Aeropostale Inc (NYSE:ARO) seems to be in a bind. While there has been a rise in the company’s shares under new CEO, Julian Geige, total of 17%. As well as the company saying it has made a first quarter profit for the first time in two years, there is an underlying problem. Company sales continue to slow even measures taken to reduce expenses worth $12 million. This figure comes even after the company’s plans to transform its store operations into more productive units by downsizing.
Even the company’s financial forecast tells a contrasting story, the problems only seem to worsen. When the company preannounced that for the fourth quarter, there will be a fall in comparable store sales by 9%. No one envisioned that the company would have also forecasted a bigger than expected first quarter loss. The result of such news sent the company’s shares plummeting 16% at the end of trading last week. Analysts from Zack Investments Research expected a loss of $594.6 million. While one year earlier the company posted loss of $70.3 million. This figure translated in a loss of 90 cents per share, on sales of $670 million.
The recent figures mean that of the three major sellers of teen retailers, inclusive of Abercrombie & Fitch and American Eagle; Aeropostale continued to underperform. American Eagle recently announced that it is starting to see a turnaround in sales figures. In fact, in stark contrast to Aeropostale Inc (NYSE:ARO), American Eagles figures have exceeded its fourth-quarter forecast. While even though Abercombie’s sales numbers remain feeble, the company still managed a $1.15 per share profit for its most recent quarter.
Shareholders have little to be optimistic about as Kimberly Greenberger, an analyst at Morgan Stanley, told investors that she thinks it is unlikely that the company can make a profit again. While remaining hopeful of a turnaround in the second half of 2015, reference was made to the previous ten consecutive quarters of negative same-store sales. All this indeed paints a dim picture unless a drastic transformation is made.