Shares of Aeropostale, Inc. tumbled to touch a 52-week low of $8.29 on Thursday, Aug 29, and eventually closed trade at $8.36. Looking at the year-to-date performance, the stock has disappointed too, as it has plunged 33.7%.
Shares of this teen apparel retailer have been portraying a downtrend since the beginning of August and given its dismal third-quarter fiscal 2013 outlook, it has more downside left. Aeropostale has been lurking in the red zone since the beginning of fiscal 2013, as it posted loss for two consecutive quarters.
Macroeconomic headwinds, adverse weather conditions hurting the top line, higher promotional costs, weak traffic and an increased inventory level hampered the company’s profitability in the first half of fiscal 2013.
For the first quarter, Aeropostale reported a loss of 16 cents per share that was down considerably from earnings of 13 cents in the comparable year-ago quarter. The loss further widened to 34 cents during the second quarter. (Please also read: Aeropostale Posts Loss in Q2).
Investors remain wary of this Zacks Rank #4 (Sell) stock as the company provided tepid outlook for the upcoming quarter. Aeropostale stated that weak traffic, higher costs and competition will adversely affect its margins and consequently, earnings as well. Therefore, it expects to report loss per share in the range of 21 cents to 26 cents in the third quarter.
Aeropostale’s dismal quarterly performance was reflected in the downward movement in the Zacks Consensus Estimate, as analysts became less constructive about the stock’s future performance. The Zacks Consensus Estimate for fiscal 2013 plunged significantly in the last 7 days.
It now stands at a loss of 62 cents per share, down from earnings of 18 cents. For fiscal 2014, most of the estimates were revised downward over the past 7 days, bringing down the Zacks Consensus Estimate to a loss of 12 cents per share from earnings of 48 cents.
We do not see any significant catalyst that can rekindle the stock’s momentum in the near term.
However, not all apparel retailers are faring as poorly as Aeropostale. DSW Inc. (DSW - Snapshot Report), L Brands, Inc. and Ann Inc. , all of which hold a favorable Zacks Rank #2 (Buy) are worth considering.