Aeropostale Shares Slump on Potential Sale or Restructuring | Financial Buzz

Aeropostale Shares Slump on Potential Sale or Restructuring

As most of the apparel retailers are cheering for the rebound of consumers’ demand, Aeropostale (NYSE: ARO) announced on Thursday that it is exploring a potential sale or restructuring of the company. Share prices slumped over 47% Friday morning to $0.25.

Aeropostale Six-Month Stock Price


The teen apparel company released its fourth quarter 2015 financial results that show another quarter of loss in addition to the previous twelve quarters. Sales for the quarter decreased 16% year-over-year to $498 million driven by the drop of comparable sales and average square footage. Net loss was $21.7 million or $0.27 per diluted share, widened from $0.17 per share loss last year.

During the earnings call, Aeropostale claimed that it had hired Stifel and other advisors to help with strategic and financial alternatives including “a potential sale or restructuring of the company”. Moreover, the company pointed out that it is having a dispute with MGF Sourcing U.S., a key supplier which according to the CEO, “is in violation of its sourcing agreement with the company” and could affect the operating performance of Aeropostale.

For the first quarter of 2016, the company expects the loss to be $0.35 to $0.42 per share under the assumption that the increase in comparable sales would be “flat-to-positive low single-digit”. The company now considers Factory Stores “a more immediate focus” and would help improve its financial performance. As a result, it has been making changes to those stores in terms of promotion and presentation, and the efforts have recently started to show benefits to its comparable sales and gross margin.

“We believe that our revised merchandise assortment and our more targeted merchandise allocation approach in our Factor Chain will reinvigorate our stores, delivering our customers the product and shopping experience they desire,” said Julian Geiger, the CEO of the company.