Aeropostale Loss Widens, Outlook Weak; Shares Fall 11%

(RTTNews) - Struggling teen-apparel retailer Aeropostale Inc. (ARO), Thursday said its second-quarter loss widened from a year ago, as revenues and margins continued to plunge. Loss for the quarter was lesser than what Wall Street estimated, while revenues also beat expectations.

Moving ahead, the retailer detailed a weak outlook for the third quarter, with loss per share expected to be worse than analysts' current estimates. Shares of Aeropostale tumbled 11 percent in after hours trade, following the news.

New York-based Aeropostale's second-quarter loss widened to $63.8 million or $0.81 per share from last year's loss of $33.7 million or $0.43 per share.

Adjusted loss, which excludes special items, for the quarter was $36.0 million or $0.46 per share. On average, 27 analysts polled by Thomson Reuters expected a loss of $0.49 per share for the second quarter. Analysts' estimates typically exclude special items.

Aeropostale's net sales for the second quarter fell 13 percent to $396.2 million from $454.0 million a year ago. Twenty-four analysts had a consensus revenue estimate of $394.38 million for the quarter.

Same-store sales, including the e-commerce channel, for the second quarter decreased 13 percent. Gross margin, or percentage of sales left after deducting cost of sales, dropped significantly to 15.8 percent from 17.9 percent last year.

"I am encouraged that the company was able to achieve higher average unit retails and margins, as well as better expense control during the second quarter, which allowed us to exceed guidance," said Julian Geiger, who was appointed CEO early this week.

Aeropostale has been losing money for the past few quarters and has closed under-performing stores in an attempt to revive the company. Aeropostale is also under pressure from certain quarters to sell itself in order to enhance shareholder value. On Monday, Aeropostale board had appointed former CEO Julian Geiger to the top post, once again hoping that he would be able to turn around the company's sliding sales.

Looking forward to the third quarter, the company expects a loss of $0.44 to $0.48 per share. Analysts currently expect a loss of $0.33 per share for the third quarter.

ARO closed Thursday's trading at $3.91 on the NYSE. The stock, however, plunged $0.41 or 10.49% in after-hours trade.