Citi Maintains Hold on Aeropostale (ARO)

Citi is out with its report today on Aeropostale ARO, maintaining Hold.

In a note to clients, Citi writes, "Product trends are still mixed, but we'll credit ARO for some realism on the cost front. Management's guidance for 2011 implies (400) – (500) bps of gross margin erosion and an operating margin in the low double digits vs the 16% to end 2010. The apparent conservatism (plus an intra quarter update on inventory) limits more meaningful near term downside, in our view, though fashion risk and pricing power obscure 2H11 earnings visibility. We remain on the sidelines for now but could reconsider when we get more clarity on the back half."

Citi maintains a $27 PT on ARO.

At the time of posting, shares of ARO were trading at $23.04, down 6.06% from Thursday's close.