Aeropostale Inc (ARO) is the latest retailer to join the slaughter with shares down 44% to $0.27 at the time of this writing. Aeropostale Inc stock was down earlier over 50% on disastrous Q4 earnings. The company is exploring options, as Stifel notes in a report this morning: Effective immediately we are suspending coverage of Aéropostale given the company’s public disclosure that they have retained Stifel and other advisors to assist in a review of strategic alternatives.
Topeka Capital opines:
ARO had a tough 2H15, not turning as expected and enters 2016 with a newly refined strategy, a dispute with a vendor and bankers hired to explore strategic alternatives. The very early signs on the new strategy are positive, but ARO still has too many stores, in our view, and is trying to turn in one of the most difficult retail environments we’ve seen in 30 years. Turnarounds are tough, this one even tougher, so we remain on the sidelines.
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Unlike what we’ve heard several other retailers mention this season, ARO commented that brick and mortar stores outperformed its online business.
We are forecasting – $0.45, Street is forecasting a loss per share of -$0.40 in 1Q16.
ARO announced on its earnings call that it hired bankers for a strategic review that could include a possible sale or restructuring of the company. The company also referenced a dispute with a vendor that resulted in supply chain disruption—and it is unclear when or whether this will be resolved (guidance assumes it will be). The company also mentioned plans to focus on its factory outlet strategy (including outlet malls as well as B&C malls) and to put its outlet product online in Fall ’16. Moving factory pricing structures online is typically not a good catalyst to stabilizing prices at inline stores, in our view.