) fell 12.0% in the after-hour trading session following the
company's dismal fourth-quarter fiscal 2013 results. The company
reported adjusted loss per share of 35 cents in the quarter, much
wider than the Zacks Consensus Estimate of a loss of 30 cents and
year-ago quarter earnings of 24 cents.
AMER EAGLE OUTF (AEO): Free Stock Analysis
ABERCROMBIE (ANF): Free Stock Analysis Report
AEROPOSTALE INC (ARO): Free Stock Analysis
FOOT LOCKER INC (FL): Free Stock Analysis
To read this article on Zacks.com click here.
Declining traffic and higher promotional expenses had a
deeper-than-expected impact as the loss came wider than the
guided range of 24-32 cents per share.
Including one-time items, the quarterly loss came in at 90 cents
per share, as against loss of 1 cent per share in the prior-year
For the full year, adjusted loss per share came in at $1.13,
wider than the Zacks Consensus Estimate of a loss of $1.09 per
share and adjusted earnings of 68 cents per share in fiscal 2012.
This teen apparel retailer witnessed a tough 2013 as it reported
continuous losses throughout the year. To counter this, the
company has undertaken a number of initiatives, such as retail
store downsizing, effective merchandising and expense management.
Recently, the company inked a strategic deal with Sycamore
Partners and its affiliates. As per the deal, Aeropostale will
have access to $150 million worth of credit facility, which
comprises five-year $100 million term loan facility and a
ten-year $50 million term loan facility.
The deal also includes a sourcing arrangement with MGF Sourcing,
one of the associates of Sycamore. Moreover, Aeropostale has to
offer Sycamore up to 5% of convertible stock equivalent at $7.25
per share. Therefore, on as-converted basis, this will boost
Sycamore's stake in Aeropostale to 12.3% of outstanding shares.
Coming back to Aeropostale's quarterly results, the top line fell
16.0% to $670.0 million, lagging the Zacks Consensus Estimate of
$699.0 million. Weakness in certain core categories affected the
quarterly sales. Full-year earnings came in at $2,091 million,
down 12% year over year and fell short of the Zacks Consensus
Estimate of $2,116 million.
Comparable-store sales (comps) - which include Aeropostale's
e-Commerce business - declined 15% in the quarter due to a 12%
fall in transactions and 3% fall in average unit retail, partly
offset by 1% increase in units per transaction. Revenues from
e-Commerce that include the GoJane business decreased 12% to
The company's gross profit declined 45.2% to $86.9 million while
gross margin fell to 13.0% from 19.8% in the prior-year quarter.
However, excluding one-time items, gross margin contracted 620
basis points to 17.8%, reflecting lower merchandise margins and
deleveraging of non-merchandise costs.
During the quarter, the company opened 5 Aeropostale and 3 P.S.
from Aeropostale stores. Alongside, it closed 32 Aeropostale
For 2014, the company plans to open 7 Aeropostale stores, 1 P.S.
from Aeropostale stores, remodel nearly 10 Aeropostale stores and
close 50 Aeropostale stores and 2 P.S. from Aeropostale
stores. The capital expenditure for 2014 is expected to be
around $22 million, lower than $35 million expected earlier,
mainly diverted to store refurbishment and other infrastructural
Currently, the company operates 864 Aeropostale outlets across 50
states and Puerto Rico, 78 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 $106.5
million, with no debt and shareholders' equity of $280.7 million.
Going forward, Aeropostale anticipates macroeconomic headwinds,
weak traffic and inventory clearance to weigh on its margins and
in turn, earnings. It anticipates operating loss in the band of
$64-$68 million for the first quarter of fiscal 2014.
Consequently, it expects to report loss per share in the range of
70 cents to 75 cents in the first quarter of fiscal 2014.
The Zacks Consensus Estimate for the first quarter stands at a
loss of 17 cents at present.
Cautious spending among teenagers has shown no signs of
improvement, thereby leading to lackluster results for
Aeropostale and its peers.
American Eagle Outfitters, Inc.'
) posted fourth-quarter fiscal 2013 adjusted earnings of 27 cents
per share, plunging 50.9% from 55 cents in the prior-year
quarter. American Eagle's net sales declined 6.7% year over year
to $1,041.7 million in the fourth quarter and came below the
Zacks Consensus Estimate of $1,065.0 million.
Currently, Aeropostale carries a Zacks Rank #4 (Sell). A
better-placed stock in the retail apparel/shoes sector is
Foot Locker, Inc.
), which has a Zacks Rank #2 (Buy).