Aeropostale's Comparables Fall - Analyst Blog

Aeropostale Inc.'s (ARO) comparable-store sales for December dropped 5.0% against a 10.0% increase in the year-earlier period. Total sales for the five weeks ended January 1, 2011, jumped 3% to $474.7 million from $460.8 million for the five weeks ended January 2, 2010.

Year to date, comparable-store sales increased 1.0% versus a tough comparison of a 10.0% rise in the same period last year. Total sales for the period clocked $2,280 million, which represents an increase of 8.0% from $2,118 million a year ago.

The company acknowledged that it used various promotional measures as a weapon to regain the lost market share and to survive in the highly competitive holiday selling season.

Aeropostale reaffirmed its expectation for fourth quarter earnings of 94 cents to 96 cents per share. The Zacks Consensus Estimate of 95 cents is in consonance with the guidance range.

Aeropostale is a mall-based, specialty retailer of casual apparel and accessories and is currently operational with 906 Aeropostale stores in 49 states and Puerto Rico, 59 Aeropostale stores in Canada and 47 P.S. from Aeropostale stores in 13 states.

The company operates in a highly fragmented specialty retail sector and faces intense competition from other teenage-focused retailers, such as Abercrombie & Fitch Co. (ANF) and Gap Inc. (GPS).

Aeropostale's shares maintain a Zacks #4 Rank, which translates into a short-term ‘Sell' recommendation. Our long-term recommendation on the stock remains ‘Neutral'.

 
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