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UPDATE 2-Aeropostale's holiday quarter forecast disappoints
December 4, 2013 / 10:16 PM / 4 years ago

UPDATE 2-Aeropostale's holiday quarter forecast disappoints

* Expects current-quarter loss of $0.24-$0.32/shr vs est $0.08

* Third-quarter adjusted loss/share $0.29 vs est $0.24

* Third-quarter revenue $514.6 mln vs est $520.2 mln (Adds CEO, CFO, analyst comments, background; updates shares)

By Aditi Shrivastava

Dec 4 (Reuters) - Apparel retailer Aeropostale Inc forecast a much bigger-than-expected loss for the holiday shopping quarter as it struggles to keep up with the tastes of young shoppers, sending its shares down 4 percent in extended trading.

Aeropostale, under pressure from some investors to sell itself, also reported its fourth straight quarterly loss.

The company said it would take more aggressive steps to revamp its merchandise, instead of relying on the popularity of its brand among teens.

“We expect ... weak consumer spending, and heavily promotional environment in the teen retail sector to continue to affect our financial performance,” Chief Financial Officer Mark Miller said in a post-earnings conference call with analysts.

Aeropostale’s efforts to introduce more fashionable and trend-right assortment have proven very difficult, Richard Jaffe of Stifel Nicolaus & Co said.

“Customer response has been poor and we believe fourth-quarter will be challenging,” Jaffe said in a client note.

The company said it expects a fourth-quarter loss of 24-32 cents per share. Analysts on average were expecting a loss of 8 cents per share, according to Thomson Reuters I/B/E/S.

Rival Abercrombie & Fitch Co also warned of tough holiday sales. The company last month reported a third-quarter loss as comparable-store sales fell for the seventh straight quarter.

Aeropostale, which adopted a poison pill on Nov. 26 that would be triggered if a stockholder buys 10 percent of the company, did not comment on Wednesday about any possible sale.

“Our team is concentrating its full energies on executing our business,” Chief Executive Tom Johnson said in the call.

Shareholder Crescendo Partners urged Aeropostale last month to sell itself, joining a list of investors expressing frustration about the fading fortunes of the youth-apparel retailer.

Aeropostale reported a net loss of $25.6 million, or 33 cents per share, for the third quarter ended Nov. 2, compared with a profit of $24.9 million, or 31 cents per share, a year earlier.

On an adjusted basis, the company reported a loss of 29 cents per share, while analysts on average had expected a loss of 24 cents per share.

Sales fell 15 percent to $514.6 million, below the average analyst estimate of $520.2 million.

“Our performance in the third quarter was clearly disappointing ... we were more promotional than anticipated in order to position ourselves for the fourth quarter,” CEO Johnson said.

Aeropostale’s shares were at $9.00 in extended trading after closing at $9.36 on the New York Stock Exchange on Wednesday. The stock has lost one-third of its value in the last six months. (Reporting by Aditi Shrivastava in Bangalore; Editing by Maju Samuel)

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