Aeropostale swings to 3rd-quarter loss

Aeropostale posts loss in 3rd quarter as it grapples with cautious spending among teens

Associated Press

NEW YORK (AP) -- NEWS: Aeropostale Inc. swung to a loss in the third quarter as the teen retailer aggressively discounted to pull in shoppers. Revenue dipped 15 percent.

The company expects a loss in the fourth quarter that could be greater than what analysts had expected.

Shares fell in after-market trading after the results were released.

DETAILS: The results come after Aeropostale announced last week that it was adopting a poison pill to help it ward off any potential hostile takeover attempts. It follows on the heels of investment firm Hirzel Capital Management LLC disclosing that it bought a stake in the New York retailer.

Like many of its teen retailing peers, Aeropostale is grappling with cautious spending among young shoppers. The company has been trying to make its merchandise more trendy and scaling back on logo merchandise. But it stepped up discounting in order to be in a healthier inventory position going into the fourth quarter.

"We were disappointed in our overall performance as customer adoption is occurring more slowly than we would like against the backdrop of a challenging teen retail environment," said Thomas P. Johnson, CEO of Aeropostale, in a statement.

Johnson added that he was encouraged that sales trends over the Black Friday weekend improved from the pace of the third quarter. But he said it was prudent to remain cautious for the remainder of the year.

NUMBERS: The teen retailer posted a loss of $25.6 million, or 33 cents per share, in the quarter ended Nov. 2. That compares with a profit of $24.9 million, or 31 cents per share, in the year-ago period.

Revenue fell 15 percent in the quarter to $514.6 million

Analysts had expected a loss of 25 cents on revenue of $514.5 million for the quarter, according to FactSet.

Revenue at stores open at least a year — a key metric of a retailer's health — dropped 15 percent.

FUTURE: Aeropostale said that it expects a loss of 24 cents to 32 cents per share for the fourth quarter. Analysts expect a per-share loss of 8 cents for the fourth quarter, according to FactSet.

STOCK: Shares fell nearly 4 percent, or 36 cents, to $9 in after-hours trading, after falling nearly 4 percent, or 38 cents, to $9.36 during regular trading. Shares have been trading between $7.78 and $17.10 over the past 52 weeks.

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