) posted yet another dismal quarter. Blaming weak traffic and
increased promotional expenses, the company reported adjusted
loss per share of 34 cents for second-quarter fiscal 2013. This
compares to the break-even results posted in the year-ago
The Zacks Consensus Estimate for the quarter was a loss of 24
cents. Including one-time items, the quarterly loss came in at 43
cents a share.
Top line waned 6% to $454 million and marginally missed the
Zacks Consensus Estimate of $455 million. Double-digit decline in
store traffic and weakness in some core categories hurt the
Comparable-store sales (comps) including the e-Commerce
business declined 15% during the quarter, reflecting a decline of
10% and 5% in transactions and average unit retail, while units
per transaction decreased 1%. Revenue from e-Commerce including
the GoJane business jumped 22% year over year to $39 million
during the quarter
The company's competitors also cited the same reason for
disappointing second-quarter results.
American Eagle Outfitters, Inc
) earnings plunged 52.4% year over year. Weak sales and higher
operating expenses led to a decline.
Casual apparel retailer,
Abercrombie & Fitch Co
) earnings decreased 20% year over year and missed the Zacks
Consensus Estimate by nearly 43%. The company blamed reduced
traffic for the sluggish results.
We believe these retailers need to focus more on their
assortments in order to drive traffic. This is well evident from
the second-quarter results of the industry leader
). Gap's second-quarter earnings jumped 31% year over year
as the demand for the company's assortments drove sales. The
company also raised its full year earnings
Coming back to Aeropostale, gross profit tumbled 33.9% to
$81.2 million, whereas gross margin contracted 740 basis points
to 17.9%. However, excluding one-time items, gross margin
contracted 570 basis points, reflecting decreased merchandise
margins and deleveraging of non-merchandise costs.
During the quarter, the company opened 4 Aeropostale and 19
P.S. from Aeropostale stores. Alongside, it closed 9 Aeropostale
and 1 P.S. from Aeropostale stores. Battered by sluggish results,
the company now plans to shutter 30 to 40 stores in fiscal 2013.
Earlier, the company had stated its plans to close 15 to 20
Aeropostale stores. Currently, the company operates 899
Aeropostale outlets across 50 states and Puerto Rico, 79
Aeropostale stores in Canada and 145 P.S. from Aeropostale stores
across 31 states and Puerto Rico.
Balance Sheet & Guidance
This Zacks Rank #4 (Sell) company ended the quarter with cash
and cash equivalents of $100.3 million, with no debt and
shareholders' equity of $368.3 million.
Going forward, Aeropostale stated that weak traffic, higher
costs and competition will adversely affect its margins and in
turn earnings. Consequently, it expects to report loss per share
in the range of 21 cents to 26 cents in the third quarter of
AMER EAGLE OUTF (AEO): Free Stock Analysis
ABERCROMBIE (ANF): Free Stock Analysis Report
AEROPOSTALE INC (ARO): Free Stock Analysis
GAP INC (GPS): Free Stock Analysis Report
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