Aeropostale, Inc. (ARO) Consumer Discretionary – Specialty Retail | Reports March 17, After Market Closes

Key Takeaways

Teen retailer, Aeropostale is scheduled to report fourth quarter earnings today, after market close. Earnings over the past few years have followed a slippery slope as teen retailers struggle to find ground in this ever changing fashion world. Shareholders are taking the biggest beating from this trend and are now down 84.3% in the past 12 months. Tomorrow the Estimize select consensus is expecting EPS of -$0.02, 2 cents below Wall Street, while revenue expectations of $545.60 million are $4 million under the Street. The Estimize community has been optimistic on Aeropostale’s profitability in the past three months, revising EPS estimates up 54%. Since February 5 revisions have been more rampant, with earnings soaring 92% and revenues up 4%. These estimates predict as a YoY decline of 585% on the bottom line, while sales are expected to contract 7%. Aeropostale has consistently outperformed expectations, beating Wall Street in 63% of reported quarters.

Last week, both Abercrombie and American Eagle reported strong earnings, signaling a potential turnaround for teen retailers. Since then, shares of Aeropostale have soared and are now up 51.79% year to date. Investors are hoping the positive momentum created by ANF and AEO continues when Aeropostale reports fourth quarter earnings next week. Last quarter the company saw net sales decrease by 20% thanks to 10% declines in comparable sales and e-commerce channels. Aeropostale announced that they would be laying off 100 corporate employees in Q4 as part of an effort to lower expenses by $40 million a year. This comes as no surprise given the company has reported a loss in seven of the past eight quarters. Instead of trying to keep pace with fashion trends, the company remains focused on providing teens with a uniform of basic clothing. So far, that strategy has failed.