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Aeropostale's Dismal Holiday Sales

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The holiday season was disappointing for Aeropostale Inc. , compelling management to lower its fourth quarter 2012 earnings guidance. Total net sales came in at $645 million for the nine-week period ended December 29, 2012, down 6% from $682.6 million reported in the prior-year period.

The specialty retailer of active and casual apparel, footwear and accessories for the youth witnessed an 8% decline in comparable-store sales (including the e-Commerce channel) for the nine-week period. Aeropostale had registered a decline of 9% in comparable-store sales for the year-ago period.

Excluding the contribution of the e-Commerce channel, comparable-store sales dipped 9% compared with a 10% fall witnessed in the prior year.

The company stated that the decrease in sales on account of lower traffic dented its December sales. Moreover, the company’s merchandising strategy backfired as its core offering, including graphics and fleece, was not well received by the consumers.  

Weak holiday sales prompted management to lower the earnings guidance to a range of 20 cents to 24 cents a share for the fourth quarter of fiscal 2012. The company had earlier forecasted earnings in the band of 36 cents to 41 cents. Consequently, we anticipate a decline in the Zacks Consensus Estimate for the fourth quarter, which currently stands at 40 cents a share.

The company currently operates 917 Aeropostale stores across 50 states and Puerto Rico, and 78 Aeropostale stores in Canada. Aeropostale operates 100 P.S. from Aeropostale stores in 20 states.

Currently, Aeropostale, which competes with American Eagle Outfitters Inc. (AEO - Free Report) , holds a Zacks Rank #5, (Strong Sell).

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