stock Analysis Report
AEROPOSTALE INC (ARO): Free Stock Analysis
FOOT LOCKER INC (FL): Free Stock Analysis
URBAN OUTFITTER (URBN): Free Stock Analysis
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