Aeropostale Inc. (ARO) posted disappointing first-quarter fiscal 2013 results, with a loss of 16 cents per share that plunged significantly from the earnings of 13 cents in the comparable year-ago quarter. However, it fared better than the Zacks Consensus Estimate of a loss of 18 cents per share.
Macroeconomic headwinds, adverse weather conditions hurting top line, higher promotional costs and an increased inventory level took a toll on the company’s profitability.
Net sales waned 9% year over year to $452.3 million but came ahead of the Zacks Consensus Estimate of $451 million.
Comparable-store-sales (comps) including the e-Commerce business declined 14% during the quarter, reflecting a decline of 10% and 9% in transactions and average unit retail, respectively, partially offset by a rise of 5% in units per transaction.
Revenue from e-Commerce including the GoJane business jumped 13% year over year to $41.9 million during the quarter under review. The company’s performance at its .com business enables it to generate additional sales while broadening its existing customer base worldwide. Alongside, it boosts the visibility and reputation of Aeropostale as a global firm offering great fashion and value.
Aeropostale’s gross profit tumbled 27% to $101.4 million, whereas gross margin contracted 560 basis points to 22.4%, reflecting decreased merchandise margins and deleveraging of non-merchandise costs.
Stores Update
During the quarter, the company opened 1 Aeropostale and 24 P.S. from Aeropostale store. Alongside, it closed 3 Aeropostale stores. The company currently operates 982 Aeropostale stores and 124 P.S. from Aeropostale stores.
Balance Sheet & Guidance
This Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $148.4 million, with no debt and shareholders' equity of $397.6 million.
Going forward, Aeropostale stated that macro 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.
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), The Buckle, Inc.(BKE) and American Apparel, Inc. (APP), all carrying a favorable Zacks Rank #2 (Buy).
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