Topic: Growth Stocks

AEROPOSTALE INC. $12.76 – New York symbol ARO

AEROPOSTALE INC. $12.76 (New York symbol ARO; TSINetwork Rating: Extra Risk) (646-485-5410; www.aeropostale.com; Shares outstanding: 78.3 million; Market cap: $999.1 million; No dividends paid) is a mall-based retailer of casual clothing and accessories. It now has 984 stores in the U.S., Canada and Puerto Rico that mainly target 14- to 17-year-old women and men. Aeropostale’s 103 P.S. from Aeropostale stores in the U.S. are aimed at seven- to 12-year-olds.

In the three months ended February 2, 2013, Aeropostale’s sales fell 1.3%, to $797.7 million from $808.4 million a year earlier. Same-store sales declined 8%, compared with a 7% decline a year ago.

Aeropostale’s earnings before one-time items fell 46.6%, to $19.0 million, or $0.24 a share, from $35.6 million, or $0.44 a share, a year earlier.

Teenage customers, especially in light of the slow U.S. economy, are increasingly demanding not only fashion but low prices. That’s Aeropostale’s traditional market, but it’s facing rising competition as other teenclothing retailers offer lower-priced merchandise.

The company appears to be successfully refreshing its clothing lines with popular new colours and styles, and price competition should subside as the economy improves. Aeropostale will likely be able to repeat its past success at attracting customers, but its sales may remain weak in the near term.

Aeropostale is still a hold.

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