Specialty retailer of casual apparel and accessories, Aeropostale, Inc. (ARO) declared the launch of its ‘P.S. from Aeropostale’ brand in Mexico. The launch was made through a licensing collaboration with local departmental store chain operator Distribuidora Liverpool, S.A. de C.V.
The opening of the company’s first outlet in Mexico was celebrated in Jul 2014 at the Sante Fe Mall. The retailer’s further plans of expanding its P.S. from Aeropostale brand to Mexico includes the introduction of branded shop-in-shops in Liverpool department stores, apart from opening standalone outlets.
For quite some time now, Aeropostale has been struggling to strengthen its market position as this mall-based specialty retailer of casual apparel has posted losses for five straight quarters. Aeropostale, along with its peers American Eagle Outfitters, Inc. (AEO) and Abercrombie & Fitch Co. (ANF), has been under tremendous pressure as the teen retail environment remains challenging.
In the most recent quarter, the company recorded an adjusted net loss of 52 cents a share that is wider than the adjusted loss of 16 cents in first-quarter fiscal 2013. However, the adjusted loss was narrower than the Zacks Consensus Estimate of a loss of 72 cents.
Additionally, the Zacks Rank #3 (Hold) company’s sales plunged 12% to $395.9 million, with comparable-store sales (comps) declining 13% year over year versus a 14% fall last year. Net sales also came below the Zacks Consensus Estimate of $410.0 million. Sales disappointed mainly due to soft traffic and erratic weather.
Hence, management seems very optimistic about this brand’s launch in Mexico as Aeropostale witnessed rapid growth in the country over a one-year period. By furthering its presence to Mexico, the company is also on track to strengthen its global footprint.
Moreover, by extending its partnership with Liverpool, the company is most likely to achieve success as Liverpool has great experience in running the largest Mexican departmental stores and Aeropostale brands. Liverpool’s experience is likely to benefit the company, which intends to introduce over 100 P.S. outlets in the next few years.
Going forward, the company plans to remain focused on undertaking initiatives to transform and grow its brand. With sustained implementation of operational, marketing and merchandising strategies, coupled with its cost-curtailment program, Aeropostale is likely to improve in the long term.
A better-ranked stock in the same industry is Citi Trends, Inc. (CTRN), with a Zacks Rank #1 (Strong Buy).