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Aeropostale Inc. (ARO - Snapshot Report) recently posted fiscal third-quarter 2012 (ended October 27, 2012) earnings of 31 cents a share, up 3.3% from the comparable prior-year earnings of 30 cents. Moreover, the reported earnings fared better than the Zacks Consensus Estimate of 29 cents a share.

The company’s net sales increased 2% to $605.9 million, mainly due to a rise of 4% in average square footage. Moreover, the reported revenue came ahead of the Zacks Consensus Estimate of $604 million.

The company’s comparable-store-sales (comps) inched down 1% against the 7% decrease in the year-ago quarter. The company noted that a rise of 3% in units per transaction coupled with a 2% increase in transactions were more than offset by a fall of 5% in average unit retail.

Revenues from e-commerce business marked an increase of 12% year over year to $51.1 million during the quarter under review. The company’s online sales enable it to generate additional sales while broadening its existing customer base worldwide. Alongside, it boosts the visibility and reputation of Aeropostale as a global firm offering great fashion and value.

During the quarter, gross profit increased 4.6% year over year to $169 million, while gross profit margin expanded 80 basis points to 27.9%. The increase reflected higher merchandise margins and the deleveraging of occupancy and distribution and transportation costs.

Stores Update

During the quarter, the company opened 5 Aeropostale and 5 P.S. from Aeropostale stores. Moreover, the company closed 2 Aeropostale and 2 temporary P.S. from Aeropostale stores. The company currently operates 916 Aeropostale stores in 50 states and Puerto Rico and 78 Aeropostale stores in Canada. Aeropostale operates 99 P.S. from Aeropostale stores in 20 states. 

Balance Sheet & Guidance

Aeropostale ended the quarter with cash and cash equivalents of $184.5 million with no debt and shareholders equity of $408.8 million. Moreover, the company repurchased $41 million shares during the quarter.

Going forward, for the fourth quarter of fiscal 2012, Aeropostale expects adjusted earnings in the range of 36 cents to 41 cents a share compared with adjusted earnings of 44 cents in the prior year quarter. The current Zacks Consensus Estimate for fourth quarter stands at 54 cents a share.

Currently, Aeropostale, which competes with American Eagle Outfitters Inc. (AEO - Analyst Report), holds a Zacks #3 Rank, which implies a short-term ‘Hold’ rating (1–3 months).

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