Aeropostale Inc ARO.N confirmed fears of weak sales during the holiday selling period as the budget-friendly teen clothes retailer saw sales slide, sending shares down 10 percent before the markets opened on Thursday.
Aeropostale has been losing out to rivals like American Eagle Outfitters Inc (AEO.N), and said the environment in the teen apparel space was still heavily promotional.
"Following a strong Black Friday weekend, sales and traffic trends deteriorated significantly in December," Aeropostale Chief Executive Officer Thomas Johnson said in a statement.
The New York-based company has had trouble engaging its young clientele with its merchandise. Wardrobe staples like graphic T shirts and fleece during cold weather often make for the lion's share of teen clothing inventories and Aeropostale has had a tough time selling those.
Analysts have said that on basic items like sweaters and T-shirts, Aeropostale was cutting prices more than the competition. The company, which gave numbers for the nine weeks ended December 29, said sales fell 6 percent.
In contrast, American Eagle, which posted numbers for the period ended January 8, said sales had risen 5 percent and post-Christmas selling was strong.
Separately, Urban Outfitters Inc (URBN.O), which owns the Anthropologie chain, said sales for two months ending December 31 rose 15 percent over the same period last year.
The weak sales prompted Aeropostale to cut back on its expectations for its fourth quarter.
The company now expects net earnings of 20 cents to 24 cents per share, compared with its earlier outlook of 36 cents to 41 cents.
Shares of the company were down 10.2 percent at $12.00 in trading before the market opened.
(Reporting by Nivedita Bhattacharjee in Chicago; Editing by Lisa Von Ahn and Grant McCool)