Ahead of the Bell: Aeropostale

Aeropostale drops in premarket as retailer's 1Q revenue misses Street, gives weak 2Q outlook

Associated Press

NEW YORK (AP) -- Shares of Aeropostale are sliding before Friday's market open as the retailer's first-quarter revenue missed analysts' estimates and it provided a soft second-quarter forecast.

On Thursday Aeropostale Inc. reported first-quarter revenue of $395.9 million, which was short of the $409.3 million that analysts surveyed by FactSet expected.

The New York company is expecting a loss of 55 cents to 61 cents per share in the second quarter. Analysts expected a loss of 50 cents per share, on average.

Eric Beder of Brean Capital said in a client note that even though "Aeropostale has identified areas to cut expenses, and is vigorously working to revamp the assortment and revitalize the brand image, given the current retail environment and change in consumer preferences and shopping behaviors, we believe turning the business is a long ways away."

The analyst reaffirmed a "Hold" rating.

Jefferies' Randal Konik called Aeropostale's second-quarter guidance "disappointingly bleak." The analyst said that the retailer's efforts to lower expenses, close stores and spruce up its merchandise offerings are "notable," but said that there is "extremely low visibility" into when the business may turn itself around.

Konik cut Aeropostale's price target to $5 from $6 and kept a "Hold" rating.

Aeropostale Inc.'s stock tumbled 76 cents, or 16.8 percent, to $3.76 in premarket trading about three hours before the market opening.

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