Mall-based apparel retailer, Aeropostale, Inc. ARO announced that it has entered into licensing agreements with India-based Arvind Lifestyle Brands Limited and Indonesia-based PT Mitra Adiperkasa TBK with an aim to expand in these countries. Shares of the company jumped 9.2% on the news.
The company’s deals with the above mentioned firms, which are one of the largest retailers in their respective regions, gives Aeropostale exposure to two of the world’s most populated countries. In India, the company plans to open 150 shop-in-shops and 50 standalone stores over a period of five years, starting Mar 2016. An online store is also in the offing.
In Indonesia, the company intends to open its first store in Jakarta in the fall of 2016. Additionally, it plans to launch 10 to 12 standalone stores across the country over the next five years.
Earlier, the company had gained success upon venturing into the markets of Philippines and Singapore. Given the strong growth prospects in both India and Indonesia, it expects good response from these markets as well.
Aeropostale has been under tremendous pressure due to a challenging teen retail environment. Consequently, this Zacks Rank #3 (Hold) stock posted soft first-quarter fiscal 2015 results and provided a bleak outlook for the second quarter.
To battle dwindling revenues, the company has taken to international expansion in a big way. It now expects to extend over 300 locations across 17 countries by the end of 2015. Further, it plans to enter into other similar global partnerships through the rest of the year.
In addition, the company, under its CEO Julian R. Geiger continues to undertake initiatives to transform and grow its brand. With sustained implementation of operational, marketing and merchandising strategies as well as its cost-curtailment program, Aeropostale hopes to turnaround its performance.
Some better-ranked stocks in the retail space include American Eagle Outfitters, Inc. AEO, Boot Barn Holdings Inc. BOOT and Express Inc. EXPR. All three stocks sport a Zacks Rank #1 (Strong Buy).
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