Aeropostale's Rough Friday: 'Brand Relevancy' At Stake

Benzinga

Aeropostale (NYSE: ARO) had a rough day Friday with shares tumbling more than 10 percent on disappointing outlook for the second half.

Shares of the troubled teen apparel retailer are down more than 60 percent year to date and Topeka's Dorothy S. Lakner noted it's too soon after the recent return of Chief Executive Julian Geiger last week to hear of new profit strategies.

The 68-year-old Geiger had served as head of Aeropostale from 1998 to 2010 and was named August 18 to replace Thomas Johnson, effective immediately.

"We'll have to wait until December to hear Geiger's thoughts on bringing Aeropostale back to profitability," Lakner said, maintaining a Hold rating and $4 target Friday.

The company has said it plans to shutter 20 percent of its stores over time, which should curb losses "but the bigger issue is brand relevancy," UBS' Roxanne Meyer said in a research note.

Meyer, who maintained a Neutral rating and $3.50 target, praised Aeropostale's recently widened margin and inventory improvements.

But Meyer said promotional pricing throughout the industry will continue to hurt Aeropostale and its big bet on denim is counter to current fashion trends.

Aeropostale closed Friday off 9.9 percent at $3.52.

View more ratings on ARO

See more from Benzinga

View Comments (1)