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Aeropostale (ARO) Cuts 4Q Profit View On Lower Sales, Margins; Shares Off

 January 10, 2013 09:14 AM

(By Balaseshan) Teen casual apparel retailer Aeropostale Inc. (NYSE: ARO) cut its earnings guidance for the fourth quarter due to lower than expected sales and margins, and its shares tumbled 9.12% in premarket.

Net sales for the nine-week period ended December 29, 2012 fell 6% to $645.0 million from $682.6 million in the previous year period. Comparable sales, including the e-commerce channel, decreased 8% compared to a 9% drop last year.

Comparable store sales, excluding the e-commerce channel, for the nine-week period ended December 29, 2012 declined 9%, compared to a 10% fall last year.

[Related -American Eagle Outfitters (AEO), The Gap Inc. (GPS), Aeropostale Inc (ARO): Mall Musings]

The company lowered its fourth quarter earnings forecast to range of about $0.20 to $0.24 per share from previous estimate of about $0.36 to $0.41 per share, while Street predicts $0.40 per share.

"Following a strong Black Friday weekend, sales and traffic trends deteriorated significantly in December. From a merchandise perspective our core basics businesses, particularly graphics and fleece, remained challenged," said Thomas Johnson, Chief Executive of Aeropostale.

For the third quarter of 2012, the company posted earnings of $24.9 million or $0.31 per share on net sales of $605.9 million. Comparable sales including the e-commerce channel decreased 1%, while sales excluding the e-commerce channel declined 2%.

ARO closed Wednesday's regular session at $13.37. The stock has been trading between $11.76 and $23.05 for the past 52 weeks.



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