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Aeropostale Forays into Mexico

Zacks Equity Research

In furtherance of the global consolidation of its brand, Aeropostale Inc. (ARO) announced its plans to expand in Mexico. Starting this summer, the company through a licensing agreement with Distribuidora Liverpool, S.A. de C.V., will open Aeropostale shops within Liverpool department stores across Mexico.

Alongside, Aeropostale will be opening its own standalone stores in Mexico, of which the first store is slated to open in summer 2013.

This strategic move reflects the company’s efforts to strengthen its position in regions where it could generate strong sales. Moreover, the expansion of its store base in Mexico will help widen its growth prospects and facilitate it to hedge against economic cycles.

Aeropostale has been grappling with lower sales and profitability as macroeconomic headwinds, higher promotional costs and increased inventory levels are taking a toll on its financials.   

The company earlier stated that macroeconomic headwinds will adversely affect its margins and in turn earnings. Consequently, it expects to report loss per share in the range of 15 cents to 20 cents in the second quarter of fiscal 2013.

This Zacks Rank #3 (Hold) teen clothing store chain currently operates through 898 Aeropostale stores and 132 P.S. from Aeropostale stores. Moreover, the company operates 78 Aeropostale stores in Canada.

Other Stocks to Consider

Until any further upward revision in the Zacks Rank on Aeropostale, other apparel retailers worth considering include The Gap, Inc. (GPS), Stein Mart Inc. (SMRT) and Pacific Sunwear of California Inc. (PSUN), all carrying a favorable Zacks Rank #2 (Buy).

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Read the Full Research Report on GPS

Read the Full Research Report on PSUN

Read the Full Research Report on SMRT

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