Aeropostale Loss Wider Than Estimates; Outlook Weak

(RTTNews) - Teen-apparel retailer Aeropostale Inc. (ARO) Wednesday reported a steeper-than-expected third-quarter loss as it continued to grapple with lower sales and increased promotional costs.

The company provided a weak earnings guidance for the fourth quarter, sending its shares down about 4 percent in after-hours trade on the New York Stock Exchange.

In a statement, CEO Thomas Johnson said that while the company had refurbished its merchandise during the quarter, it found lackluster patronage. Johnson also cautioned about future prospects.

Aeropostale shares have taken a beating amid a weak teen-retail environment. The company has fared worse than youth retailers like Abercrombie & Fitch Co. (ANF) and American Eagle Outfitters Inc. (AEO), while bigger rival Gap Inc. (GPS) has performed well.

For the third quarter, New York-based Aeropostale posted a net loss of $25.6 million or $0.33 per share, compared with net income of $25 million or $0.31 per share last year.

Excluding items, loss for the quarter would have been $23 million or $0.29 per share. On average, 28 analysts polled by Thomson Reuters estimated a loss of $0.24 per share. Analysts' estimates typically exclude special items.

Sales for the quarter fell 15 percent to $514.6 million from $605.9 million in the prior year. Analysts expected sales of $520.2 million.

On a same store basis, sales for the quarter were down 15 percent. Online sales were flat, the company said.

Results were further hurt by gross margin that shrunk to 17 percent from 28 percent last year.

For the fourth quarter, Aeropostale expects a loss of $0.24 to $0.32 per share. Analysts expect a loss $0.08 per share.

At the end of the quarter, the company operated 1,124 stores.

For fiscal 2014, the company plans to open about 11 Aeropostale stores, nearly 5 P.S. from Aeropostale stores, remodel around 26 Aeropostale stores, and close almost 40 to 50 Aeropostale stores.

Aeropostale expects capital investment of about $35 million in fiscal 2014.

ARO closed Thursday at $9.35, down $0.39 or 4%, on a volume of 4.3 million shares. In after hours, the stock $ or % at $. In the last year, the stock has traded in the range of $7.78 - $17.10.