DOW JONES NEWSWIRES
Aeropostale Inc.'s (ARO) fiscal first-quarter profit dropped 64%
on weak growth in sales and margins as the teen apparel retailer
issued a much lower-than-expected forecast for the current
quarter.
Looking ahead to the second quarter, the company projected a
per-share profit of 11 cents to 16 cents share, well below the
estimate of 27 cents a share from analysts polled by Thomson
Reuters.
"Based on current business trends and uncertainty surrounding
the retail environment in the back-half of the year," Aeropostale
said it "is not reiterating or providing an update to its
previously issued full year guidance."
Shares fell 8.6% after-hours to $19.50 Thursday. The stock had
been down 20% over the past three months through the close after
the company's outlook revision earlier this month sent shares
falling.
Unlike other mall-based retail chains, Aeropostale posted strong
results throughout the recession by gaining market share as a
lower-price alternative to rivals such as Abercrombie & Fitch
Co. (ANF) and American Eagle Outfitters Inc. (AEO). It has faced
stiffer competition in recent months as more retailers discount
their goods to court shoppers. Abercrombie on Wednesday said it
swung to a fiscal first-quarter profit as margins improved on more
expensive sales abroad.
"Our outlook for the second quarter reflects our plans to
aggressively clear through spring inventories to position ourselves
appropriately for the important back to school selling season,"
Aeropostale Chief Executive Thomas P. Johnson said. "Our goals for
the remainder of the year remain very clear--regain balance and
clarity in our merchandise assortments, mitigate industry wide cost
increases, and manage our cost structure conservatively and
carefully."
For the quarter ended April 30, Aeropostale posted a profit of
$16.4 million, or 20 cents a share, down from $45.4 million, or 48
cents a share, a year earlier.
The company two weeks ago slashed its already-downbeat earnings
guidance to about 20 cents a share, citing the lower-than-expected
sales.
Gross margin dropped to 29.1% from 39.4%.
Aeropostale also previously reported that net sales increased 1%
to $469.2 million, below the $478 million estimate at the time from
analysts polled by Thomson Reuters.
Same-store sales dropped 7% after rising 8% last year.
-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909;
Andrew.FitzGerald@dowjones.com