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Aeropostale Lifts Outlook in Spite of Soft Holiday Sales - Analyst Blog

Zacks Equity Research
Updated

Buoyed by improved margins and effective cost management, Aeropostale, Inc. (ARO) now anticipates a narrower-than-expected loss for the fourth quarter of fiscal 2014 despite soft holiday sales performance. This teen apparel retailer now expects loss of 25-31 cents per share as compared with 37-44 cents projected earlier. The Zacks Consensus Estimate is pegged at a loss of 27 cents.

Coming to the holiday sales report, Aeropostale’s net sales for the nine weeks ended Jan 3, 2015 declined 11% year over year to $507.8 million, while comparable sales (includes online sales) fell 9%. However, comparable sales for this Zacks Rank #3 (Hold) stock improved from the last year, when it reported a 15% drop.

Apart from Aeropostale, another teen apparel retailer, American Eagle Outfitters Inc. (AEO) also raised its fourth quarter fiscal 2014 guidance despite soft holiday sales. Net revenue inched up 1% year over year to $893 million for the nine-week period ended Jan 3, 2015. On the other hand, comps declined 2% for the period. However, management stated that comps increased in the final month of the year due to fresh spring assortments.

As a result, American Eagle now expects earnings to range from 32–34 cents a share, up from 30–33 cents expected earlier. The Zacks Consensus Estimate is pegged at 34 cents. This guidance represents growth of 19%–26% over last year’s earnings of 27 cents.

The holiday shopping season this year has been an uplifting one for most retailers with many reporting solid sales numbers for the months of November and December. Falling oil prices have led to a spurt in consumer spending towards the end of December. Some of the retailers that have posted positive comps data include Macy's Inc. (M) and J. C. Penney Company Inc. (JCP).

Macy’s reported that comparable sales on an owned plus licensed basis grew 2.7% for the November and December months, whereas J. C. Penney reported an increase of 3.7% in its comps for same period. 


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