December 2, 2009 / 9:31 PM / 10 years ago

UPDATE 2-Aeropostale profit up 47 pct but shares fall

 * Q3 EPS 92 cents vs Street’s 91 cents
 * Q3 revenue up 18 pct
 * Sees Q4 EPS $1.20-$1.24
 * Shares down 8 pct  (Adds analyst comments, executive comments, updates share movement)
 By Alexandria Sage
 SAN FRANCISCO, Dec 2 (Reuters) - Aeropostale Inc ARO.N said third-quarter net profit and revenue rose sharply, but the low end of its fourth-quarter outlook fell just short of Wall Street estimates, and its shares fell nearly 8 percent.
 The teen apparel retailer’s November same-store sales also fell just shy of analysts’ expectations, on average.
 The mall-based retailer’s casual fashions and relatively low prices have made it a hit with teens and their penny-pinching moms during the downturn.
 Aeropostale posted a 47 percent rise in third-quarter net profit to $62.6 million, or 92 cents per share, compared with $42.6 million, or 63 cents per share, a year earlier.
 Analysts on average had been expecting third-quarter earnings of 91 cents per share, according to Thomson Reuters I/B/E/S.
 Eric Beder, an analyst with Brean Murray, said that given Aeropostale’s strength throughout the downturn, investor expectations for the company remained among the highest in retail.
 “We believe they can continue to exceed them, but the Street remains skeptical,” said Beder. “Aeropostale will just have to continue to put the naysayers to shame. We think they will.”
 Revenue rose 18 percent in the quarter to $567.9 million, above the $566.5 million expected, on average, by Wall Street.
 Aeropostale said that same-store sales, a key measure of retail strength, rose 10 percent on the Friday and Saturday after the U.S. Thanksgiving holiday.
 Same-store sales in November rose 7 percent.
 That was just shy of the 7.7 percent increase expected on average by analysts, according to Thomson Reuters data, which culled estimates ranging from a rise of 4 percent to a rise of 14 percent.
 “It is our belief that we will continue to be the destination store in the mall throughout the holiday season,” said Chief Executive Julian Geiger, speaking to analysts during a conference call.
 OUTPERFORMING RIVALS
 Aeropostale’s results have stood out in the pressured apparel sector, as most U.S. retailers selling clothing have posted tepid sales and profits in the third quarter as consumers cut back on spending.
 Whereas Aeropostale has consistently posted robust sales this fall — logging a 10 percent same-store sales gain in the third quarter — competitors have struggled.
 Abercrombie & Fitch Co (ANF.N), for example, recently posted a 22 percent decline in third-quarter same-store sales, while those of American Eagle Outfitters Inc (AEO.N) fell 4 percent.
 As previously announced, Geiger will step down at the end of January. He will be replaced by two executives: President and Chief Merchandising Officer Mindy Meads and Executive Vice President and Chief Operating Officer Thomas Johnson.
 Looking to the crucial holiday quarter, the company said it expects earnings to range between $1.20 and $1.24 per share.
 Wall Street has been expecting earnings of $1.22 in the fourth quarter on revenue of $765.1 million.
 Aeropostale’s shares fell 7.8 percent to $30.16 after-hours compared with a regular close of $32.70, up 1.5 percent, on the New York Stock Exchange.  (Reporting by Alexandria Sage, editing by Leslie Gevirtz and Matthew Lewis)  

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