| NEW YORK
NEW YORK Feb 10 Aeropostale Inc is
considering raising capital from private equity firms as the
struggling teen retailer evaluates various ways to shore up both
its balance sheet and its share price, four people familiar with
the matter said on Monday.
Aeropostale, which has reported losses for four straight
quarters, faces pressure from investors to sell itself and is
working with investment bank Barclays Plc to study its
options, the sources said.
If the company decides to raise capital, it may choose to do
so in the form of a private investment in public equity (PIPE)
transaction of a few hundred million dollars, some of the people
A PIPE transaction is often used by small and mid-cap
companies that may have difficulty raising capital in public
markets. Private equity firms involved in the deal will
typically get stock at a discount to the public market
The situation remains fluid, and Aeropostale is considering
other options that may include a sale of the entire company, one
of the people said.
All the people requested anonymity because the situation is
private. Aeropostale was not immediately available for comment.
Barclays declined to comment.
Retailers like Aeropostale, Abercrombie & Fitch Co
and American Eagle Outfitters Inc, which focus on
selling apparel to teenagers, are struggling to keep up with the
changing tastes of young shoppers.
Disappointed with Aeropostale's performance, investors have
driven the company's shares down 50.3 percent in the last 12
months to their lowest levels since 2003. The Standard & Poor's
500 Index has risen 19 percent in the last year.
The company has also been burning through cash quickly.
Aeropostale had working capital of $166.7 million as of Nov. 2,
down from $193.9 million on Aug. 3, while its cash fell to $68
million from $100.3 million. It also has a $175 million credit
facility it has not drawn on.
For the quarter ended Nov. 2, Aeropostale reported a net
loss of $25.6 million, or 33 cents per share. Sales fell 15
percent to $514.6 million, below the analysts' average estimate
of $520.2 million.
Activist investor Crescendo Partners in November urged
Aeropostale to sell itself.
Private equity firm Sycamore Partners, which is run by
retail veteran Stefan Kaluzny, separately took an 8 percent
stake in Aeropostale in September, becoming its third-largest
Sycamore's intentions for its investment still remain
unclear. The firm may ultimately try to buy the entire company
or may just want to pressure Aeropostale to consider
alternatives, one of the people said. Sycamore declined to