) fell nearly 6.0% in the after-hours trading session following
the company's dismal third-quarter fiscal 2013 results. Battered
by weak traffic and higher promotional expenses, Aeropostale
reported adjusted loss per share of 29 cents for the quarter. The
figure also compared unfavorably with the Zacks Consensus
Estimate of a loss of 25 cents.
AMER EAGLE OUTF (AEO): Free Stock Analysis
ABERCROMBIE (ANF): Free Stock Analysis Report
AEROPOSTALE INC (ARO): Free Stock Analysis
FINISH LINE-CLA (FINL): Free Stock Analysis
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Including one-time items, the quarterly loss came in at 33 cents
Aeropostale's top line fell 15.1% to $514.6 million and missed
the Zacks Consensus Estimate of $516.0 million. Weakness in
certain core categories affected the quarterly sales.
Comparable-store sales (comps) - which include the e-Commerce
business - declined 15% in the quarter, reflecting a decline of
10% in transactions and 7% in average unit retail, partly offset
by 2% increase in units per transaction. Revenues from e-Commerce
that include the GoJane business remained flat year over year.
Cautious spending among teens led to lackluster third-quarter
results for Aeropostale and its peers.
American Eagle Outfitters, Inc.'s
) reported disappointing preliminary sales and comps results for
third-quarter fiscal 2013 on Nov 6, 2013. Net sales for the
quarter fell 6% year over year to $857 million but beat the Zacks
Consensus Estimate of $834 million. The company is scheduled to
report full-fledged earnings on Dec 6, 2013.
Coming back to Aeropostale, gross profit declined 48.0% to $87.9
million while gross margin fell drastically to 17.1%, compared
with 27.9% reported in the prior-year quarter. However, excluding
one-time items, gross margin contracted 980 basis points to
18.1%, reflecting lower merchandise margins and deleveraging of
During the quarter, the company opened 3 Aeropostale and 6 P.S.
from Aeropostale stores. Alongside, it closed 4 Aeropostale
outlets. In the fourth quarter, the company plans to shut 29
Aeropostale stores, thereby bringing total store closures for
2013 to 46 against its earlier projection of 15-20 store closures
For 2014, the company plans to open 11 Aeropostale stores, 5 P.S.
from Aeropostale stores, remodel nearly 26 Aeropostale stores and
shutter 40-50 Aeropostale stores. The capital expenditure
for 2014 is expected to be around $35 million, mainly owing to
store refurbishment and other infrastructural development.
Currently, the company operates 902 Aeropostale outlets across 50
states and Puerto Rico, 79 Aeropostale stores in Canada and 151
P.S. from Aeropostale stores across 31 states and Puerto Rico.
Balance Sheet & Guidance
Aeropostale, which competes with
Abercrombie & Fitch Co.
), ended the quarter with cash and cash equivalents of $68.0
million, with no debt and shareholders' equity of $346.9 million.
Going forward, Aeropostale stated that macroeconomic headwinds,
weak traffic and rise in costs as well as competition would weigh
on its margins and in turn earnings. Consequently, it expects to
report loss per share in the range of 24 cents to 32 cents in the
fourth quarter of fiscal 2013. The Zacks Consensus Estimate for
the fourth quarter stands at a loss of 12 cents at present and we
expect further downward revisions.
Currently, Aeropostale carries a Zacks Rank #4 (Sell). A better
placed stock in the retail apparel/shoes sector is
Finish Line Inc.
) with a Zacks Rank #2 (Buy).