Aeropostale Inc (NYSE:ARO) Expects Net Loss Of $0.25-$0.31 Per Diluted Share In 4Q2014

Aeropostale Inc (NYSE:ARO) updated its shareholders on the financial outlook for the fourth quarter. It expects the net loss to come in between $0.25-$0.31 per diluted share in 4Q2014. Previously, the company had forecasted the net loss to come in between $0.37 to $0.44 per diluted share. The company is working on expense management and therefore expects the loss to narrow down in the fourth quarter. It will release fiscal 2014 and fourth quarter results on March 12, 2015.

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Holiday sales

Aeropostale’s total net sales declined 11% to $507.8 million for the nine-week period ended on January 3, 2015. The comparable sales declined 9% against a 15% decline last year. The teen apparel maker had cut inventories this holiday season so that it doesn’t have to deal with huge unsold stock. The shoppers have reduced their spending on discretionary items making it tough for the retailers to have a strong holiday season.

Change in approach

As Aeropostale Inc (NYSE:ARO) expected lower traffic to malls, it invested more in online business in the last quarter. Aeropostale didn’t want to go for heavy discounting for the left over stock this holiday season. It was a wise approach as the teen apparel retailers were bloated with inventories in last holiday season. Also, it shifted its focus on higher-margin products so as to adjust for the lower traffic in the malls. Most of the teen apparel retailers opted for strong inventory control to preserve the gross margins in the tough holiday season.

The management view

Julian R. Geiger, the CEO of Aeropostale said that Aeropostale Inc (NYSE:ARO) managed to expand margins in the third quarter. The margins were better than the expectations as the company didn’t opt for heavy discounts this holiday season. Also, the comparable sales came in line as per the guidance. The analysts expect the promotional intensity to exist among the retailers.

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John is a special projects and general assignment reporter, noted for breaking several exclusive stories.

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